Robert W. Cunningham

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made November 3, 2004, between Robert W. Cunningham (“Executive”) and Swift Transportation Co., Inc. (the “Company”), a Nevada corporation.

RECITAL

     The Company desires to employ Executive in the capacities and on the terms and conditions hereinafter set forth, and Executive is willing to accept such employment on such terms and conditions.

AGREEMENT

     The parties agree as follows:

     1. Duties.

          (a) The Company does hereby hire, engage, and employ Executive in the following capacities: (i) from November 3, 2004 (“Effective Date”) through the Transition Date (as defined below) as President and Chief Operating Officer and (ii) after the Transition Date, as Chief Executive Officer. Executive does hereby accept and agree to such hiring, engagement, and employment. Executive shall serve the Company in such positions in conformity with the provisions of this Agreement, directives of the Board of Directors of the Company (the “Board”), and the corporate policies of the Company as they presently exist and as such policies may be amended, modified, changed, or adopted from time to time. Executive will be elected to the Board at the soonest practicable date, and, subject to the recommendations of the Company’s nominating and governance committees and shareholder vote, shall continue to serve on the Board during his employment hereunder. Executive shall not receive additional compensation for such Board service.

          (b) Throughout his employment, Executive shall devote his time, energy, and skill to the performance of his duties for the Company, vacations and other leave authorized under this Agreement and the Company’s policies excepted. During his employment hereunder, Executive shall not serve on the board of any other publicly traded company without first receiving the written consent of the Board. The foregoing notwithstanding, it is understood and agreed that Executive may (i) prior to the disposition thereof, devote such time and attention as may be reasonably required in connection with the sale of the stock or assets of Cunningham Commercial Vehicles, Ltd. (the “Existing Business”) and the operation of such Existing Business pending sale, (ii) own for investment purposes 5% or less of any class of publicly traded equity securities of any entity, provided that Executive is not employed by, engaged as a consultant or otherwise participating in the management, operation or control of such person or entity (other than the Company), and (iii) devote such time and attention as may be reasonably required in connection with his investment in or his participation in the management, operation or control of any person or entity controlled by Executive and/or members of Executive’s immediate family and his and their lineal descendents for family financial or estate planning purposes, provided that such activities otherwise permitted under this clause (iii) do not materially interfere with the performance of Executive’s duties hereunder.

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     2. Term. The initial term of this Agreement shall commence on the Effective Date and shall terminate on the five-year anniversary of the Effective Date. If Executive’s employment with the Company is not terminated pursuant to either Section 6 or Section 7 before the end of the initial term or any renewal term of this Agreement, then Executive’s employment with the Company shall be automatically renewed for an additional one year term unless either Executive or the Company elects not to renew such employment for such additional one year by giving written notice of nonrenewal to the other party at least ninety (90) days before the expiration of the initial term or the then current renewal term, as the case may be.

     3. Compensation.

          (a) Salary. Commencing on the Effective Date and through the Sale Date (as defined below), Executive’s salary shall be $400,000 annually. After the Sale Date, Executive’s salary shall be increased to $800,000 annually. After Executive is promoted to the office of Chief Executive Officer of the Company, Executive’s salary shall be increased to an amount that Executive and the Company shall agree upon. Executive’s salary thereafter shall be reviewed at least annually by the Board and may be increased by the Board after any such review. Executive’s salary shall be paid in accordance with the Company’s regular payroll practices, but not less than bi-monthly, and shall be subject to applicable withholding and other deductions of general application. For purposes of this Agreement, “Sale Date” shall mean the earlier to occur of (i) the date that the entire Existing Business is sold or (ii) the date that Executive provides written notice to the Company of his undertaking to perform his duties hereunder on a full time basis in accordance with the terms hereof.

          (b) Bonus. Executive will not be entitled to bonus compensation.

          (c) Equity-Based Compensation. Executive shall receive 500,000 shares of nonqualified stock options at fair market value on the Effective Date. On an annual basis thereafter, Executive also shall be eligible to receive up to an additional 50,000 shares of nonqualified stock options at fair market value as of the date of grant in accordance with the Company’s option granting processes and procedures then applicable to senior executives of the Company. All of such options shall have a five (5) year vesting period, with one-fifth (1/5) of such options vesting on the one year anniversary of the date granted and one-fifth (1/5) on each anniversary date thereafter until fully vested. In addition, in accordance with the terms of Sections 6 and 7 of this Agreement, all such options shall be one hundred percent (100%) vested upon either (i) the Company’s termination of Executive’s employment with Company other than for Cause, or (ii) Executive’s termination of Executive’s employment with Company for Good Reason. All of such options otherwise shall be granted under and subject to the Swift Transportation Co., Inc. 2003 Stock Incentive Plan effective May 22, 2003, except (i) the vesting schedule shall be as provided above, and (ii) the purchase price may be paid through the delivery of common stock of the Company held for longer than six (6) months, at Executive’s sole discretion; and (iii) the term cause shall have the same meaning as provided in this Agreement; and (iv) Executive shall have a period of thirty (30) days after termination of his Employment by the Company for Cause in which to exercise any of his options, and (v) the Company shall have no right to repurchase any of such shares from Executive upon the termination of his employment with the Company for any reason, and (vi) all shares issued to Executive upon the exercise of any such options and the payment of the purchase price therefore shall be registered shares under the Securities Act of 1933 and all applicable state’s securities

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laws and subject to the restrictions of Rule 144 (it being understood and agreed that the Company shall have to obligation hereunder to provide for any resale registration with respect to such shares).

     4. Benefits.

          (a) Health, Welfare And Pension. Executive shall be entitled to participate, on the same terms and at the same level as other senior executives, in all health and welfare benefit plans and programs and all retirement, deferred compensation and similar plans and programs generally available to other executives or employees of the Company as in effect from time to time, subject to any legally required restrictions specified in such plans and programs. Without limiting the generality of the foregoing, during Executive’s employment, the Company shall provide and maintain, at the Company’s sole cost and expense, term life insurance insuring Executive’s life and for Executive in a face amount of $5,000,000, subject to all necessary medical information and qualifying tests as are required by the insurance provider in order to secure such coverage. Executive shall have the sole right to designate the beneficiary or beneficiaries of such policy. Upon the termination of Executive’s employment with the Company for any reason, the Company shall assign the ownership of such policy to Executive without any payment by Executive for such assignment; provided, however, that Executive shall be solely responsible for the payment of any premiums due from and after the date of such termination.

          (b) Vacation And Other Leave. Executive shall receive five (5) weeks paid vacation per year. Such vacation shall be scheduled and taken in accordance with the Company’s standard vacation policies applicable to Company executives. Executive shall also be entitled to all other holiday and leave pay generally available to other executives of the Company.

          (c) Expense Reimbursements. During Executive’s employment, the Company shall, pursuant to the Company’s expense reimbursement policies, promptly reimburse Executive for reasonable expenses incurred in connection with performance of his duties for the Company.

     5. Death or Disability.

          (a) Definition Of Permanently Disabled And Permanent Disability. For purposes of this Agreement, the terms “Disabled” or “Disability” shall mean Executive’s inability, because of physical or mental illness or injury, to perform the essential functions of his customary duties pursuant to this Agreement, even with a reasonable accommodation, and the continuation of such disabled condition for a period of one hundred twenty (120) continuous days, or for not less than two hundred ten (210) days during any continuous twenty-four (24) month period.

          (b) Termination Due To Death Or Disability. If Executive dies, Executive’s employment shall automatically cease and terminate as of the date of Executive’s death. If Executive becomes Disabled during his employment, the Company may thereafter terminate Executive’s employment upon fifteen (15) days written notice to Executive. In the event of the

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termination of employment hereunder due to Executive’s death or Disability, the Company shall pay to Executive or his estate:

               (i) a lump sum cash payment, payable on the termination of Executive’s employment, equal to the sum of any accrued but unpaid salary as of the date of Executive’s termination of employment hereunder (“Accrued Salary”); and

               (ii) such employee benefits, if any, as to which Executive may be entitled under the employee benefit plans and arrangements of the Company.

     6. Termination by the Company.

          (a) Termination For Cause. The Company may, by providing written notice to Executive indicating the principal reasons therefor, terminate Executive’s employment hereunder for Cause at any time. The term “Cause” shall mean:

               (i) Executive’s conviction of, or entrance of a plea of guilty or nolo contendere to, a felony; or

               (ii) fraudulent conduct by Executive in connection with the business affairs of the Company; or

               (iii) theft, embezzlement, or other criminal misappropriation of funds by Executive from the Company; or

               (iv) Executive’s bad faith refusal to (a) perform the duties of his position, or (b) follow the lawful orders of the Board of Directors; or

               (v) Executive’s willful misconduct, which has, or would if generally known, materially adversely affect the good will, business, or reputation of the Company.

          If Executive’s employment is terminated for Cause, the termination shall take effect on the effective date of written notice of such termination to Executive and Executive shall be entitled to receive: (i) payment of Accrued Salary on the effective date of Executive’s termination; and (ii) such employee benefits, if any, as to which Executive may be entitled under the employee benefit plans and arrangements of the Company; provided, however, that Executive may elect to continue his existing health and medical insurance coverage, at the sole cost and expense of Executive, for the remainder of the then current term plus an additional twenty-four (24) months.

          If the Company attempts to terminate Executive’s employment pursuant to this Section 6(a) and it is ultimately determined that the Company lacked Cause, the provisions of Section 6(b) (“Termination by the Company-Termination Without Cause”) shall apply and Executive shall be entitled to receive the payments called for by Section 6(b) (“Termination by the Company-Termination Without Cause”).

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          (b) Termination Without Cause. The Company may, with or without reason, terminate Executive’s employment hereunder without Cause at any time by providing Executive thirty (30) days written notice of such termination. In the event of the termination of Executive’s employment hereunder by the Company without Cause (other than due to Executive’s death or Disability), the Company shall pay to Executive:

               (i) the Accrued Salary on the effective date of Executive’s termination; and

               (ii) such employee benefits, if any, as to which Executive may be entitled under the employee benefit plans and arrangements of the Company; and

               (iii) continuation of Executive’s health and medical insurance coverage at the Company’s sole cost and expense for the remainder of the then current term plus an additional twenty-four (24) months; and

               (iv) continued payment of Executive’s then current salary, in the Company’s normal payroll cycle for the greater of twenty-four (24) months or the remainder of the then current term; and

               (v) full vesting of any unvested or partially vested equity-based compensation granted to Executive.

     If Executive’s employment is terminated by the Company without Cause, the termination shall take effect on the effective date of written notice of such termination to Executive.

     7. Termination by Employee.

          (a) Termination Upon Notice. Executive may, with or without reason, terminate Executive’s employment hereunder without Good Reason (as defined below) at any time by providing thirty (30) days written notice of such termination to the Company. A termination by Executive without Good Reason pursuant to this Section 7(a) shall be treated for all purposes of this Agreement as a termination by the Company for Cause and the provisions of Section 6(a) shall apply.

          (b) Termination With Good Reason. Executive may terminate Executive’s employment hereunder for Good Reason at any time by providing written notice of such termination to the Company stating the principal reasons therefore, which termination shall be effective upon delivery of such notice. Any such termination by Executive for Good Reason shall be treated for all purposes of this Agreement as a termination by the Company without Cause and the provisions of Section 6(b) shall apply.

          (c) Good Reason. For purposes of this Agreement, “Good Reason” shall include the following circumstances:

               (i) if the Company assigns duties to Executive that are materially inconsistent with, or constitute a material reduction of powers or functions associated with, Executive’s position, duties, or responsibilities with the

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Company, or constitute a material adverse change in Executive’s titles, authority, or reporting responsibilities, or in the conditions of Executive’s employment; or

               (ii) if Executive’s salary is reduced; or

               (iii) if the Company fails to cause any successor to the Company to expressly assume and agree to be bound by the terms of this Agreement; or

               (iv) if the Company relieves Executive of his duties other than for Cause; or

               (v) if Executive is not promoted to the position of Chief Executive Officer as such time as the current holder of such position ceases to hold such position or if Executive is not promoted to the position of Chief Executive Officer on or prior to December 31, 2005 (such date or time being referred to herein as the “Transition Date”); or

               (vi) if Executive is not nominated or fails to be elected to the Board during the initial term or any extended term hereunder, except in case of his resignation or refusal to stand for reelection; or

               (vii) the Company’s material breach of this Agreement, which breach remains uncured for a period of 30 days following the delivery of written notice thereof by Executive.

     8. Additional Termination and Effect of Termination on Board Membership.

          (a) In addition to the provisions of Section 6 and Section 7, in the event the Sale Date does not occur by December 31, 2005, then the Company may terminate Executive’s employment with the Company hereunder by providing written notice of such termination to Executive within ninety (90) days after such date. In such event, the provisions of Section 5(b) shall apply as if Executive were then deceased.

          (b) Executive agrees that any termination of Executive’s employment hereunder by either Executive or the Company shall, unless otherwise agreed in writing by Executive and the Company (duly authorized by the Board), effect a resignation of Executive from the Board concurrent with the termination date.

     9. Assignment. This Agreement is personal in its nature and neither of the parties hereto shall, without the written consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that, in the event of a merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.

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     10. Governing Law. This Agreement and the legal relations hereby created between the parties hereto shall be governed by and construed under and in accordance with the internal laws of the State of Arizona, without regard to conflicts of laws principles thereof.

     11. Entire Agreement. This Agreement embodies the entire agreement of the parties hereto respecting the matters within its scope. This Agreement supersedes all prior agreements of the parties hereto on the subject matter hereof. Any prior negotiations, correspondence, agreements, proposals, or understandings relating to the subject matter hereof shall he deemed to be merged into this Agreement and to the extent inconsistent herewith, such negotiations, correspondence, agreements, proposals, or understandings shall be deemed to be of no force or effect. There are no representations, warranties, or agreements, whether express or implied, or oral or written, with respect to the subject matter hereof, except as set forth herein.

     12. Modifications. This Agreement shall not be modified by any oral agreement, either express or implied, and all modifications hereof shall be in writing and signed by the parties hereto and, in the case of the Company, duly authorized by the Board.

     13. Waiver. Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times.

     14. Arbitration. Any dispute, controversy, or claim, whether contractual or non-contractual, between the parties hereto arising directly or indirectly out of or connected with this Agreement, relating to the breach or alleged breach of any representation, warranty, agreement, or covenant under this Agreement, unless mutually settled by the parties hereto, shall be resolved by binding arbitration in accordance with the Employment Arbitration Rules of the American Arbitration Association (the “AAA”). Any arbitration shall be conducted by arbitrators approved by the AAA and mutually acceptable to Company and Executive. All such disputes, controversies, or claims shall be conducted by a single arbitrator, unless the dispute involves more than $50,000 in the aggregate in which case the arbitration shall be conducted by a panel of three arbitrators. If the parties hereto are unable to agree on the arbitrator(s), then the AAA shall select the arbitrator(s). The resolution of the dispute by the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable by a court of competent jurisdiction under the Federal Arbitration Act. The arbitrator(s) shall award damages to the prevailing party. The arbitration award shall be in writing and shall include a statement of the reasons for the award. The arbitration shall be held in Phoenix, Arizona. The arbitrator(s) shall award reasonable attorneys’ fees and costs to the prevailing party.

     15. Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken, and all portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Furthermore, any court order striking any portion of this Agreement shall modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties under this Agreement.

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     16. Notices. All notices under this Agreement shall be in writing and shall be either personally delivered or mailed postage prepaid, by registered or certified mail, return receipt requested:

 

 

 

 

 

 

 

(a)

 

if to the Company:

 

 

 

 

 

 

 

 

 

Swift Transportation Co., Inc.

 

 

 

 

2200 South 75th Avenue

 

 

 

 

Phoenix, Arizona 85043

 

 

 

 

Attention: Secretary

 

 

 

 

 

 

 

(b)

 

if to Executive:

 

 

 

 

 

 

 

 

 

14201 South Presario Trail

 

 

 

 

Phoenix, Arizona 85048

Notice shall be effective when personally delivered, or five (5) business days after being so mailed.

     17. Board Approval. The Company represents and warrants to Executive that the Board has duly approved this Agreement, including without limitation the grant of the nonqualified stock options pursuant to Section 3(c) and has authorized the officer identified below to execute and deliver this Agreement on behalf of the Company.

     IN WITNESS WHEREOF, the Company and Executive have executed this Employment Agreement as of the date first above written.

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

/s/ Robert W. Cunningham

 

 


 

 

Robert W. Cunningham

 

 

 

 

 

 

 

COMPANY:

 

 

 

 

 

 

 

SWIFT TRANSPORTATION CO., INC.

 

 

 

 

 

 

 

By

 

/s/ Jerry Moyes

 

 

 

 


 

 

 

 

 

 

 

Name:

 

Jerry Moyes

 

 

 

 


 

 

 

 

 

 

 

Title:

 

Chief Executive Officer

 

 

 

 


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CHANGE IN CONTROL AGREEMENT

 

           THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”) is entered into as of the 27th day of October, 2005 by and between Swift Transportation Co., Inc., a Nevada corporation (the “Company”), and Robert W. Cunningham (“Executive”).

W I T N E S S E T H

           WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders; and

           WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

           WHEREAS, the Board (as defined in Section 1) has determined that it is in the best interests of the Company and its stockholders to secure Executive’s continued services and to ensure Executive’s continued dedication to his duties in the event of any threat or occurrence of a Change in Control (as defined in Section 1) of the Company; and

           WHEREAS, the Board has authorized the Company to enter into this Agreement.

           NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, the Company and Executive hereby agree as follows:

           1. Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below:

           (a) “Board” means the Board of Directors of the Company.

           (b) “Bonus Amount” means the highest annual incentive bonus earned by Executive from the Company (or its affiliates) during the last three (3) completed fiscal years of the Company immediately preceding Executive’s Date of Termination (annualized in the event Executive was not employed by the Company (or its affiliates) for the whole of any such fiscal year), or, in the event that Executive has not been employed by the Company for any part of a prior year at the relevant time hereunder, the “Bonus Amount” will mean Executive’s target annual incentive bonus). It is acknowledged that, as of the date of this Agreement, Executive is not entitled to an

 


 

annual incentive bonus pursuant to terms of the Employment Agreement between the Company and Executive dated as of November 3, 2004 (the “Employment Agreement”).

           (c) “Cause” means (i) the willful and continued failure of Executive to perform substantially his duties with the Company (other than any such failure resulting from Executive’s incapacity due to physical or mental illness or any such failure subsequent to Executive being delivered a notice of termination, pursuant to Section 9, without Cause by the Company or delivering a notice of termination, pursuant to Section 9, for Good Reason to the Company) after a written demand for substantial performance is delivered to Executive by the Board which specifically identifies the manner in which the Board believes that Executive has not substantially performed Executive’s duties, or (ii) the willful engaging by Executive in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company or its affiliates. For purpose of this paragraph (c), no act or failure to act by Executive shall be considered “willful” unless done or omitted to be done by Executive in bad faith and without reasonable belief that Executive’s action or omission was in the best interests of the Company or its affiliates. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, based upon the advice of counsel for the Company or upon the instructions of the Company’s chief executive officer or another senior officer of the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. Cause shall not exist unless and until the Company has delivered to Executive a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding Executive if Executive is a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (i) or (ii) has occurred and specifying the particulars thereof in detail.

           (d) “Change in Control” means the occurrence of any one of the following events:

     (i) individuals who, on the date of this Agreement, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

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     (ii) any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (C) by any underwriter temporarily holding securities pursuant to an offering of such securities;

     (iii) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or

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     (iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of a sale of all or substantially all of the Company’s assets.

           (e) “Date of Termination” means (i) the effective date on which Executive’s employment by the Company terminates as specified in a prior written notice by the Company or Executive, as the case may be, to the other, delivered pursuant to Section 9 or (ii) if Executive’s employment by the Company terminates by reason of death, the date of death of Executive.

           (f) “Disability” means termination of Executive’s employment by the Company due to Executive’s absence from Executive’s duties with the Company on a full-time basis for at least one hundred eighty (180) days in any two hundred seventy (270) day period as a result of Executive’s incapacity due to physical or mental illness.

           (g) “Good Reason” means, without Executive’s express written consent, the occurrence of any of the following events after a Change in Control:

     (i) (A) any change in the duties or responsibilities (including reporting responsibilities) of Executive that is inconsistent in any material and adverse respect with Executive’s position(s), duties, responsibilities or status with the Company immediately prior to such Change in Control (including any material and adverse diminution of such duties or responsibilities), including any change that is directly or indirectly a result of the Company no longer being a publicly traded entity, or (B) a material and adverse change in Executive’s titles or offices (including, if applicable, membership on the Board) with the Company as in effect immediately prior to such Change in Control;

     (ii) a reduction by the Company in Executive’s rate of annual base salary or annual target bonus opportunity (including any material and adverse change in the formula for such annual bonus target) as in effect immediately prior to such Change in Control or as the same may be increased from time to time thereafter;

     (iii) any requirement of the Company that Executive (A) be based anywhere more than thirty-five (35) miles from Phoenix, AZ, or (B) travel on Company business to an extent substantially greater than the travel obligations of Executive immediately prior to such Change in Control;

     (iv) the failure of the Company to (A) continue in effect any employee benefit plan, compensation plan, welfare benefit plan or material fringe benefit plan in which Executive is participating immediately prior to such Change in Control or the taking of any action by the Company which would adversely affect Executive’s participation in or reduce Executive’s benefits under any such plan, unless Executive is permitted to participate in other plans providing Executive with substantially equivalent benefits (at substantially equivalent cost with respect

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to welfare benefit plans), or (B) provide Executive with paid vacation in accordance with the most favorable vacation policies of the Company as in effect for Executive immediately prior to such Change in Control, including the crediting of all service for which Executive had been credited under such vacation policies prior to the Change in Control;

     (v) any purported termination of Executive’s employment which is not effectuated pursuant to Section 9(b) (and which will not constitute a termination hereunder); or

     (vi) the failure of the Company to obtain the assumption (and, if applicable, guarantee) agreement from any successor (and Parent Corporation) as contemplated in Section 8(b);

     (vii) the majority stockholder of the Company (or any affiliate of the Company, including but not limited to any successor, Surviving Corporation or Parent Corporation) is Jerry Moyes, any affiliate of Jerry Moyes, or any entity that is controlled by or under common control with Jerry Moyes or any of his affiliates (including but not limited to a trust).

           An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within ten (10) days after receipt of notice thereof given by Executive shall not constitute Good Reason. Executive’s right to terminate employment for Good Reason shall not be affected by Executive’s incapacities due to mental or physical illness.

           Executive and the Company agree that Executive will notify the Company of his intention to resign for Good Reason (if Executive chooses to exercise such right), within fifty-five (55) days of the first occurrence of the event or action which constitutes Good Reason hereunder, and shall designate Executive’s effective date of resignation to be not later than seventy (70) days after such event or action. The Executive’s failure to object to an event or action that constituted Good Reason within this period will preclude Executive from relying on such event following this period.

           (h) “Qualifying Termination” means a termination of Executive’s employment (i) by the Company other than for Cause or (ii) by Executive for Good Reason. Termination of Executive’s employment on account of death (other than death after the delivery of a valid notice of termination without Cause or for Good Reason), Disability or Retirement shall not be treated as a Qualifying Termination.

           (i) “Retirement” means Executive’s mandatory retirement (not including any mandatory early retirement) in accordance with the Company’s retirement policy generally applicable to its salaried employees, as in effect immediately prior to the Change in Control, or in accordance with any retirement arrangement established with respect to Executive with Executive’s written consent.

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           (j) “Subsidiary” means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors or in which the Company has the right to receive 50% or more of the distribution of profits or 50% of the assets or liquidation or dissolution.

           (k) “Termination Period” means the period of time beginning with a Change in Control and ending two (2) years following such Change in Control. Notwithstanding anything in this Agreement to the contrary, if Executive’s employment is terminated prior to a Change in Control but in connection with a potential Change in Control and after the Company or a third party had taken affirmative steps to effectuate a Change in Control, for reasons that would have constituted a Qualifying Termination if they had occurred following a Change in Control (other than as described in Section 1(g)(vii)), then for purposes of this Agreement, the date immediately prior to the date of such termination of employment or event constituting Good Reason shall be treated as a Change in Control if and only if an actual Change of Control does, in fact, occur within one (1) year of such termination. For purposes of determining the timing of payments and benefits to Executive under Section 3, the date of the actual Change in Control shall be treated as Executive’s Date of Termination under Section 1(e), and for purposes of determining the amount of payments and benefits to Executive under Section 3, the date Executive’s employment is actually terminated shall be treated as Executive’s Date of Termination under Section 1(e).

           2. Term of Agreement. This Agreement shall be effective on the date hereof and shall continue in effect until the Company shall have given three (3) years’ written notice of cancellation; provided, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of two (2) years after a Change in Control, if such Change in Control shall have occurred during the term of this Agreement. Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if Executive or the Company terminates Executive’s employment prior to a Change in Control, except as provided in Section 1(k).

           3. Payments and Benefits Upon a Change in Control and Termination of Employment.

           (a) Severance Benefits. If during the Termination Period the employment of Executive shall terminate pursuant to a Qualifying Termination, then the Company shall provide to Executive:

     (i) within ten (10) days following the Date of Termination a lump-sum cash amount equal to the sum of (A) Executive’s base salary through the Date of Termination and any bonus amounts which have become payable, to the extent not theretofore paid or deferred, (B) a pro rata portion of Executive’s annual bonus for the fiscal year in which Executive’s Date of Termination occurs

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in an amount at least equal to (x) Executive’s Bonus Amount, multiplied by (y) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is three hundred sixty-five (365), and any accrued vacation pay, in each case to the extent not theretofore paid; plus

     (ii)  all employee benefits as to which Executive may be entitled under the employee benefit plans, programs and policies of the Company and its affiliates (the amounts and benefits described in subsections (i) and (ii), the “Accrued Amounts”); plus

     (iii) within ten (10) days following the Date of Termination, a lump-sum cash amount equal to the greater of: (1) (A) three (3) times Executive’s highest annual rate of base salary during the 12-month period immediately prior to Executive’s Date of Termination, plus (B) three (3) times Executive’s Bonus Amount, or (2) the amount payable to Executive pursuant to Section 6(b)(iv) of the Employment Agreement (which, for purposes of clarity, shall be payable in a lump sum hereunder notwithstanding the provisions of said Section 6(b)(iv).

           (b) Welfare Benefits. If during the Termination Period the employment of Executive shall terminate pursuant to a Qualifying Termination, then the Company shall continue to provide, for a period of two (2) years following Executive’s Date of Termination, Executive (and Executive’s dependents, if applicable) with the same level of medical, dental, accident, disability and life insurance benefits upon substantially the same terms and conditions (including contributions required by Executive for such benefits) as existed immediately prior to Executive’s Date of Termination (or, if more favorable to Executive, as such benefits and terms and conditions existed immediately prior to the Change in Control); provided, that, if Executive cannot continue to participate in the Company plans providing such benefits, the Company shall otherwise provide such benefits on the same after-tax basis as if continued participation had been permitted. Notwithstanding the foregoing, in the event Executive becomes reemployed with another employer and becomes eligible to receive welfare benefits from such employer, the welfare benefits described herein shall be secondary to such benefits during the period of Executive’s eligibility, but only to the extent that the Company reimburses Executive for any increased cost and provides any additional benefits necessary to give Executive the benefits provided hereunder.

           (c) Acceleration of Equity Compensation. Upon a Change in Control, any equity or equity-based compensation or awards that have been granted to Executive by the Company or its affiliates which remain unvested, or pursuant to which the restrictions have not lapsed, shall become immediately vested, exercisable, and all restrictions thereon shall lapse.

           (d) Non-Qualifying Termination. If during the Termination Period the employment of Executive shall terminate other than by reason of a Qualifying

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Termination, then the Company shall pay to Executive within thirty (30) days following the Date of Termination, the Accrued Amounts. The Company may make such additional payments, and provide such additional benefits, to Executive as the Company and Executive may agree in writing.

           4. Certain Additional Payments by the Company.

           (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of Executive (whether pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 4) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to Executive an additional payment (a “Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (including, without limitation, any income taxes and any interest and penalties imposed with respect thereto, and any excise tax) imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

           (b) Subject to the provisions of Section 4(a), all determinations required to be made under this Section 4, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment, the amount of any Option Redetermination (as defined below) and the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from the Company or Executive that there has been a Payment, or such earlier time as is requested by the Company (collectively, the “Determination”). Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules, (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting

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the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. The Gross-Up Payment under this Section 4 with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on Executive’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. The Determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”) or Gross-Up Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event the amount of the Gross-Up Payment is less than the amount necessary to reimburse Executive for his Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of Executive. In the event the amount of the Gross-Up Payment exceeds the amount necessary to reimburse Executive for his Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by Executive (to the extent Executive has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. Executive shall cooperate, to the extent Executive’s expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax.

           5. Withholding Taxes. The Company may withhold from all payments due to Executive (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.

           6. Reimbursement of Expenses. If any contest or dispute shall arise under this Agreement involving termination of Executive’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse Executive, on a current basis, for all reasonable legal fees and expenses, if any, incurred by Executive in connection with such contest or dispute (regardless of the result thereof), together with interest in an amount equal to the prime rate of interest from time to time in effect, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company receives Executive’s statement for such fees

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and expenses through the date of payment thereof, regardless of whether or not Executive’s claim is upheld by a court of competent jurisdiction/arbitration panel; provided, however, Executive shall be required to repay any such amounts to the Company to the extent that a court/arbitration panel issues a final and non-appealable order setting forth the determination that the position taken by Executive was frivolous or advanced by Executive in bad faith.

           7. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle Executive to continued employment with the Company or its Subsidiaries, and if Executive’s employment with the Company shall terminate prior to a Change in Control, Executive shall have no further rights under this Agreement (except as otherwise provided hereunder); provided, however, that any termination of Executive’s employment during the Termination Period shall be subject to all of the provisions of this Agreement.

           8. Successors; Binding Agreement.

           (a) This Agreement shall not be terminated by any Business Combination. In the event of any Business Combination, the provisions of this Agreement shall be binding upon the Surviving Corporation, and such Surviving Corporation shall be treated as the Company hereunder.

           (b) The Company agrees that in connection with any Business Combination, it will cause any successor entity to the Company unconditionally to assume (and for any Parent Corporation in such Business Combination to guarantee), by written instrument delivered to Executive (or his beneficiary or estate), all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption and guarantee prior to the effectiveness of any such Business Combination that constitutes a Change in Control, shall be a breach of this Agreement and shall constitute Good Reason hereunder and shall entitle Executive to compensation and other benefits from the Company in the same amount and on the same terms as Executive would be entitled hereunder if Executive’s employment were terminated following a Change in Control by reason of a Qualifying Termination. For purposes of implementing the foregoing, the date on which any such Business Combination becomes effective shall be deemed the date Good Reason occurs, and shall be the Date of Termination if requested by Executive.

           (c) This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive shall die while any amounts would be payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by Executive to receive such amounts or, if no person is so appointed, to Executive’s estate.

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           9. Notice. (a) For purposes of this Agreement, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows:

 

 

 

 

 

 

 

If to Executive:

 

To the address of the Executive on
the books and records of the
Company.

 

 

 

 

 

 

 

If to the Company:

 

Swift Transportation Co., Inc.

 

 

 

 

2200 South 75th Avenue

 

 

 

 

Phoenix, AZ 85043

 

 

 

 

Attn: Corporate Secretary

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

           (b) A written notice of Executive’s Date of Termination by the Company or Executive, as the case may be, to the other, shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) specify the termination date (which date shall be not less than fifteen (15) (thirty (30), if termination is by the Company for Disability) nor more than sixty (60) days after the giving of such notice). The failure by Executive or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

           10. Full Settlement; Resolution of Disputes and Costs.

           (a) The Company’s obligation to make any payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to Executive under any other severance or employment agreement between Executive and the Company, and any severance plan of the Company, including but not limited to the Employment Agreement. The Company’s obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take other action by way of mitigation of the amounts payable to Executive under any of the

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provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.

           (b) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Phoenix, Arizona by three arbitrators in accordance with the commercial arbitration rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section.

           11. Employment with Subsidiaries. Employment with the Company for purposes of this Agreement shall include employment with any Subsidiary.

           12. Survival. The respective obligations and benefits afforded to the Company and Executive as provided in Sections 3, 4, 5, 6, 8, 9, 10, 13 and 15 shall survive the termination of this Agreement.

           13. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

           14. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

           15. Section 409A of the Code. If any payment(s) or benefit(s)under this Agreement would be subject to the provisions of Section 409A of the Code, the Company agrees that this Agreement shall be deemed reformed so that all such payments shall fully comply and meet the requirements of Section 409A of the Code (such that Executive shall receive all payments and benefits hereunder in the shortest amount of time from the date otherwise due, while no portion of any payments to Executive hereunder shall be subject to the excise taxes of Section 409A of the Code).

           16. Miscellaneous. No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by Executive and by a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time (except as otherwise set forth in the definition of “Good Reason”

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hereunder). Failure by Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right Executive or the Company may have hereunder, including without limitation, the right of Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. Except as otherwise specifically provided herein, the rights of, and benefits payable to, Executive, his estate or his beneficiaries pursuant to this Agreement are in addition to any rights of, or benefits payable to, Executive, his estate or his beneficiaries under any other employee benefit plan or compensation program of the Company.

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer of the Company and Executive has executed this Agreement as of the day and year first above written.

 

 

 

 

 

 

SWIFT TRANSPORTATION CO., INC.
 

 

 

By:  

/s/ Glynis Bryan  

 

 

 

Name:  

Glynis Bryan 

 

 

 

Title:  

Chief Financial Officer 

 

 

 

 

 

 

 

 

/s/ Robert W. Cunningham  

 

 

Robert W. Cunningham 

 

 

 

 

 

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