Document/Exhibit Description Pages Size
1: 10-K Annual Report 33 146K
2: EX-3 Exhibit 3.2 9 35K
3: EX-4 Exhibit 4.16E 10 31K
4: EX-4 Exhibit 4.17C 12 29K
5: EX-10 Exhibit 10.10 67 222K
6: EX-10 Exhibit 10.15 96 292K
7: EX-10 Exhibit 10.26 3 16K
8: EX-10 Exhibit 10.60 6 28K
9: EX-10 Exhibit 10.61 21 70K
10: EX-10 Exhibit 10.62 21 70K
11: EX-10 Exhibit 10.63 21 70K
12: EX-10 Exhibit 10.64 21 70K
13: EX-10 Exhibit 10.65 21 70K
14: EX-10 Exhibit 10.66 21 70K
15: EX-10 Exhibit 10.67 51 214K
16: EX-10 Exhibit 10.68 8 23K
17: EX-10 Exhibit 10.69 1 7K
18: EX-13 Annual or Quarterly Report to Security Holders 29 115K
19: EX-21 Subsidiaries of the Registrant 1 7K
20: EX-27 Financial Data Schedule (Pre-XBRL) 1 11K
22: EX-99 Exhibit 99.1 2 10K
21: EX-99 Miscellaneous Exhibit 2 9K
Change of Control
Employment Agreement
Among
Chicago and North Western Transportation Company,
Chicago and North Western Railway Company
and
Executive
TABLE OF CONTENTS
Page
1. Certain Definitions . . . . . . . . . . . . . . . . . . 1
2. Employment Period . . . . . . . . . . . . . . . . . . . 3
3. Terms of Employment . . . . . . . . . . . . . . . . . . 3
4. Termination of Employment . . . . . . . . . . . . . . . 7
5. Obligations of CNW upon Termination . . . . . . . . . . 10
6. Certain Reduction of Payments by CNW . . . . . . . . . . 12
7. Non-exclusivity of Rights . . . . . . . . . . . . . . . 14
8. Confidentiality/NonCompetition . . . . . . . . . . . . . 14
9. Legal Fees and Other Expenses . . . . . . . . . . . . . 16
10. Full Settlement . . . . . . . . . . . . . . . . . . . . 16
11. Successors . . . . . . . . . . . . . . . . . . . . . . . 17
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 17
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CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 20th day of December 1994,
is made by and among CHICAGO AND NORTH WESTERN TRANSPORTATION
COMPANY (the "Company"), a Delaware corporation having its
principal place of business in Chicago, Illinois, CHICAGO AND
NORTH WESTERN RAILWAY COMPANY ("CNW Railway"), (the Company and
CNW Railway collectively referred to herein as "CNW"), and
DENNIS E. WALLER (the "Executive"), a resident of Illinois.
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and
its shareholders to assure that CNW will have the continued
dedication of the Executive, notwithstanding the possibility,
threat, or occurrence of a Change of Control (as defined below)
of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or
threatened Change of Control, to encourage the Executive's full
attention and dedication to CNW, and to provide the Executive
with compensation and benefits arrangements upon a Change of
Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and are
competitive with those of other major corporations. This
Agreement is intended to accomplish these objectives.
1. Certain Definitions
(a) The "Effective Date" shall be the first date on
which a Change of Control occurs during the "Change of Control
Period" (as defined in Section 1(b)). Anything in this Agreement
to the contrary notwithstanding, if the Executive's employment
with CNW is terminated prior to the date on which a Change of
Control occurs, and it is reasonably demonstrated that such
termination of employment (i) was at the request of a third party
who has taken steps reasonably calculated to effect the Change of
Control or (ii) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" is the period
commencing on the date hereof and ending on the third anniversary
of such date; provided, however, that commencing on the date one
year after the date hereof, and on each annual anniversary of
such date (such date and each annual anniversary thereof is
hereinafter referred to as a "Renewal Date"), the Change of
Control Period shall be automatically extended so as to terminate
on the third anniversary of such Renewal Date, unless at least
60 days prior to the Renewal Date CNW shall give notice to the
Executive that the Change of Control Period shall not be so
extended.
(c) "Change of Control". For the purpose of this
Agreement, a "Change of Control" shall mean any of the following
events:
(i) the acquisition by any person or group of
beneficial ownership of 40% or more of either the then
outstanding Stock or the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors, except that
(A) no such person or group shall be deemed to own
beneficially any securities held by the Company or a
Subsidiary (as defined below) or any employee benefit plan
(or any related trust) of the Company or a Subsidiary, and
(B) no Change of Control shall be deemed to have occurred
solely by reason of any such acquisition by a corporation
with respect to which, after such acquisition, more than 60%
of both the then outstanding common shares of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors are then
beneficially owned, directly or indirectly, by the persons
who were the beneficial owners of the Stock and voting
securities of the Company immediately before such
acquisition in substantially the same proportion as their
ownership, immediately before such acquisition, of the then
outstanding Stock and the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors, as the case may
be;
(ii) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Directors") cease for
any reason to constitute at least a majority of the Board;
provided that any individual who becomes a director after
the date hereof whose election, or nomination for election
by the Company's stockholders was approved by a vote or
written consent of at least two-thirds of the directors then
comprising the Incumbent Directors shall be considered as
though such individual were an Incumbent Director, but
excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of
the directors of the Company (as such terms are used in Rule
14a-11 under the Securities Exchange Act of 1934, as amended
("1934 Act")); or
(iii) approval by the stockholders of the Company of
(A) a merger, reorganization or consolidation with respect
to which the individuals and entities who were the
respective beneficial owners of the Stock and voting
securities of the Company immediately before such merger,
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reorganization or consolidation do not, after such merger,
reorganization or consolidation, beneficially own, directly
or indirectly, more than 60% of, respectively, the then
outstanding common shares and the combined voting power of
the then outstanding voting securities entitled to vote
generally in the election of directors of the corporation
resulting from such merger, reorganization or consolidation,
(B) a liquidation or dissolution of the Company or (C) the
sale or other disposition of all or substantially all of the
assets of CNW.
For purposes of this definition, "person" means such term as
used in Securities Exchange Commission ("SEC") Rule 13d-5(b)
under the 1934 Act; "beneficial owner" means such term as defined
in SEC Rule 13d-3 under the 1934 Act; "group" means such term as
defined in Section 13(d) of the 1934 Act; "Subsidiary" means a
corporation as defined in Section 425(f) of the Internal Revenue
Code of 1986, as amended ("Code") with the Company being treated
as the employer corporation for purposes of this definition of
Subsidiary; and "Stock" means the common stock of the Company,
par value $.01, or any other common stock that the Company may
issue from time to time.
2. Employment Period. CNW hereby agrees to continue the
Executive in its employ, and, subject to Section 4 of the
Agreement, the Executive hereby agrees to remain in the employ of
CNW, for the period commencing on the Effective Date and ending
on the third anniversary of such date (the "Employment Period").
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, titles,
reporting requirements and responsibilities), authority and
duties shall be at least commensurate in all material
respects with the most significant of those held, exercised
and assigned at any time during the 90-day period
immediately preceding the Effective Date, and (B) the
Executive's services shall be performed at the location
where the Executive was employed immediately preceding the
Effective Date or any office or location less than 50 miles
from such location.
(ii) During the Employment Period, and excluding any
periods of vacation, sick leave or disability to which the
Executive is entitled, the Executive agrees to devote the
Executive's full attention and time to the business and
affairs of CNW and, to the extent necessary to discharge the
duties assigned to the Executive hereunder, to use the
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Executive's best efforts to perform faithfully and
efficiently such duties. During the Employment Period, it
shall not be a violation of this Agreement for the Executive
to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities
are consistent with the policies of CNW at the Effective
Date and do not significantly interfere with the performance
of the Executive's duties in accordance with this Agreement.
It is expressly understood and agreed that to the extent
that any such activities have been conducted by the
Executive prior to the Effective Date and were consistent
with the policies of CNW at the Effective Date, the
continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's duties
hereunder.
(b) Compensation.
(i) Base Salary. During the Employment Period, CNW
Railway shall pay or cause to be paid to the Executive an
annual base salary in cash ("Guaranteed Base Salary"), which
shall be paid in a manner consistent with CNW Railway's
payroll practices immediately preceding the Effective Date
at a rate at least equal to twelve times the highest monthly
base salary paid or payable to the Executive by CNW Railway
in respect of the twelve-month period immediately preceding
the month in which the Effective Date occurs. During the
Employment Period, the Guaranteed Base Salary shall be
reviewed at least annually and shall be increased at any
time and from time to time as shall be substantially
consistent with increases in base salary awarded in the
ordinary course of business to other peer executives of CNW
Railway. Any increase in Guaranteed Base Salary shall not
serve to limit or reduce any other obligation to the
Executive under this Agreement. Guaranteed Base Salary
shall not be reduced after any such increase, and the term
Guaranteed Base Salary as used in this Agreement shall refer
to the Guaranteed Base Salary as so increased.
(ii) Guaranteed Bonus. (A) In addition to Guaranteed
Base Salary, CNW shall pay or cause to be paid to the
Executive a bonus (the "Guaranteed Bonus") for each
Performance Period which ends during the Employment Period.
For purposes of this Agreement, a "Performance Period" means
each period of time designated in accordance with the
Chicago and North Western Holdings Corp. Bonus Plan or any
other bonus arrangement ("Bonus Plan") which is based upon
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performance and approved by the Board or any duly designated
committee of the Board. The Guaranteed Bonus shall be at
least equal to the product of (I) a percentage equal to the
greatest of (a) the On Plan Percentage (as defined in
Section 3(b)(ii)(B)(I) below), or (b) the amount of the
Historical Bonus Percentage (as defined in Section
3(b)(ii)(B)(II) below), or (c) the Actual Bonus Percentage
(as defined in Section 3(b)(ii)(B)(III) below), multiplied
by (II) the Guaranteed Annual Salary.
(B) For purposes of this Section 3(b)(ii), the following
definitions apply:
(I) "On Plan Percentage" means the percentage
of Guaranteed Base Salary to which the Executive would
have been entitled under any Bonus Plan for the
Performance Period for which the Guaranteed Bonus is
awarded ("Current Performance Period") as if the
performance achieved 100% of performance goals
established pursuant to such Bonus Plan.
(II) "Historical Bonus Percentage" means the
highest Adjusted Bonus Percentage (as defined below) in
the three Performance Periods preceding the Effective
Date (individually referred to herein as a "Prior
Performance Period"). The "Adjusted Bonus Percentage"
for any such Prior Performance Period is equal to the
bonus accrued for such Prior Performance Period,
expressed as a percentage of the annual rate of base
salary earned by the Executive during such Prior
Performance Period, multiplied by the Adjustment
Fraction (as defined below). The "Adjustment Fraction"
is, with respect to each Prior Performance Period, a
fraction, the numerator of which is the number of
months in the Current Performance Period, and the
denominator of which is the number of months in each
Prior Performance Period.
(III) "Actual Bonus Percentage" means the
percentage of the rate of Guaranteed Base Salary for
the Current Performance Period which the Executive
would accrue as a bonus under any Bonus Plan if the
performance during the Current Performance Period were
measured by the actual performance during the Current
Performance Period; provided, however, that for
purposes of calculating the Guaranteed Bonus under
Section 5 hereof, "Actual Bonus Percentage" means the
percentage of the rate of Guaranteed Base Salary for
the Performance Period during which the Termination
Date (as defined below), occurred ("Termination
Performance Period") which the Executive would accrue
as a bonus under any Bonus Plan if the performance
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during such Termination Performance Period were
measured by the actual performance during the
Termination Performance Period prior to the Termination
Date projected to the last day of such Performance
Period.
(iii) Incentive, Savings and Retirement Plans. In
addition to Guaranteed Base Salary and Guaranteed Bonus
payable as hereinabove provided, the Executive shall be
entitled to participate during the Employment Period in all
incentive (including long-term incentives), savings and
retirement plans, practices, policies and programs
applicable to other peer executives of CNW, but in no event
shall such plans, practices, policies and programs provide
the Executive with incentive (including long-term
incentives), savings and retirement benefits which, in each
case, are less favorable, in the aggregate, than the most
favorable of those provided by CNW for the Executive under
such plans, practices, policies and programs as in effect at
any time during the 90-day period immediately preceding the
Effective Date.
(iv) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by CNW (including,
and without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
dependent life, accidental death and travel accident
insurance plans and programs) and applicable to other peer
executives of CNW, but in no event shall such plans,
practices, policies and programs provide benefits which in
each case are less favorable, in the aggregate, than the
most favorable of those provided by CNW for the Executive
under such plans, practices, policies and programs as in
effect at any time during the 90-day period immediately
preceding the Effective Date.
(v) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits in
accordance with the most favorable plans, practices,
programs and policies applicable to peer executives of CNW
Railway, but in no event shall such plans, practices,
policies and programs provide fringe benefits which in each
case are less favorable, in the aggregate, than the most
favorable of those provided by CNW Railway for the Executive
under such plans, practices, policies and programs in effect
at any time during the 90-day period immediately preceding
the Effective Date.
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(vi) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement
for all reasonable employment-related expenses incurred by
the Executive upon CNW Railway's receipt of accountings in
accordance with the most favorable policies, practices and
procedures applicable to peer executives of CNW Railway, but
in no event shall such policies, practices and procedures in
each case be less favorable, in the aggregate, than the most
favorable of those provided by CNW Railway for the Executive
under such policies, practices and procedures in effect at
any time during the 90-day period immediately preceding the
Effective Date.
(vii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and
other assistance in accordance with the most favorable
policies, practices and procedures applicable to peer
executives of CNW Railway, but in no event shall such
policies, practices and procedures be less favorable, in the
aggregate, than the most favorable of those provided by CNW
Railway for the Executive under such policies, practices and
procedures in effect at any time during the 90-day period
immediately preceding the Effective Date.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance
with the most favorable plans, practices, policies and
programs applicable to peer executives of CNW Railway, but
in no event shall such plans, practices, policies and
programs provide paid vacation which is less favorable in
the aggregate than the most favorable of those provided by
CNW Railway for the Executive under such plans, practices,
policies and programs in effect at any time during the
90-day period immediately preceding the Effective Date.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment
shall terminate automatically upon the Executive's death or
Disability during the Employment Period. Disability of the
Executive shall be deemed to have occurred on the date on which
the Executive is certified as having incurred a Disability by a
physician selected by CNW or its insurers and acceptable to the
Executive or the Executive's legal representative. If CNW
determines in good faith that the Disability of the Executive has
occurred during the Employment Period, it may give to the
Executive written notice in accordance with Section 11(e) of this
Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with CNW
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shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), unless
within the 30 days after such receipt, the Executive shall have
returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" means any medically
determinable physical or mental impairment that can be expected
to last for a continuous period of not less than six months, and
that renders the Executive unable to perform the duties required
under this Agreement.
(b) Cause. The Executive's employment may be
terminated during the Employment Period by CNW for Cause.
"Cause" means either of the following:
(i) conviction of the Executive of any felony or
other crime involving dishonesty, or moral turpitude; or
(ii) the Executive's habitual neglect of the
Executive's duties (other than on account of Disability),
except that Cause shall not mean:
(i) bad judgment or negligence other than habitual
neglect of duty;
(ii) any act or omission believed by the Executive in
good faith to have been in or not opposed to the interest of
CNW (without intent of the Executive to gain therefrom,
directly or indirectly, a profit to which the Executive was
not legally entitled);
(iii) any act or omission with respect to which a
determination could properly have been made by the Board
that the Executive met the applicable standard of conduct
for indemnification or reimbursement under the By-Laws of
CNW, any applicable indemnification agreement, or the laws
and regulations under which CNW is governed, in each case in
effect at the time of such act or omission; or
(iv) any act or omission with respect to which notice
of termination of employment of the Executive is given more
than twelve (12) months after the earliest date on which any
member of the Board who is not a party to the act or
omission, knew or should have known of such act or omission.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" means any
one of the following events:
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(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles, reporting requirements
or responsibilities), authority or duties as contemplated by
Section 3(a) of this Agreement, or any other action by CNW
which results in a diminution or other material adverse
change in such position, authority or duties, excluding for
this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by CNW
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by CNW to comply with any of the
provisions of Section 3(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by CNW promptly
after receipt of notice thereof given by the Executive;
(iii) CNW requiring the Executive to be based at any
office or location other than the location described in
Section 3(a)(i)(B) hereof;
(iv) any other material adverse changes to the terms
and conditions of the Executive's employment;
(v) any purported termination by CNW of the
Executive's employment otherwise than as expressly permitted
by this Agreement, it being understood that any such
purported termination shall not be effective for any other
purpose of this Agreement; or
(vi) any failure by CNW to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 4(c), any good faith
determination of "Good Reason" made by the Executive shall be
conclusive.
(d) Notice of Termination. Any termination of the
Executive's employment by CNW for Cause or by the Executive for
Good Reason shall be communicated by Notice of Termination (as
defined below) to the other party hereto given in accordance with
Section 11(e) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated and (iii) if the Termination Date (as defined below) is
other than the date of receipt of such Notice of Termination,
specifies the Termination Date. The failure by the Executive to
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set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any
right of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing the Executive's
rights hereunder.
(e) Termination Date. "Termination Date" means the
date of receipt of the Notice of Termination or any later date
specified therein (which date shall be not more than fifteen days
after the giving of such notice), as the case may be; provided,
however, that (i) if the Executive's employment is terminated by
CNW other than for Cause or Disability, the Termination Date
shall be the date of receipt of such Notice of Termination and
(ii) if the Executive's employment is terminated by reason of
death or Disability, the Termination Date shall be the date of
death of the Executive or the Disability Effective Date, as the
case may be.
5. Obligations of CNW upon Termination.
(a) Termination of Employment for Good Reason or
Other Than for Cause or Disability. If, during the Employment
Period, CNW shall terminate Executive's employment other than for
Cause or Disability, or if the Executive shall terminate
employment under this Agreement for Good Reason, CNW shall pay to
the Executive, in addition to all vested rights arising from his
employment, as specified in Section 7 hereof, in a lump sum in
cash within three days after the Termination Date the aggregate
of the following amounts (hereinafter, the amounts described in
Section 5(a)(i)(A), (B), and (C) shall be called the "Accrued
Obligations"):
(A) to the extent not theretofore paid, the
Guaranteed Base Salary and any accrued vacation pay
through the Termination Date;
(B) the difference between (I) the product of
(1) the Guaranteed Bonus, multiplied by (2) a fraction,
the numerator of which is the number of days in the
Termination Performance Period which elapsed prior to
the Termination Date, and the denominator of which is
the total number of days in the Termination Performance
Period, and (II) the amount of any Guaranteed Bonus
paid to the Executive with respect to the Termination
Performance Period;
(C) in the case of compensation previously
deferred by the Executive, all amounts previously
deferred (together with any accrued earnings thereon)
and not yet paid by CNW;
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(D) an amount equal to the product of (I)
three (3), multiplied by (II) the sum of (1) the
Guaranteed Base Salary and (2) the Guaranteed Bonus
multiplied by a fraction, the numerator of which is
twelve and the denominator of which is the number of
months in the Termination Performance Period; and
(E) a payment equal to the value of the
Executive's accrued benefit under the Chicago and North
Western Transportation Company Supplemental Pension
Plan (the "Pension Plan") calculated as though the
Executive continued to accrue benefits under the
Pension Plan for a period of three years after the
Termination Date (the "Continuance Period"), reduced by
the value of the Executive's vested accrued benefit
under the Pension Plan as of the Termination Date; and
(F) for the Continuance Period, or such
longer period as any plan, program, practice or policy
may provide, CNW Railway shall continue to provide at
no cost to the Executive, except a cost equal to the
lesser of (I) the cost to the Executive immediately
prior to the Termination Date or (II) the cost to the
Executive immediately prior to the Effective Date, all
welfare benefits (including, but without limitation,
medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental
death and travel accident insurance plans and programs)
to the Executive and/or the Executive's family which
are at least as favorable as the most favorable plans,
practices, programs or policies of CNW Railway
applicable to other peer Executives, but which are in
no event less favorable than the most favorable plans,
practices, programs or policies of CNW Railway
applicable to other peer Executives and their families
during the 90-day period immediately preceding the
Effective Date.
(b) Termination of Employment for Cause. If the
Executive's employment shall be terminated by CNW for Cause
during the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than the
obligation to pay to the Executive in a lump sum in cash, within
30 days of the Termination Date, the Guaranteed Base Salary
through the Termination Date, plus the amount of any compensation
previously deferred by the Executive, plus any accrued vacation,
in each case to the extent theretofore unpaid.
(c) Termination of Employment Other Than for Good
Reason. If the Executive terminates employment during the
Employment Period other than for Good Reason, Disability or
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death, this Agreement shall terminate without further obligations
by CNW, other than the obligation to pay to the Executive all
Accrued Obligations in a lump sum in cash within 30 days of the
Notice Date.
(d) Termination of Employment for Disability. If
the Executive's employment is terminated by reason of the
Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than the obligation to pay to the Executive all
Accrued Obligations in a lump sum in cash within 30 days of the
Termination Date. Anything in this Agreement to the contrary
notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other
benefits at least equal to those provided under the most
favorable plans, practices, policies and programs relating to
disability applicable to disabled peer executives of CNW and
their families, but in no event shall such plans, practices,
policies and programs provide benefits which in each case are
less favorable, in the aggregate, than the most favorable of
those provided by CNW for the Executive under such plans,
practices, policies or programs in effect at any time during the
90-day period immediately preceding the Effective Date.
(e) Termination of Employment Because of Death. If
the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's
legal representatives under this Agreement, other than the
obligation to pay to the Executive's estate or beneficiary all
Accrued Obligations in a lump sum in cash within 30 days of the
Notice Date. Anything in this Agreement to the contrary
notwithstanding, the Executive's family shall be entitled to
receive benefits at least equal to the most favorable benefits
provided by CNW to the surviving families of peer executives of
CNW under such plans, practices, policies and programs, but in no
event shall such plans, practices, policies or programs provide
benefits which in each case are less favorable, in the aggregate,
than the most favorable of those provided by CNW to the Executive
under such plans, practices, policies or programs in effect at
any time during the 90-day period immediately preceding the
Effective Date.
6. Certain Reduction of Payments by CNW.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by CNW to or for the benefit of the
Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by CNW for
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Federal income tax purposes because of Section 280G of the Code,
then the aggregate present value of amounts payable or
distributable to or for the benefit of the Executive pursuant to
this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments")
shall be reduced to the Reduced Amount. The "Reduced Amount"
shall be an amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without causing any
Payment to be nondeductible by CNW because of Section 280G of the
Code. For purposes of this Section 6, present value shall be
determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations required to be made under
this Section 6 shall be made by Arthur Andersen (the "Accounting
Firm") which shall provide detailed supporting calculations both
to CNW and the Executive within 15 business days of the Date of
Termination or such earlier time as is requested by CNW and an
opinion to the Executive that he has substantial authority not to
report any Excise Tax on his Federal income tax return with
respect to the Agreement Payments. Any such determination by the
Accounting Firm shall be binding upon CNW and the Executive. The
Executive shall determine which and how much of the Agreement
Payments shall be eliminated or reduced consistent with the
requirements of this Section 6, provided that, if the Executive
does not make such determination within ten business days of the
receipt of the calculations made by the Accounting Firm, CNW
shall elect which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this
Section 6 and shall notify the Executive promptly of such
election. Within five business days thereafter, CNW shall pay to
or distribute to or for the benefit of the Executive such amounts
as are then due to the Executive under this Agreement.
(c) As a result of the uncertainty in the
application of Section 280G of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Agreement Payments will have been made by CNW which
should not have been made ("Overpayment") or that additional
Agreement Payments which will not have been made by CNW could
have been made ("Underpayment"), in each case, consistent with
the calculations required to be made hereunder. In the event
that the Accounting Firm, based upon the assertion of a
deficiency by the Internal Revenue Service against the Executive
which the Accounting Firm believes has a high probability of
success determines that an Overpayment has been made, any such
Overpayment paid or distributed by CNW to or for the benefit of
the Executive shall be treated for all purposes as a loan ab
initio to the Executive which the Executive shall repay to CNW
together with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided, however, that no
such loan shall be deemed to have been made and no amount shall
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be payable by the Executive to CNW if and to the extent such
deemed loan and payment would not either reduce the amount on
which the Executive is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes. In
the event that the Accounting Firm, based upon controlling
precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be
promptly paid by CNW to or for the benefit of the Executive
together with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code.
7. Non-exclusivity of Rights.
(a) Waiver of Other Severance Rights. If the
Executive receives payments pursuant to Section 5(a) hereof, the
Executive hereby waives the right to receive severance payments
under any other plan, policy or agreement of CNW.
(b) Other Rights. Except as provided in
Section 6(a), nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or
practices, provided by CNW or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have
under any other agreements with CNW or any of their affiliated
companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan,
practice, policy or program of CNW or any of their affiliated
companies and any other payment or benefit required by law at or
subsequent to the Termination Date shall be payable in accordance
with such plan, practice, policy or program or applicable law
except as explicitly modified by this Agreement.
8. Confidentiality/NonCompetition.
(a) Confidentiality. Executive acknowledges that it
is the policy of the Company and its subsidiaries to maintain as
secret and confidential all valuable and unique information and
techniques acquired, developed or used by the Company and its
subsidiaries relating to their business, operations, employees
and customers, which gives the Company and its subsidiaries a
competitive advantage in the railroad industry and other
businesses in which the Company and its subsidiaries are engaged
("Confidential Information"). Executive recognizes that all such
Confidential Information is the sole and exclusive property of
the Company and its subsidiaries, and that disclosure of
Confidential Information would cause damage to the Company and
its subsidiaries. In consideration of the Company's entering
into this Agreement, Executive agrees that, except as required by
the duties of his employment with the Company and/or its
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subsidiaries, he will never directly or indirectly use, publish,
disseminate or otherwise disclose any Confidential Information
obtained during his employment with the Company and/or its
subsidiaries for so long as such information is valuable and
unique.
(b) Noncompetition/Nonsolicitation.
(i) Executive agrees that, during the period of his
employment with the Company and/or its subsidiaries and, if
Executive's employment is terminated for any reason,
thereafter for a period of one (1) year, Executive will not
at any time directly or indirectly, in any capacity, engage
or participate in, or become employed by or render advisory
or consulting or other services in connection with any
Prohibited Business as defined in Section 8(b)(iv).
(ii) Executive agrees that, during the period of his
employment with the Company and/or its subsidiaries and, if
Executive's employment is terminated for any reason,
thereafter for a period of one (1) year, Executive shall not
make any financial investment, whether in the form of equity
or debt, or own any interest, directly or indirectly, in any
Prohibited Business. Nothing in this Section 8(b)(ii)
shall, however, restrict Executive from making any
investment in any company whose stock is listed on a
national securities exchange or actively traded in the
over-the-counter market; provided that (A) such investment
does not give Executive the right or ability to control or
influence the policy decisions of any Prohibited Business,
and (B) such investment does not create a conflict of
interest between Executive's duties hereunder and
Executive's interest in such investment.
(iii) Executive agrees that, during the period of his
employment with the Company and/or its subsidiaries and, if
Executive's employment is terminated for any reason,
thereafter for a period of one (1) year, Executive shall not
(A) employ any employee of the Company and/or its
subsidiaries or (B) interfere with the Company's or any of
its subsidiaries' relationship with, or endeavor to entice
away from the Company and/or its subsidiaries any person,
firm, corporation, or other business organization who or
which at any time (whether before or after the date of
Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business
relationship with, any business of the Company and/or its
subsidiaries which was conducted at any time during the
period commencing one year prior to the termination of
employment.
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(iv) For the purpose of this Section 8(b),
"Prohibited Business" shall be defined as any railroad,
freight carrier or other entity and any branch, office or
operation thereof, which is a direct and material competitor
of the Company wherever the Company does business, in the
United States or abroad, and which has established or seeks
to establish contact, in whatever form (including but not
limited to solicitation of sales, or the receipt or
submission of bids) with any entity who is at any time a
client, customer or supplier of the Company (including but
not limited to all subdivisions of the federal government.)
(c) Executive and the Company specifically agree
that, in the event that Executive shall breach his obligations
under this Section 8, the Company and its subsidiaries will
suffer irreparable injury and no adequate remedy for such breach,
and shall be entitled to injunctive relief therefor, and in
particular, without limiting the generality of the foregoing, the
Company shall not be precluded from pursuing any and all remedies
it may have at law or in equity for breach of such obligations.
9. Legal Fees and Other Expenses.
(a) Legal Fees and Expenses. CNW agrees to pay
promptly upon presentation of an invoice from the Executive, to
the full extent permitted by law, all legal fees, including
retainer fees, and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome
thereof) by CNW or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any other
benefit plan, program or policy or any guarantee of performance
thereof (including, but not limited to, legal fees and expenses
as a result of any contest by the Executive about the amount of
any payment pursuant to Section 5 of this Agreement).
(b) Interest. In the event any amount due to the
Executive under this Agreement is not paid within 10 days of
request therefor, the Executive shall be entitled to receive
interest at the highest interest rate applicable to CNW in its
borrowing of funds from any third party during the period of
nonpayment and if such rate is not determinable, or if higher,
then at a rate two percent above the prime commercial lending
rate announced by Citibank, N.A. in effect from time to time
during the period of such nonpayment.
10. Full Settlement. CNW's obligation to make the payments
provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances,
including, without limitation, set-off, counterclaim, recoupment,
defense or other claim, right or action which CNW may have
against the Executive or others. In no event shall the Executive
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be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement, nor shall the amount of
any payment hereunder be reduced by any compensation earned by
the Executive as result of employment by another employer.
11. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of CNW shall not be assignable
by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon CNW and its successors and assigns.
(c) CNW will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of CNW to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that CNW would be required to
perform it if no such succession had taken place. As used in
this Agreement, "CNW" shall mean the CNW as hereinbefore defined
and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation
of law, or otherwise, and CNW and such successor shall be jointly
and severally liable hereunder.
12. Miscellaneous.
(a) If the Executive dies prior to receiving amounts
to which the Executive is entitled hereunder, such amounts shall
be paid in a lump sum payment to the beneficiary designated in
writing by the Executive and if no such beneficiary is
designated, to the Executive's estate.
(b) Benefits payable under this Agreement shall not
be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution or levy of any kind, either voluntary or involuntary,
prior to actually being received by the Executive, and any such
attempt to dispose of any right to benefits payable hereunder
shall be void.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) This Agreement shall not be altered, amended or
modified except by written instrument executed by CNW and
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Executive. A waiver of any term, covenant, agreement or
condition contained in this Agreement shall not be deemed a
waiver of any other term, covenant, agreement or condition, and
any waiver of any default in any such term, covenant, agreement
or condition shall not be deemed a waiver of any later default
thereof or of any other term, covenant, agreement or condition.
(e) All notices and other communications hereunder
shall be in writing and delivered by hand or by first class
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
__________________________
__________________________
__________________________
__________________________
If to CNW:
Chicago and Northwestern
Transportation Company
165 North Canal Street
Chicago, Illinois 60606
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(f) This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument
originals.
(g) This Agreement shall be interpreted and
construed in accordance with the laws of the State of Illinois,
without regard to its choice of law principles. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect.
(h) CNW may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
(i) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision thereof.
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(j) The obligations of CNW under this Agreement
shall be unfunded and unsecured. CNW shall not be required to
segregate any assets that may at any time be required to provide
benefits under this Agreement.
(k) This Agreement contains the entire understanding
of CNW and the Executive with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors,
the Company and CNW Railway have caused these presents to be
executed in their name on their behalf, all as of the day and
year first above written.
/s/ Dennis E. Waller
Executive
CHICAGO AND NORTH WESTERN
TRANSPORTATION COMPANY
BY: /s/ Robert Schmiege
CHICAGO AND NORTH WESTERN
RAILWAY COMPANY
BY: /s/ Robert Schmiege
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