SEVERANCE AGREEMENT (NON-CHANGE IN CONTROL)

THIS SEVERANCE AGREEMENT (NON-CHANGE IN CONTROL), effective September 20, 2011, is by and between Con-way Freight Inc. (the "Employer"), and Walter G. Lehmkuhl (the "Executive").

WHEREAS, the Employer and the Executive desire to enter into a severance agreement to set forth the terms and conditions on which the Employer will make available to the Executive certain severance payments and benefits in the event of the Executive's termination of employment in certain circumstances other than in connection with a Change in Control;

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

In addition, if the Executive incurs a Severance, the Executive's unvested Qualifying Long-Term Incentive Awards shall vest in accordance with and to the extent provided in the Vesting Provisions, using a number of months (the “Number of Months”) equal to 18. Nothing in this Agreement shall modify or otherwise affect the vesting provisions or other terms of any of Executive's long-term incentive awards which are not Qualifying Long-Term Incentive Awards.

"Affiliate" means an affiliate of the Company, as defined in Rule 12b-2 promulgated under Section 12 of the Exchange Act, including any Business Unit.

“Agreement” means the Severance Agreement (Non-Change in Control) to which these Terms and Conditions are attached, including the Terms and Conditions, which are incorporated by reference in the Agreement.

“Board” means the Board of Directors of the Company.

“Business Unit” is defined in Section 2 of the EIP.

“Cause" for termination by the Employer of the Executive's employment (following the applicable procedures set forth in Section 5) means (i) fraud, misappropriation or embezzlement by the Executive against the Employer, the Company or any Affiliate, (ii) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Employer (other than any such failure resulting from the Executive's incapacity due to Disability) after a written demand for substantial performance is delivered to the Executive by or on behalf of the Employer Board, which demand specifically identifies the manner in which the Employer Board believes that the Executive has not substantially performed the Executive's duties, or (iii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Employer, the Company or an Affiliate, monetarily or otherwise. For purposes of clauses (ii) and (iii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Employer, the Company or an Affiliate.

“Change in Control” has the meaning set forth in the CIC Severance Agreement.

“CIC Severance Agreement” means the Severance Agreement (Change in Control) effective as of September 20, 2011, as amended, entered into by the Executive and the Employer.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, supplemented or substituted from time to time.

“Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Company" means Con-way Inc., a corporation organized under the laws of the State of Delaware, or any successor corporation.

“Disability” means a physical or mental illness or condition causing the Executive's inability to substantially perform the Executive's duties with the Employer.

“EIP” means the Company's 2006 Equity and Incentive Plan, 2012 Equity and Incentive Plan, or any successor plan, each as may be amended from time to time.

“Employer” means the entity specified in the first paragraph of the Agreement or any assignee or successor. The last bullet of the Agreement provides that, if the Executive transfers to the Company or an Affiliate, the Agreement will be assigned, resulting in a change in the Employer. A draft form of assignment and assumption is attached as Exhibit B.

“Employer Board” means the Board of Directors of the Employer.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and as now or hereafter construed, interpreted and applied by regulations, rulings and cases.

“Executive” means the individual specified in the first paragraph of the Agreement.

“Health Benefits” means health maintenance organization, insured or self-funded medical, dental, vision, prescription drug and behavioral health benefits.

“Involuntary Termination” means the actual termination of the Executive's employment by the Employer for any reason other than death, Disability, Cause or Change in Control. Under no circumstances shall any alleged constructive termination of the Executive's employment constitute an Involuntary Termination.

“Outplacement Services” means professional outplacement services determined by the Employer to be suitable to the Executive's position. The maximum amount that the Employer will pay for such services is set forth in the Agreement. The outplacement services shall be made available until the earlier of (i) such time as the aggregate cost to the Employer of the outplacement services reaches the maximum amount specified in the Agreement, and (ii) the date on which the Executive obtains another full-time job. The Employer will not pay the Executive cash in lieu of professional outplacement services.

"Person" means any person, as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than (i) the Company or its Affiliates, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or its Affiliates, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the Common Stock.

“Qualifying Long-Term Incentive Award” means:

“Severance Benefits” means Health Benefits substantially similar to those provided to Executive and Executive's dependents by or on behalf of the Executive's Employer immediately prior to the Severance Date, in accordance with the applicable benefit plan eligibility requirements and policies. To the extent possible, the Health Benefits shall be provided at the Employer's expense through COBRA, in accordance with the applicable plans, programs or policies of the Company. For any portion (if any) of the Severance Period in which the Health Benefits cannot be provided through COBRA, the Employer shall promptly purchase, at its own expense and at no cost to the Executive, an individual policy from an A-rated third party insurer under which Executive and Executive's dependents shall receive the benefits described above (with no preexisting condition limitations). With respect to each of Executive and Executive's dependents who are provided Health Benefits by or on behalf of the Executive's Employer immediately prior to the Severance Date, the Health Benefits shall be provided from the Severance Date until the earliest to occur of (A) the expiration of the Severance Period, (B) the date on which Executive or Executive's dependent(s), as applicable, becomes eligible for coverage under another group health insurance plan with no pre-existing condition limitation or exclusion; provided, however, for avoidance of doubt, benefits made available to one or more of Executive and Executive's dependents by the employer of Executive's spouse shall not reduce the Health Benefits otherwise available, except to the extent the Executive's spouse elects to receive such benefits from his or her employer, (C) the date on which Executive or the Executive's dependent(s), as applicable, becomes entitled to benefits under Medicare and (D) the date on which Executive becomes eligible for retiree medical coverage offered by the Company or its Affiliates. The period during which Executive is being provided with health insurance under this Agreement shall be credited against Executive's period of COBRA coverage, if any.

Executive shall promptly notify Employer if, prior to the expiration of the maximum period of coverage, the Executive or any of the Executive's dependents becomes eligible for coverage under another group health plan with no pre-existing condition limitation or exclusion or becomes entitled to benefits under Medicare.

The Employer may limit any reimbursement to the Executive to the excess, if any, of the cost to the Executive of Health Benefits over such cost immediately prior to the Severance Date.

If the Executive dies, the Employer shall continue to provide the Executive's dependents with the Health Benefits otherwise receivable on the same basis as if the Executive had survived.

If any such benefits are treated as deferred compensation subject to Code section 409A and the Executive is a Specified Employee, the Executive shall pay the full cost of such benefits for the first six months after the Severance Date and the Employer shall reimburse the Executive for such payments as soon as practicable thereafter but not later than nine (9) months from the date the Executive paid such costs.

"Severance Date" means the date on which an Executive incurs a Severance, which shall be the date of termination as determined under Section 5.2.

“Severance Multiple” has the meaning set forth in the Agreement.

"Severance Payment" means, in lieu of any other severance payments or benefits pursuant to any other plan or agreement of the Employer, the Company or any Affiliate to which the Executive is otherwise entitled, an amount equal to the product of (i) the Severance Multiple multiplied by (ii) the sum of (A) the Executive's annual base salary immediately prior to the time of Severance and (B)the Executive's Target Bonus for the calendar year immediately prior to the calendar year in which the Severance occurs.

“Severance Period” has the meaning set forth in the Agreement.

“Specified Employee” has the meaning set forth in the Con-way Inc. 2005 Deferred Compensation Plan for Executives and Key Employees, as amended and restated in December 2008 and as subsequently amended from time to time.

“Target Bonus” means, for any calendar year, an amount equal to (i) the Executive's Annual Compensation (as defined in the Company's Executive Incentive Plan) for that calendar year multiplied by (ii) the Participation Percentage (as defined in the Executive Incentive Plan) applicable to executives in the Executive's grade level (i.e., E1, E2, E3, E4 or E5) for that calendar year, as determined by the Compensation Committee of the Board; provided, however, that, with respect to such calendar year, if the Executive was not employed by the Employer for the entire calendar year, Annual Compensation shall mean the Executive's annualized base salary, determined as of the date such Executive commenced employment with the Employer. “Target Bonus” shall be determined in the manner provided in the preceding sentence whether or not the Executive is a participant in the Executive Incentive Plan during that calendar year, and shall not be based on the Executive's target bonus under any other annual incentive plan in which the Executive participates during that calendar year. If during the calendar year for which the Target Bonus is determined the Executive has not been assigned to an executive grade level of E1, E2, E3, E4 or E5, the Executive's grade level for purposes of this definition shall be the grade level between E1 and E5 that the Compensation Committee of the Board has determined is equivalent to the Executive's actual grade level.

“Taxes” means all federal, state, local and other taxes, to the extent applicable to all or any part of the Severance Payment and/or Severance Benefits.

“Terms and Conditions” means these terms and conditions.

“Vesting Provisions” means:

Example 1: Assume the Number of Months applicable to Executive A is 18. On January 26, 2009 Executive A received a stock option grant that is scheduled to vest in three equal installments, on January 1, 2010, January 1, 2011 and January 1, 2012, respectively. Executive A incurs a Severance on December 20, 2009. On the Severance Date the stock option installments scheduled to vest on January 1, 2010 and January 1, 2011 would vest but the installment scheduled to vest on January 1, 2012 (more than 18 months after the Severance Date) would not vest under the Vesting Provisions.

Example 2: Assume the Number of Months applicable to Executive A is 18. On January 26, 2009 Executive A received a grant of 10,000 restricted stock units with 36 month cliff vesting. Executive A incurs a Severance on December 20, 2009. On the Severance Date 5,000 restricted stock units (18 months/36 months) would vest under the Vesting Provisions.

The Executive shall be liable for the payment of all Taxes. The Employer shall be entitled to withhold from amounts to be paid to the Executive hereunder any Taxes which it is from time to time required to withhold.

If, for any legal reason, a controversy arising from or concerning the interpretation or application of this Agreement cannot be arbitrated as provided above, the parties agree that any civil action shall be brought in United States District Court in the metropolitan area closest to where the Executive lives or, only if there is no basis for federal jurisdiction, in state court closest to where the Executive lives. The parties further agree that any such civil action shall be tried to the court, sitting without a jury. The parties knowingly and voluntarily waive trial by jury.

Notwithstanding the foregoing, if at the time a dispute or controversy arises the Executive is working outside of the United States, and if at such time the Executive maintains a residence in the United States, the dispute or controversy will be resolved (i) by arbitration in the metropolitan area closest to the Executive's residence in the United States or (ii) by litigation in the United States District Court in the metropolitan area closest to the Executive's residence in the United States or, only if there is no basis for federal jurisdiction, in state court closest to the Executive's residence in the United States. If the Executive does not maintain a United States residence at such time, the dispute or controversy will be subject to arbitration in Ann Arbor, Michigan or to litigation in the United States District Court for the Eastern District of Michigan (or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Michigan).

5.    NOTICE OF TERMINATION.

(b) “Confidential Information” as used in this Agreement includes all confidential competitive, pricing, marketing, proprietary and other information, knowledge, materials or data (whether or not reduced to writing) relating or belonging to Employer, any of its subsidiaries, affiliated companies or businesses, including but not limited to all confidential or proprietary information furnished or disclosed or otherwise obtained by the Executive during the Executive's employment with the Employer, and further including but not limited to, the Employer's, and its parent's, subsidiaries', and affiliates' legal matters, technical data, systems and programs, financial and planning data, business development or strategic plans or data, organizational and operating plans or strategies, marketing plans or strategies, software development, product development, pricing, current and prospective customer lists and information, trade secrets, personnel information (including without limitation the identity of Company employees, their responsibilities, competence and abilities, and compensation), computer programs, patented or unpatented inventions, discoveries and improvements, information concerning planned or pending acquisitions or divestitures, information concerning planned or pending investments, information concerning purchases of major equipment or property, and other privileged or confidential business information. “Confidential Information” does not include information that lawfully is or becomes generally and publicly known outside of the Employer and its affiliates other than through the Executive's breach of this Agreement or breach by another person of some other obligation.

(c)    Nothing herein prohibits the Executive from disclosing Confidential Information as legally required pursuant to a validly issued subpoena or order of a court, administrative agency or arbitrator (as applicable) of competent jurisdiction, provided that the Executive shall first promptly notify the Company if the Executive receives a subpoena, court order or other order requiring any such disclosure, to allow the Company to seek protection therefrom in advance of any such legally compelled disclosure.

 

(a)     Executive hereby acknowledges that, by virtue of his or her unique relationship with the Employer and/or its affiliates, the Executive has acquired and had access to, or will acquire and have access to, Confidential Information and will also develop a unique and comprehensive familiarity with the Employer and its Business and Affiliates, which the Executive would not have otherwise had but for his or her employment, and which the Executive acknowledges are valuable assets of the Employer and its affiliates. Executive acknowledges that the restrictions contained in this Section 6 are reasonable and necessary to protect the legitimate business interests of Employer and its affiliates, that the Employer would not have entered into the Agreement in the absence of such restrictions, and that any violation of any provision of this Section 6 will result in immediate and irreparable injury to Employer and its affiliates for which damages cannot be readily calculated and for which damages are an inadequate remedy. By entering into the Agreement, the Executive represents that his or her experience and capabilities are such that the restrictions contained in this Section 6 will not unreasonably restrict his or her post-employment opportunities. The Executive further represents and acknowledges that (i) he or she has been advised by Employer to consult his or her own legal counsel in respect of this Agreement, and (ii) that he or she has had full opportunity, prior to agreeing to enter into the Agreement, to review thoroughly this Agreement with his or her counsel.

 

(b)     Executive agrees that Employer and its affiliates shall be entitled to preliminary and permanent injunctive relief to prevent any actual or threatened breach or any continuing breach by the Executive of the covenants contained in this Section 6, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Section 6, which rights shall be cumulative and in addition to any other rights or remedies to which Employer may be entitled. The Executive further agrees to reimburse the Employer and its affiliates for all costs and expenditures, including but not limited to reasonable attorneys' fees and court costs, incurred by any of them in connection with the successful enforcement of any of their rights under Section 6. In the event that any of the provisions of this Section 6 should ever be adjudicated by a court or arbitrator of competent jurisdiction to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction or to otherwise be unreasonable or unenforceable, then such provisions shall be deemed modified or limited in such jurisdiction so that, as modified or limited, such provisions may be enforced to the maximum time, geographic, service, or other limitations permitted by applicable law.

(c)    The running of the time periods set forth in this Section 6 shall be tolled during the period of any breach by the Executive of this Section 6 and during the period of any dispute involving the breach, applicability, scope, duration or other aspect of any of the provisions of this Section 6 whether or not any party has filed a lawsuit. The provisions of this Section 6 shall remain in full force and effect for the duration of such breach or dispute, until the breach or dispute is fully and finally resolved by either (i) the written agreement of the parties to each such dispute or (ii) a final, non-appealable order from a court of competent jurisdiction, at which point the time-period of such provisions shall again commence running, unless such agreement or order (as applicable) expressly provides otherwise.

(d)     Executive irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of this Section 6, including without limitation, any action commenced by the Employer or the Company for preliminary and permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the Eastern District of Michigan, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Michigan, (ii) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which Executive may have to the laying of venue of any such suit, action or proceeding in any such court. Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Section 7.9.

7.    GENERAL PROVISIONS.

The payments to Executive pursuant to this Agreement are also intended to be exempt from Code section 409A to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and for such purpose, any installment paid to Executive under this Agreement shall be considered a separate payment.

If any provision of the Agreement would cause compensation to be includible in the Executive's income pursuant to Code section 409A(a)(1)(A), such provision shall be void, and the Employer shall have the unilateral right to amend the Agreement retroactively for compliance with Code section 409A in such a way as to achieve substantially similar economic results without causing such inclusion. Any such amendment shall be binding on the Executive. In the event the Agreement does not comply with the requirements of Code section 409A, the Executive will be solely responsible for any adverse tax consequences to the Executive.

To the extent any amounts under this Agreement are payable by reference to Executive's Severance Date or “termination of employment” such terms and similar terms shall be deemed to refer to Executive's “separation from service,” within the meaning of Code section 409A.

Any reimbursement payable to Executive pursuant to this Agreement shall be conditioned on the submission by Executive of all documentation reasonably required by Employer, and shall be paid to Executive within 30 days following receipt of such documentation, but in no event later than the last day of the calendar year following the calendar year in which Executive incurred the reimbursable expense. Any amount of expenses eligible for reimbursement, or in-kind benefit provided, during a calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefit to be provided, during any other calendar year. The right to any reimbursement or in-kind benefit pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

In consideration of, and subject to, the payment to be made to me by ____________ (the “Employer”) of the "Severance Payment" (in each case as defined in the Severance Agreement (Non-Change in Control), effective as of _________, entered into between me and the Employer (the "Agreement")), I hereby waive any claims I may have for employment or re-employment by the Employer or any parent or subsidiary of the Employer after the date hereof, and I further agree to and do release and forever discharge the Employer and any parent or subsidiary of the Employer, and their respective past and present officers, directors, shareholders, insurers, employees and agents from any and all claims and causes of action, known or unknown, arising out of or relating to my employment with the Employer or any parent or subsidiary of the Employer, or the termination thereof, including, but not limited to, wrongful discharge, breach of contract, tort, fraud, the Civil Rights Acts, Age Discrimination in Employment Act as amended by the Older Workers' Benefits Protection Act, Employee Retirement Income Security Act of 1974, Americans with Disabilities Act, or any other federal, state or local legislation or common law relating to employment or discrimination in employment or otherwise; provided however, that no claim that I may have against the Employer in any capacity other than as an Employer shall be waived pursuant to this Waiver and Release.

Notwithstanding the foregoing or any other provision hereof, nothing in this Waiver and Release of Claims shall adversely affect (i) my rights to ongoing Severance Benefits under the terms of the Agreement; (ii) my rights to benefits (other than severance payments or benefits) under plans, programs and arrangements of the Employer or any parent or subsidiary of the Employer; (iii) my rights to indemnification under any indemnification agreement, applicable law or the certificates of incorporation or bylaws of the Employer or any parent or subsidiary of the Employer, (iv) my rights under any director's and officers' liability insurance policy covering me, (v) my workers compensation rights, or (vi) my unemployment insurance rights.

I acknowledge that I have signed this Waiver and Release of Claims voluntarily, knowingly, of my own free will and without reservation or duress, and that no promises or representations have been made to me by any person to induce me to do so other than the promise of payment set forth in the first paragraph above and the Employer's acknowledgment of my rights reserved under the second paragraph above.

I understand that this release will be deemed to be an application for benefits under the Agreement and that my entitlement thereto shall be governed by the terms and conditions of the Agreement and any applicable plan. I expressly hereby consent to such terms and conditions.

I acknowledge that (i) I am waiving any rights or claims I might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act (“ADEA”); (ii) I have received consideration beyond that to which I was previously entitled; (iii) I have been given forty-five (45) days to review and consider this Waiver and Release of Claims (unless I have signed a written waiver of such review and consideration period); (iv) I have had the opportunity to consult with an attorney or other advisor of my choice and have been advised by the Employer to do so if I choose; and (vi) I have been separately furnished a written schedule of all persons, listed by job title and age, within the affected decisional unit who were selected and not selected for the benefits extended by this Agreement, as may be required by the ADEA. I may revoke this Waiver and Release of Claims seven days or less after its execution by providing written notice to the Employer.

I acknowledge that it is my intention and the intention of the Employer in executing this Waiver and Release of Claims that the same shall be effective as a bar to each and every claim, demand and cause of action hereinabove specified. In furtherance of this intention, I hereby expressly waive any and all rights and benefits conferred upon me by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE, to the extent applicable to me, and expressly I consent that this Waiver and Release of Claims shall be given full force and effect according to each and all of its express terms and provisions, including as well those related to unknown and unsuspected claims, demands and causes of action, if any, as well as those relating to any other claims, demands and causes of action hereinabove specified. SECTION 1542 provides:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."

I acknowledge that I may hereafter discover claims or facts in addition to or different from those which I now know or believe to exist with respect to the subject matter of this Waiver and Release of Claims and which, if known or suspected at the time of executing this Waiver and Release of Claims, may have materially affected this settlement.

Finally, I acknowledge that I have read this Waiver and Release of Claims and understand all of its terms.

____________ (the “Old Employer”) and ______________ (the “Executive”) have entered into a Severance Agreement (Non-Change in Control) effective ______________ (the “Agreement”). The Executive is transferring employment from the Old Employer to ____________ (the “New Employer”), effective ________. The last bullet of the Agreement provides that, if the Executive transfers to the Company or an Affiliate, the Old Employer shall assign the Agreement to the Company or Affiliate. To order to carry out the provisions of the last bullet of the Agreement -