Exhibit 10.7

                             SEVERANCE AGREEMENT


THIS  AGREEMENT,  dated  as of and effective as of August 23, 2007, is by and
between Contract Freighters,  Inc.  (the  "Employer"), and Herbert J. Schmidt
(the "Executive") and supersedes all prior  severance  agreements between the
Executive and the Employer or any Affiliate.

WHEREAS,  the  Employer  (a) considers it essential to foster  the  continued
employment of key management  personnel,  (b) recognizes that the possibility
of a Change in Control exists and that such  possibility, and the uncertainty
and  questions  which  it  may  raise among management,  may  result  in  the
departure or distraction of management  personnel  to  the  detriment  of the
Employer,  and  (c) has determined that appropriate steps should be taken  to
reinforce and encourage  the continued attention and dedication of members of
the Employer's management,  including the Executive, to their assigned duties
without  distraction  in the face  of  potentially  disturbing  circumstances
arising from the possibility of 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:

   * The Term of this Agreement shall commence on August  23, 2007 and expire
     as  provided  in the definition of "Term" in Section 1 of  the  attached
     Terms and Conditions,  all  of  which (including definitions) are hereby
     incorporated by reference.

   * The Executive agrees that, subject  to  the Terms and Conditions, in the
     event of a Potential Change in Control during  the  Term,  the Executive
     will remain in the employ of the Employer until the earliest  of  (a)  a
     date  which  is six (6) months from the date of such Potential Change in
     Control,  (b) the  date  of  a  Change  in  Control,  (c)  the  date  of
     termination  by  the  Executive  of  the Executive's employment for Good
     Reason or by reason of death, disability  or  retirement  in  accordance
     with  the  Con-way Inc. Retirement Plan, including early retirement,  or
     (d) the termination  by  the  Employer of the Executive's employment for
     any reason.

   * If the Executive incurs a Severance  following  a  Change  in Control or
     Potential Change in Control and during the Term, the Executive  shall be
     entitled to receive (a) a Severance Payment equal to three (3) times the
     sum of the Executive's annual base salary and Annual Bonus in a lump sum
     and  (b) Severance  Benefits  for  a  period  of 36 months following the
     Severance Date, as provided in the attached Terms and Conditions.

   * If the Executive transfers to and becomes an employee  of  an Affiliate,
     the  Employer  shall  assign  this  Agreement  to the Affiliate and  the
     Affiliate shall become the Employer and shall assume  the obligations of
     the Employer.

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|THE EMPLOYER                      |                                        |
|                                  |                                        |
|By:  Contract Freighters, Inc.    |  Con-way Inc. hereby  assumes  the     |
|/s/ Jennifer W. Pileggi           |  obligations imposed by the            |
|------------------------          |  second sentence of Section 3.1        |
|Name:  Jennifer W. Pileggi        |  of the  attached  Terms               |
|Title: Secretary                  |  and Conditions.                       |
|                                  |                                        |
-----------------------------------------------------------------------------
|                                  |                                        |
|EXECUTIVE                         |CON-WAY INC.                            |
|/s/  Herbert J. Schmidt           |                                        |
|-------------------------         |By: /s/  Douglas W. Stotlar             |
|Name: Herbert J. Schmidt          |    -------------------------           |
|Address: 4527 Goldfinch Road      |Name:  Douglas W. Stotlar               |
|         Joplin, MO 64804         |Title: President - CEO                  |
|                                  |                                        |
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                 TERMS AND CONDITIONS OF SEVERANCE AGREEMENT

                              Table of Contents

           1.  Definitions................................
           2.  Compensation other than Severance Payments
                and Benefits..............................
           3.  Severance Payments and Benefits............
           4.  Excise Tax Gross-Up........................
           5.  Notice of Termination......................
           6.  General Provisions.........................
           Exhibit A - Waiver and Release of Claims.......
           Exhibit B - Assignment and Assumption of Agreement


1.   DEFINITIONS.  As hereinafter used:

     "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  to  which  these  Terms and
     Conditions  are attached, including the Terms and Conditions, which  are
     incorporated   by   reference   in   the  Agreement.  If  there  is  any
     inconsistency  between  the  Severance Agreement  and  these  Terms  and
     Conditions, the Terms and Conditions shall govern.

     "Annual Bonus" means the annual bonus payable with respect to a calendar
     year  under  the ICP (Incentive  Compensation  Plan)  applicable  to  an
     Executive or other  applicable annual bonus or arrangement determined as
     if such Annual Bonus  had  been  earned  to  the  extent  of 100% of the
     Executive's  target  bonus opportunity, as opposed to the maximum  200%.
     The Annual Bonus does  not  include any amount payable under the Con-way
     Inc. Value Management Plan or any other long-term incentive plan.

     "Auditor" shall have the meaning set forth in Section 4.2 hereof.

     "Base Amount" shall have the  meaning set forth in Section 280G(b)(3) of
     the Code.

     "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
     means  (i)  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,  including  physical or mental illness or any such actual or
     anticipated failure after  the  issuance by the Executive of a notice of
     intent to terminate employment for  Good  Reason,  as  provided  in  the
     definition  of  Good  Reason)  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 (ii) 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 (i) and (ii) 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. In the
     event  of a dispute concerning the application  of  this  provision,  no
     claim by the Employer that Cause exists shall be given effect unless the
     Employer  establishes  (iii) to the Employer Board and (iv) in the event
     of an arbitration to resolve  the  dispute,  to the arbitrator, by clear
     and convincing evidence that Cause exists.

     "Change  in  Control"  means the occurrence of any  one  of  the  events
     described in clauses (a)  through  (d)  of  the definition of "Change in
     Control"  in  Section  2  of  the  EIP or the occurrence  of  the  event
     described in the following clause (e), which shall apply for purposes of
     the Agreement instead of clause (e)  of  the  definition  of  "Change in
     Control" in Section 2 of the EIP:

     (e)   Disposition   of   a  Business  Unit.  There  is  consummated  the
           Disposition  of a Business  Unit;  provided,  however,  that  this
           clause (e) shall  apply only to an Executive who immediately prior
           to the Disposition  of a Business Unit was employed by (and on the
           payroll  of)  the Business  Unit  that  was  the  subject  of  the
           Disposition of a Business Unit.

     The following Examples illustrate clause (e):

           Example 1. The  ownership interests of Business Unit X are sold to
           an unrelated purchaser.  Executive  A  was employed by (and on the
           payroll  of) Business Unit X immediately  prior  to  the  sale.  A
           Change in Control has taken place with respect to Executive A.

           Example 2.  The assets of Business Unit Y are sold to an unrelated
           purchaser. Executive  B  was  employed  by (and on the payroll of)
           Business Unit Y immediately prior to the sale. A Change in Control
           has taken place with respect to Executive B.

           Example 3. Executive C is employed by (and  on  the  payroll of) a
           Business  Unit as described in either Example 1 or 2, except  that
           Executive C remains employed by (and on the payroll of) a Business
           Unit that continues to be a Business Unit of the Company following
           the sale. A  Change  in  Control  has  taken place with respect to
           Executive C.

     Because  the  EIP  is  not  intended to serve the same  purpose  as  the
     Agreement, whether a "Change  in  Control" has taken place under the EIP
     is not relevant in determining whether  benefits  are  payable under the
     Agreement. For example, in Example 3, a Change in Control took place for
     Executive C under the Agreement, but no Change in Control took place for
     Executive  C  under  the  EIP. If Executive C terminates employment  six
     months  after  the  Change in  Control  occurred  under  the  Agreement,
     Executive C may or may  not be entitled to benefits under the Agreement,
     depending  on  the  facts surrounding  the  termination  of  employment.
     However, no Change in  Control  would  take  place  under  the  EIP with
     respect  to  Executive  C  under  the facts of Example 3, whether or not
     benefits are due under the Agreement.

     "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.

     "Disposition of a Business Unit" is defined in Section 2 of the EIP.

     "EIP" means the Con-way Inc. 1997 Equity and Incentive  Plan, as amended
     from time to time, or any successor plan.

     "Employer"  means  the  person specified in the first paragraph  of  the
     Agreement  or any assignee  or  successor  (including  a  successor  who
     assumes the  Agreement following a Change in Control). The fourth 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. Notwithstanding  the preceding provisions of this
     definition,  if (and for as long as) the Executive  is  an  employee  of
     Vector  SCM, LLC,  (i)  the  Employer  means  Vector  SCM,  LLC  or  any
     successor,  (ii)  the  Company  shall  fulfill  the  obligations  of the
     Employer under the Agreement, and (iii) clause (e) of the definition  of
     Change in Control shall not apply to the Executive.

     "Employer Board" means the Board of Directors of the Employer.

     "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.

     "Excise  Tax" means any excise tax imposed under  Section  4999  of  the
     Code.

     "Executive"  means  the  person  specified in the first paragraph of the
     Agreement.

     "Good  Reason"  for  termination by the  Executive  of  the  Executive's
     employment shall mean  the  occurrence  (without the Executive's express
     written consent) after any Change in Control of any one of the following
     acts by the Employer, or failures by the  Employer  to  act, unless such
     act  or  failure  to act is corrected within 30 days of receipt  by  the
     Employer of notice  of  the  Executive's  intent  to  terminate for Good
     Reason hereunder:

     (1)   the  failure  of  the successor company, following the  Change  in
           Control, to assume  the  Agreement and all obligations thereunder,
           as of the date of such Change in Control;

     (2)   the assignment to the Executive  of  duties  inconsistent with the
           Executive's  status  as  an  executive  of  the  Employer   or   a
           substantial  adverse  alteration  in  the  nature or status of the
           Executive's  responsibilities  from  those  in effect  immediately
           prior to the Change in Control;

     (3)   a reduction by the Employer in the Executive's  base  salary, cash
           bonus opportunity, or long term incentive opportunity,  each as in
           effect  immediately prior to the Change in Control or as the  same
           may thereafter be increased from time to time;

     (4)   the relocation of the Executive's principal place of employment to
           a location  that results in an increase in the Executive's one way
           commute of at  least  50  miles  more than the Executive's one way
           commute immediately prior to the Change in Control,

     (5)   a  substantial  increase  in  the  Executive's   business   travel
           obligations  from  the  Executive's  business  travel  obligations
           immediately prior to the Change in Control;

     (6)   the failure by the Employer to pay to the Executive when  due  any
           portion of the Executive's current compensation;

     (7)   the  failure  by the Employer to continue to provide the Executive
           with  benefits substantially  similar  to  those  enjoyed  by  the
           Executive  under  any  of  the  Employer's  pension, savings, life
           insurance,  medical, health and accident, or disability  plans  in
           which the Executive  was  participating  immediately  prior to the
           Change  in Control (except for across-the-board changes  similarly
           affecting  all  or substantially all employees of the Employer and
           any entity in control  of  the  Employer), the taking of any other
           action  by  the  Employer  which  would   directly  or  indirectly
           materially reduce any of such benefits or deprive the Executive of
           any material fringe benefit enjoyed by the  Executive  immediately
           prior to the Change in Control, or the failure by the Employer  to
           provide the Executive with the number of paid vacation days or PTO
           days (days of paid time off) to which the Executive was entitled.

     If  a Change in Control takes place with respect to the Executive solely
     because of the Disposition of a Business Unit as described in clause (e)
     of the definition of Change in Control and the Executive continues to be
     employed  by the Company or an Affiliate, but the position the Executive
     previously  held  is no longer needed, then, for purposes of determining
     whether there is a  substantial  adverse  alteration  in  the  nature or
     status  of the Executive's responsibilities under clause (2) above,  all
     the facts  and  circumstances shall be taken into account, and no single
     or selected set of  facts  shall be determinative. In particular, if the
     Executive receives a bona fide offer of a new or different position with
     the Company or an Affiliate,  the  fact  or set of facts that, under the
     Executive's new position, fewer employees may be supervised and/or fewer
     functional areas may be within the Exective's  span of control shall not
     be determinative.

     The Executive's right to terminate the Executive's  employment  for Good
     Reason  shall  not  be  affected  by  the  Executive's incapacity due to
     disability, including physical or mental illness,  except as provided in
     the penultimate paragraph of the definition of Severance.

     If Good Reason first occurs during the last 30 days  of the Term and the
     Executive gives notice of the Executive's intent to terminate  for  Good
     Reason before the end of the Term, the correction period referred to  in
     the  first  sentence  of this definition of Good Reason shall end on the
     date of termination specified in Section 5.3.

     The Executive's continued  employment after Good Reason occurs shall not
     constitute consent to, or a waiver of rights with respect to, any act or
     failure to act constituting Good Reason hereunder.

     "Gross Up Payment" shall have  the  meaning  set  forth  in  Section 4.1
     hereof.

     "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.

     "Potential Change in Control" shall be deemed to have occurred if:

     (1)   the  Company  or  any Affiliate  enters  into  an  agreement,  the
           consummation of which  would  result in the occurrence of a Change
           in Control;

     (2)   the Company or any "person," as  such  term  is  used  in Sections
           13(d)  and  14(d)  of  the  Exchange  Act  publicly  announces  an
           intention  to  take  or  to  consider  actions,  including but not
           limited  to  proxy  contests or consent solicitations,  which,  if
           consummated, would constitute a Change in Control;

     (3)   any Person becomes the  beneficial owner (as defined in Rule 13d-3
           under the Exchange Act),  directly or indirectly, of securities of
           the  Company  representing  15%   or   more  of  either  the  then
           outstanding  shares  of the common stock,  par  value  $0.625  per
           share,  of  the Company  or  the  combined  voting  power  of  the
           Company's  then  outstanding  securities  (not  including  in  the
           securities  beneficially  owned  by  such  Person  any  securities
           acquired directly from the Company or its Affiliates); or

     (4)   the Board or  the Employer Board if the Employer is other than the
           Company adopts  a  resolution  to the effect that, for purposes of
           the Agreement, a Potential Change in Control has occurred.

     If the Potential Change in Control referred  to  in  clause  (1)  or (2)
     would  arise  because  of  an  event  described  in  clause  (e)  in the
     definition  of  Change in Control, the Potential Change in Control shall
     apply only if the  Executive  is employed by (and on the payroll of) the
     Business Unit that would be the subject of the Disposition of a Business
     Unit.

     "Severance" means the termination  of an Executive's employment with the
     Employer  following a Change in Control  and  during  the  Term  of  the
     Agreement,  (i)  by  the  Employer  other than for Cause, or (ii) by the
     Executive for Good Reason.

     For  purposes  of  the Agreement, the Executive's  employment  shall  be
     deemed to have been  terminated  following  a  Change  in Control by the
     Employer without Cause or by the Executive with Good Reason  if  (i) the
     Executive's  employment  is  terminated  by  the  Employer without Cause
     following a Potential Change in Control but prior to a Change in Control
     (whether  or not a Change in Control ever occurs) and  such  termination
     was at the  request  or  direction  of  a Person who has entered into an
     agreement with the Company or Affiliate the  consummation of which would
     constitute a Change in Control, (ii) the Executive terminates employment
     for Good Reason following a Potential Change in  Control  but prior to a
     Change in Control (whether or not a Change in Control ever  occurs)  and
     the  circumstance  or  event which constitutes Good Reason occurs at the
     request or direction of such Person; or (iii) the Executive's employment
     is terminated by the Employer without Cause or by the Executive for Good
     Reason  and  such  termination   or  the  circumstance  or  event  which
     constitutes  Good  Reason  is  otherwise   in   connection  with  or  in
     anticipation of a Change in Control (whether or not  a Change in Control
     ever occurs). For purposes of this paragraph, a Change  in Control shall
     be deemed to have occurred for purposes of the definition of Good Reason
     if  a Potential Change in Control has occurred or if the termination  or
     the circumstance or event which would constitute Good Reason if a Change
     in Control  had  occurred  is in connection with or in anticipation of a
     Change in Control (whether or not a Change in Control ever occurs).

     An Executive will not be considered  to have incurred a Severance (i) if
     the Executive's employment is discontinued  by reason of the Executive's
     death or disability, including a physical or  mental  condition  causing
     such  Executive's  inability  to  substantially  perform the Executive's
     duties with the Employer for a period of six consecutive  months or (ii)
     by  reason  of  the  divestiture  of  a facility, sale of a business  or
     business unit, or the outsourcing of a  business activity with which the
     Executive is affiliated, notwithstanding the fact that such divestiture,
     sale or outsourcing constitutes, or takes  place  following  a Change in
     Control  and  during  the  Term  of  the Agreement, if the Executive  is
     offered a position with the successor  company  that, if accepted, would
     not  give  rise  to Good Reason, and such successor  company  agrees  to
     assume the obligations of the Agreement with respect to such Executive.

     If any benefits provided  to  the  Executive  under  the  Agreement  are
     treated  as  deferred  compensation  subject  to  Code section 409A, the
     Executive will not be considered to have incurred a  Severance until the
     Executive  incurs  a "separation from service," becomes  "disabled,"  or
     dies; provided, however, that if an "unforseeable emergency" occurs, the
     Severance Payment may  be  made  to the extent permitted by Code section
     409A(a)(2)(B)(ii)(II). (The terms  quoted  in  the immediately-preceding
     sentence have the meanings set forth in Code section 409A(a)(2)(A).)

     "Severance Benefits" means:

     (1)   life,  disability and accident benefits substantially  similar  to
           those provided  to  the  Executive  and the Executive's dependents
           immediately prior to the Severance or,  if  more  favorable to the
           Executive,  immediately  prior  to  the Change in Control,  at  no
           greater  cost  to the Executive than the  cost  to  the  Executive
           immediately prior  to  the  Severance  or the Change in Control in
           this  Agreement; provided, however, that,  unless  the  Change  in
           Control took place because of the event described in clause (e) of
           the definition  of  Change  in  Control, the Employer may apply to
           such benefits any across the board changes similarly affecting all
           or substantially all employees participating in such benefits;

     (2)   health  and dental benefits provided  to  the  Executive  and  the
           Executive's  dependents under the Company's health and dental plan
           as in effect immediately  prior  to  the  Severance  or,  if  more
           favorable  to  the  Executive, those provided to the Executive and
           the Executive's dependents  immediately  prior  to  the  Change in
           Control, at no cost to the Executive; and

     (3)   outplacement services determined by the Company to be suitable  to
           the Executive's position, at no cost to the Executive;

     in  each  case  for  the  number  of  months  specified in the Agreement
     following such Executive's Severance Date; provided, however, that

     (4)   benefits otherwise receivable pursuant to  (1)  and  (2)  shall be
           reduced to the extent benefits of the same type are received by or
           made  available  to  the  Executive  or the Executive's dependents
           following the Executive's termination  of employment (and any such
           benefits shall be reported to the Employer by the Executive);

     (5)   the Employer shall reimburse the Executive for the excess, if any,
           of  the  cost  to  the  Executive  of benefits  received  or  made
           available pursuant to (1) and (2) over such cost immediately prior
           to  the  Severance  or,  if  more  favorable   to  the  Executive,
           immediately prior to the Change in Control;

     (6)   if the Executive dies, the Employer shall continue  to provide the
           Executive's  dependents  with  the  benefits  otherwise receivable
           pursuant to (1) and (2) on the same basis as if  the Executive had
           survived, and

     (7)   if any such benefits are treated as deferred compensation  subject
           to  Code  section 409A and the Executive is a "specified employee"
           as defined  in  Code section 409A(a)(2)(B)(i), 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.

     "Severance  Date"  means  the  date  on  which  an  Executive  incurs  a
     Severance, which should be the date  of  termination as determined under
     Section 5.3.

     "Severance  Payment" means a payment, in lieu  of  any  other  severance
     payment or benefit  pursuant  to  any  other  plan  or  agreement of the
     Employer,  the  Company  or  any  Affiliate  to  which the Executive  is
     otherwise entitled, of an amount equal to the number  of years specified
     in the Agreement times the sum of (i) the Executive's annual base salary
     immediately  prior  to  the time of Severance or, if higher,  in  effect
     immediately prior to the  Change  in  Control  and  (ii) the Executive's
     Annual  Bonus  for  the  calendar  year in which the Change  in  Control
     occurred.

     "Tax Counsel" shall have the meaning set forth in Section 4.2 hereof.

     "Term" means the period of time commencing  on the date specified in the
     Agreement  and continuing through December 31  of  the  following  year;
     provided, however,  that commencing on January 1 of such following year,
     and each January 1 thereafter,  the Term shall automatically be extended
     for one additional year unless, not  later  than  September  30  of  the
     preceding  year,  the  Employer or the Executive shall have given notice
     not to extend the Term;  and further provided, however, that if a Change
     in Control shall occur during the Term, the Term shall expire no earlier
     than  24  months beyond the  month  in  which  such  Change  in  Control
     occurred.

     "Terms and Conditions" means these terms and conditions.

     "Total Payments"  means  those  payments  so  described  in  Section 4.1
     hereof.

2.   COMPENSATION OTHER THAN SEVERANCE PAYMENTS AND BENEFITS.

     2.1   Following  a  Change  in  Control and during the Term, during  any
           period that the Executive fails  to  perform the Executive's full-
           time duties with the Employer as a result  of  incapacity  due  to
           disability,  including  physical  or  mental illness, the Employer
           shall pay the Executive's full salary to the Executive at the rate
           in effect at the commencement of any such  period,  together  with
           all  compensation  and benefits payable to the Executive under the
           terms of any compensation  or benefit plan, program or arrangement
           maintained by the Employer during  such  period  (other  than  any
           disability  plan),  until the Executive's employment is terminated
           by the Employer for disability.

     2.2   If the Executive's employment  shall  be terminated for any reason
           following a Change in Control and during  the  Term,  the Employer
           shall pay the Executive's full salary to the Executive through the
           Severance  Date  at  the rate in effect immediately prior  to  the
           Severance Date or, if higher, the rate in effect immediately prior
           to  the Change in Control,  together  with  all  compensation  and
           benefits payable to the Executive through the Severance Date under
           the terms  of  the  Employer's  compensation  and  benefit  plans,
           programs  or  arrangements  as  in effect immediately prior to the
           Severance  Date or, if more favorable  to  the  Executive,  as  in
           effect immediately prior to the Change in Control.

     2.3   If the Executive's  employment  shall be terminated for any reason
           following a Change in Control and  during  the  Term, the Employer
           shall pay to the Executive the Executive's normal post termination
           compensation and benefits as such payments become  due (other than
           severance   payments   under  any  severance  plan  as  in  effect
           immediately  prior  to  the   Severance).  Such  post  termination
           compensation and benefits shall  be  determined under, and paid in
           accordance  with, the Company's retirement,  insurance  and  other
           compensation  or  benefit  plans,  programs and arrangements as in
           effect immediately prior to the Severance or, if more favorable to
           the Executive, as in effect immediately  prior  to  the  Change in
           Control.

3.   SEVERANCE PAYMENTS AND BENEFITS.

     3.1   If  the  Executive  incurs  a  Severance,  the  Executive shall be
           entitled  to  receive from the Employer (i) the Severance  Payment
           and (ii) Severance  Benefits.  If the Employer is not the Company,
           the  Employer  does  not provide the  Severance  Payment  and  the
           Severance Benefits and  the  Severance  is  related to a Change in
           Control or a Potential Change in Control that  occurred other than
           because  of  the  Disposition  of a Business Unit as  provided  in
           clause (e) of the definition of  Change  in  Control,  the Company
           shall fulfill the obligations of the Employer under the Agreement,
           and  the  Executive  need  not  exhaust  the remedies provided  in
           Section 3.4 and 3.5 against the Employer before  being entitled to
           receive the Severance Payment and the Severance Benefits  from the
           Company.

     3.2   The Employer shall pay the Severance Payment to the Executive in a
           cash  lump  sum,  on the date that is 6 months after the Severance
           Date or as soon as  practicable  thereafter, but in no event later
           than 10 business days immediately following such date.

     3.3   The Executive shall not be eligible to receive a Severance Payment
           or  Severance Benefits under the Agreement  unless  the  Executive
           (or,  in  the  event  of the death of the Executive, the executor,
           personal  representative   or  administrator  of  the  Executive's
           estate) first executes a written release substantially in the form
           attached  as  Exhibit A hereto  and  the  Executive  executes  the
           release within 6 months after the Severance Date.

     3.4   In the event that  the  Executive  or a dependent of the Executive
           believes  that he or she is not receiving  the  full  benefits  to
           which he or  she  is entitled under the Agreement, such person may
           make a claim to the  Employer  Board  (or  the Board if the second
           sentence  of  Section 3.1 applies), and the claims  procedure  set
           forth in Section  8 of the EIP shall apply with the Employer Board
           (or the Board if the  second  sentence  of  Section  3.1  applies)
           treated as the Committee.

     3.5   Any  further dispute or controversy arising under or in connection
           with the  Agreement  which remains after the final decision of the
           Board as contemplated  by  Section  3.4  shall  be finally settled
           exclusively  by  arbitration  in  San  Francisco,  California,  in
           accordance with the rules of the American Arbitration  Association
           then  in  effect; provided, however, that the clear and convincing
           evidentiary  standard set forth in the definition of Cause in this
           Agreement shall  apply;  and provided further, that the arbitrator
           shall apply the applicable  provisions  of  ERISA,  and applicable
           regulations  adopted  thereunder,  in such arbitration proceeding.
           Judgment may be entered on the arbitrator's  award  in  any  court
           having jurisdiction.

     3.6   The  Employer  shall  pay  to  the  Executive  all  legal fees and
           expenses  incurred  by the Executive in seeking in good  faith  to
           obtain or enforce any  benefit or right provided by the Agreement.
           Such payments shall be made  within  five  (5) business days after
           delivery   of  the  Executive's  written  requests   for   payment
           accompanied  with  such  evidence of fees and expenses incurred as
           the Employer reasonably may  require.  The  Employer  shall not be
           obligated  to  pay legal fees and expenses incurred by any  person
           other than the Executive. However, the Employer shall be obligated
           to pay legal fees and expenses incurred by the Executive on behalf
           of the Executive's dependents and legal fees and expenses incurred
           by the estate of  the  Executive on behalf of the Executive or the
           Executive's dependents.

     3.7   The Employer shall be entitled to withhold from amounts to be paid
           to the Executive hereunder any federal, state or local withholding
           or other taxes or charges  which  it is from time to time required
           to withhold.

     3.8   The Employer agrees that, if the Executive's  employment  with the
           Employer   terminates  following  a  Change  in  Control  that  is
           applicable to  the Executive and during the Term of the Agreement,
           the Executive is  not  required  to  seek  other  employment or to
           attempt in any way to reduce any amounts payable to  the Executive
           hereunder. Further, the amount of any payment or benefit  provided
           for  in the Agreement shall not be reduced (except as provided  in
           clause  (4)  of  the  definition  of  Severance  Benefits)  by any
           compensation  earned  by the Executive as the result of employment
           by another employer, by retirement benefits, by offset against any
           amount claimed to be owed  by  the  Executive  to the Employer, or
           otherwise.

4.   EXCISE TAX GROSS-UP.

     4.1   Whether  or  not the Executive becomes entitled to  the  Severance
           Payment and Severance Benefits, if any of the payments or benefits
           received or to  be  received by the Executive in connection with a
           Change in Control or  the  Executive's  termination  of employment
           (whether  pursuant  to  the  terms  of the Agreement or any  other
           agreement,  plan, or arrangement with  the  Employer,  any  Person
           whose actions  result  in  a  Change  in  Control  or  any  Person
           affiliated  with  the  Employer  or such Person) (such payments or
           benefits,  excluding  the  Gross-Up  Payment,   being  hereinafter
           referred to as the "Total Payments") will be subject to the Excise
           Tax, the Employer shall pay to the Executive an additional  amount
           (the "Gross Up Payment") such that the net amount retained by  the
           Executive, after deduction of any Excise Tax on the Total Payments
           and  any  federal, state and local income and employment taxes and
           Excise Tax  upon  the  Gross-Up  Payment  (but  without  deducting
           federal, state and local income and employment taxes on the  Total
           Payments), shall be equal to the Total Payments.

     4.2   For purposes of determining whether any of the Total Payments will
           be  subject  to  the Excise Tax and the amount of such Excise Tax,
           (i) all of the Total  Payments  shall  be  treated  as  "parachute
           payments"  (within the meaning of Section 280G(b)(2) of the  Code)
           unless, in the  opinion  of tax counsel ("Tax Counsel") reasonably
           acceptable to the Executive  and  selected  by the accounting firm
           which  was,  immediately  prior  to  the  Change in  Control,  the
           Company's independent auditor (the "Auditor"),  such  payments  or
           benefits  (in  whole  or  in part) should not constitute parachute
           payments, including by reason  of  Section  280G(b)(4)(A)  of  the
           Code,  (ii)  all "excess parachute payments" within the meaning of
           Section 280G(b)(l)  of the Code shall be treated as subject to the
           Excise Tax unless, in  the  opinion  of  Tax  Counsel, such excess
           parachute  payments  (in  whole  or in part) represent  reasonable
           compensation for services actually rendered (within the meaning of
           Section 280G(b)(4)(B) of the Code)  in  excess  of the Base Amount
           allocable to such reasonable compensation, or should otherwise not
           be subject to the Excise Tax and (iii) the value  of  any  noncash
           benefits or any deferred payment or benefit shall be determined by
           the   Auditor  in  accordance  with  the  principles  of  Sections
           280G(d)(3)  and  (4)  of the Code. For purposes of determining the
           amount of the Gross Up  Payment,  the Executive shall be deemed to
           pay federal income tax at the highest  marginal  rate  of  federal
           income taxation in the calendar year in which the Gross Up Payment
           is  to  be  made  and  state and local income taxes at the highest
           marginal  rate of taxation  in  the  state  and  locality  of  the
           Executive's residence at the time of the Severance (or if there is
           no Severance,  then  the  date  on  which  the Gross-Up Payment is
           calculated for purposes of this Section 4.2),  net  of the maximum
           reduction  in  federal  income taxes which could be obtained  from
           deduction of such state and local taxes.

     4.3   In the event that the Excise  Tax is finally determined to be less
           than the amount taken into account  hereunder  in  calculating the
           Gross-Up Payment, the Executive shall repay to the Company, within
           five (5) business days following the time that the amount  of such
           reduction in the Excise Tax is finally determined, the portion  of
           the  Gross  Up  Payment  attributable to such reduction (plus that
           portion of the Gross Up Payment attributable to the Excise Tax and
           federal, state and local income  and  employment  taxes imposed on
           the Gross Up Payment being repaid by the Executive,  to the extent
           that such repayment results in a reduction in the Excise Tax and a
           dollar-for-dollar reduction in the Executive's taxable  income and
           wages  for  purposes  of  federal,  state  and  local  income  and
           employment  taxes). In the event that the Excise Tax is determined
           to exceed the  amount  taken into account hereunder in calculating
           the Gross-Up Payment (including  by  reason  of  any  payment  the
           existence  or  amount of which cannot be determined at the time of
           the Gross Up Payment),  the Company shall make an additional Gross
           Up Payment in respect of such excess (plus any interest, penalties
           or additions payable by the Executive with respect to such excess)
           within five (5) business  days  following the time that the amount
           of  such  excess  is finally determined.  The  Executive  and  the
           Company  shall  each   reasonably  cooperate  with  the  other  in
           connection  with  any  administrative   or   judicial  proceedings
           concerning  the existence or amount of liability  for  Excise  Tax
           with respect to the Total Payments.

     4.4   The payments  provided  in  Section  4.1 shall be made on the date
           that  is  6  months  after  the  Severance  Date  or  as  soon  as
           practicable thereafter; provided, however, that  if the amounts of
           such payments cannot be finally determined on or before  such day,
           the  Employer  shall pay to the Executive on such day an estimate,
           as determined in  good  faith  by  the Employer or, in the case of
           payments under Section 4.1 or 4.3, in accordance with Section 4.2,
           of the minimum amount of such payments  to  which the Executive is
           clearly  entitled  and shall pay the remainder  of  such  payments
           (together with interest  on  the  unpaid remainder (or on all such
           payments to the extent the Company  fails  to  make  such payments
           when due) at 120% of the rate provided in Section 1274(b)(2)(B) of
           the Code) as soon as the amount thereof can be determined.  In the
           event that the amount of the estimated payments exceeds the amount
           subsequently  determined  to  have  been due, such excess shall be
           paid by the Executive to the Employer  not  later  than  the fifth
           (5th) business day after demand by the Employer. At the time  that
           payments  are made under the Agreement, the Employer shall provide
           the Executive with a written statement setting forth the manner in
           which such  payments  were  calculated  and  the  basis  for  such
           calculations  including, without limitation, any opinions or other
           advice the Employer  has received from Tax Counsel, the Auditor or
           other advisors or consultants  (and  any  such  opinions or advice
           which are in writing shall be attached to the statement).

     4.5   The Employer also shall pay to the Executive all  legal  fees  and
           expenses  incurred  by  the  Executive in seeking in good faith to
           obtain or enforce any benefit  or  right provided by the Agreement
           or in connection with any tax audit  or  proceeding  to the extent
           attributable to the application of Section 4999 of the Code to any
           payment or benefit provided hereunder. Such payments shall be made
           within  five  (5)  business days after delivery of the Executive's
           written requests for  payment  accompanied  with  such evidence of
           fees and expenses incurred as the Employer reasonably may require.

5.   NOTICE OF TERMINATION.

     5.1   After  a  Change  in  Control  and during the Term, any  purported
           termination of the Executive's employment (other than by reason of
           death) shall be communicated by written notice of termination from
           the Employer to the Executive or  the Executive to the Employer in
           accordance with Section 6.9.

     5.2   The notice of termination shall indicate  the specific termination
           provision  in the Agreement relied upon and  shall  set  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. A notice of termination for Cause  shall
           include a copy of  a  resolution  duly  adopted by the affirmative
           vote  of  not  less  than  three-quarters  (3/4)   of  the  entire
           membership  of  the  Employer  Board at a meeting of the  Employer
           Board which was called and held  for  the  purpose  of considering
           such termination (after reasonable notice to the Executive  and an
           opportunity  for  the  Executive,  together  with  the Executive's
           counsel, to be heard before the Employer Board) finding  that,  in
           the  good  faith  opinion of the Employer Board, the Executive was
           guilty  of  conduct set  forth  in  clause  (i)  or  (ii)  of  the
           definition of Cause herein, and specifying the particulars thereof
           in detail.

     5.3   The notice of  termination  shall  specify the date of termination
           which, in the case of a termination  by the Employer, shall not be
           less than thirty (30) days (except in  the  case  of a termination
           for  Cause)  and,  in the case of a termination by the  Executive,
           shall not be less than  thirty  (30) days nor more than sixty (60)
           days, respectively, from the date  such  notice  of termination is
           given.

           (1)  Once the Employer or the Executive has specified  a  date  of
                termination   in   a  notice  of  termination,  the  date  of
                termination  cannot  be   changed  by  the  Employer  or  the
                Executive except by mutual consent.

           (2)  The date of termination must  be  at  least 30 days after the
                notice  of  termination unless the termination  is  for  Good
                Reason and Good  Reason  first occurs during the last 30 days
                of  the  Term  (determined without  regard  to  this  Section
                5.3(2)), in which  event the date of termination shall be (i)
                the  end  of the Term  (determined  without  regard  to  this
                Section 5.3(2))  if  the  Employer  receives  notice  of  the
                Executive's  intent  to terminate for Good Reason ten days or
                more before the end of the Term (determined without regard to
                this Section 5.3(2)) or  (ii)  the  later  of  ten days after
                receipt  by the Employer of notice of the Executive's  intent
                to terminate  for  Good  Reason or five days after the end of
                the Term (determined without  regard  to this Section 5.3(2))
                if the Employer does not receive notice  of  the  Executive's
                intent  to terminate for Good Reason ten days or more  before
                the end of  the  Term  (determined  without  regard  to  this
                Section 5.3(2)).

6.   GENERAL PROVISIONS.

     6.1   Except  as  otherwise  provided  herein  or  by  law,  no right or
           interest  of the Executive under the Agreement shall be assignable
           or transferable,  in  whole  or  in  part,  either  directly or by
           operation  of  law  or otherwise, including without limitation  by
           execution, levy, garnishment, attachment, pledge or in any manner;
           no attempted assignment  or  transfer  thereof shall be effective;
           and  no  right or interest of the Executive  under  the  Agreement
           shall be liable for, or subject to, any obligation or liability of
           such Executive.  When  a  payment is due under the Agreement to an
           Executive who is unable to  care  for  his or her affairs, payment
           may be made directly to the Executive's legal guardian or personal
           representative.

     6.2   If  the  Employer,  the  Company  or  any Affiliate  is  obligated
           pursuant to applicable law or by virtue  of  being  a  party  to a
           contract  (other  than  this  Agreement)  to  pay severance pay, a
           termination indemnity, notice pay or the like or  if the Employer,
           the  Company  or  any  Affiliate  is  obligated by law to  provide
           advance notice of separation ("Notice Period"), then any Severance
           Payment  hereunder  shall be reduced by the  amount  of  any  such
           severance pay, termination  indemnity,  notice pay or the like, as
           applicable, and by the amount of any compensation  received during
           any Notice Period.

     6.3   Neither  the  Agreement,  nor  any modification thereof,  nor  the
           creation of any fund, trust or account,  nor  the  payment  of any
           benefits shall be construed as giving any Executive, or any person
           whomsoever,  the  right  to  be  retained  in  the  service of the
           Employer,  and the Executive shall remain subject to discharge  to
           the same extent as if the Agreement had never been executed.

     6.4   If any provision  of  the  Agreement  shall  be  held  invalid  or
           unenforceable,  such  invalidity  or  unenforceability  shall  not
           affect  any  other  provisions  hereof, and the Agreement shall be
           construed  and  enforced  as  if  such  provisions  had  not  been
           included.

     6.5   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  amend  the  Agreement  retroactively  in  such a way as  to
           achieve  substantially  similar  economic results without  causing
           such  inclusion.  Any  such amendment  shall  be  binding  on  the
           Executive unless the Executive objects within 30 days after a copy
           of such amendment is delivered  to  the  Executive.  In any event,
           the  Executive  will  be solely responsible for  any  adverse  tax
           consequences to the Executive.

     6.6   The Agreement shall be binding upon and shall inure to the benefit
           of and be enforceable by  the  Employer  and  its  successors  and
           assigns,  and  by  each  Executive  and  by the personal and legal
           representatives,  executors,  administrators,  successors,  heirs,
           distributees, devisees and legatees  of  each  Executive.  If  any
           Executive  shall  die  while  any amount would still be payable to
           such  Executive  (other  than  amounts   which,  by  their  terms,
           terminate upon the death of the Executive)  if  the  Executive had
           continued  to  live,  all such amounts, unless otherwise  provided
           herein,  shall  be  paid in  accordance  with  the  terms  of  the
           Agreement   to   the  executors,   personal   representatives   or
           administrators of the Executive's estate.

     6.7   The headings and captions  herein  are  provided for reference and
           convenience only, shall not be considered  part  of the Agreement,
           and shall not be employed in the construction of the Agreement.

     6.8   The  Agreement shall not be funded. The Executive shall  not  have
           any right to, or interest in, any assets of the Employer which may
           be applied  by  the  Employer  to the payment of benefits or other
           rights under the Agreement.

     6.9   All  notices  and all other communications  provided  for  in  the
           Agreement (i) shall  be  in writing, (ii) shall be hand delivered,
           sent by overnight courier  or  by  United  States registered mail,
           return receipt requested and postage prepaid,  addressed,  in  the
           case  of  the  Employer,  to the principal office of the Employer,
           attention President, and in  the  case  of  the  Company,  to 2855
           Campus  Drive,  San  Mateo,  California  94403,  attention General
           Counsel,  and  in  the  case of the Executive, to the  last  known
           address of the Executive,  and  (iii) shall be effective only upon
           actual receipt.

     6.10  The Agreement shall be construed  and  enforced  according  to the
           laws  of  the  State  of  Delaware  (without  giving effect to the
           conflict of laws principles thereof) to the extent  not  preempted
           by federal law, which shall otherwise control.









                                                                    EXHIBIT A
                                                                    ---------
                        WAIVER AND RELEASE OF CLAIMS
                        ----------------------------

In  consideration  of,  and  subject  to,  the  payment  to  be made to me by
____________ (the "Employer") of the "Severance Payment" (as defined  in  the
Severance  Agreement,  dated as of _________, entered into between me and the
Company (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, 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.

Notwithstanding  the foregoing or any other provision hereof, nothing in this
Waiver and Release  of  Claims  shall  adversely  affect  (i)  my  rights  to
Severance Benefits under 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; or (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 have been given  not  less  than 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),  and that I have had
the opportunity to consult with an attorney or other advisor of my choice and
have  been  advised  by the Company to do so if I choose. 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.


            _________________________________________________________
                                Signature of Executive

            _________________________________________________________
                                Print Name

            _________________________________________________________
                                Date Signed









                                                                    EXHIBIT B
                                                                    ---------


                        Assignment and Assumption of
                             Severance Agreement
                          Between ____________ and
                               ______________,
                              As of ___________


____________  (the "Old Employer") and ______________ (the "Executive")  have
entered into a  Severance  Agreement  dated ______________ (the "Agreement").
The  Executive  is  transferring  employment   from   the   Old  Employer  to
____________ (the "New Employer"), effective ________. The fourth  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 fourth bullet of the
Agreement -

1.   The Old Employer hereby assigns the Agreement to the New Employer.

2.   The  New  Employer hereby assumes the obligations of  the  Old  Employer
     under the Agreement.

3.   The assignment and assumption are effective as of the date employment is
     transferred.

4.   The Executive  hereby  acknowledges  receipt of notice of the assignment
     and assumption.


-----------------------------------------------------------------
|THE OLD EMPLOYER               |THE NEW EMPLOYER               |
|                               |                               |
|                               |                               |
|By: ___________________________|By: ___________________________|
|Name:                          |Name:                          |
|Title:                         |Title:                         |
-----------------------------------------------------------------
|                               |                               |
|EXECUTIVE                      |                               |
|                               |                               |
|                               |                               |
|______________________________ |                               |
|Name:  Herbert J. Schmidt      |                               |
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