Document:

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                                                                     EXHIBIT 4.2

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of February 24, 2004, by and among VERSO TECHNOLOGIES, INC.,
a Minnesota corporation (the "COMPANY"), and the investors signatory hereto
(each a "INVESTOR" and collectively, the "INVESTORS").

                  This Agreement is made pursuant to the Securities Purchase
Agreement, dated as February 20, 2004, among the Company and the Investors (the
"PURCHASE AGREEMENT").

                  The Company and the Investors hereby agree as follows:

         1.       Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. As used in this Agreement, the following
terms shall have the respective meanings set forth in this Section 1:

                  "EFFECTIVE DATE" means, as the case may be, the date that a
Registration Statement filed pursuant to Section 2(a) or 2(b) is first declared
effective by the Commission.

                  "EFFECTIVENESS DATE" means: (a) with respect to the
Registration Statement required to be filed under Section 2(a) to cover the
resale by the Holders of the Registrable Securities, the earlier of: (a)(i) the
90th day following the Closing Date; provided, that, if the Commission reviews
and has written comments to such Registration Statement that would require the
filing of a pre-effective amendment thereto with the Commission, then the
Effectiveness Date under this clause (a)(i) shall be the 120th day following the
Closing Date, and (ii) the fifth Trading Day following the date on which the
Company is notified by the Commission that such Registration Statement will not
be reviewed or is no longer subject to further review and comments, and (b) with
respect to any additional Registration Statements that may be required pursuant
to Section 2(b), the earlier of: (b)(i) the 90th day following the date on which
the Company first knows, or reasonably should have known, that such additional
Registration Statement is required under such Section; provided, that, if the
Commission reviews and has written comments to such Registration Statement that
would require the filing of a pre-effective amendment thereto with the
Commission, then the Effectiveness Date under this clause (b)(i) shall be the
120th day following the date that the Company first knows, or reasonably should
have known, that such additional Registration Statement is required under such
Section and (ii) the fifth Trading Day following the date on which the Company
is notified by the Commission that such additional Registration Statement will
not be reviewed or is no longer subject to further review and comments.

                  "EFFECTIVENESS PERIOD" means, for any Registration Statement,
the date which is the earlier of (i) five years after the Effective Date for
such Registration Statement, (ii) such time as all of the Registrable Securities
covered by such Registration Statement have been publicly sold by the Holders,
or (iii) such time as all of the Registrable Securities covered by such
Registration Statement may be sold pursuant to Rule 144(k).

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

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                  "FILING DATE" means (a) with respect to the Registration
Statement required to be filed pursuant to Section 2(a) in respect of the
Registrable Securities, the 30th day following the Closing Date, and (b) with
respect to any additional Registration Statements that may be required pursuant
to Section 2(b), the 30th day following the date on which the Company first
knows, or reasonably should have known, that such additional Registration
Statement is required under such Section.

                  "HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "INDEMNIFIED PARTY" shall have the meaning set forth in
Section 5(c).

                  "INDEMNIFYING PARTY" shall have the meaning set forth in
Section 5(c).

                  "LOSSES" shall have the meaning set forth in Section 5(a).

                  "PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "PROSPECTUS" means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                  "REGISTRABLE SECURITIES" means: (i) the Shares and (ii) the
Warrant Shares.

                  "REGISTRATION STATEMENT" means any registration statement
required to be filed in accordance with Section 2(a) or (b), including (in each
case) the Prospectus, amendments and supplements to such registration statements
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be incorporated
by reference in such registration statements.

                  "RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "RULE 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

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                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "SHARES" means the shares of Common Stock issued or issuable
to the Investors pursuant to the Purchase Agreement.

                  "TRADING MARKET" means whichever of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ National Market or the NASDAQ
SmallCap Market, on which the Common Stock is listed or quoted for trading on
the date in question.

                  "WARRANTS" mean the Warrants issued or issuable pursuant to
the Purchase Agreement.

                  "WARRANT SHARES" means the shares of Common Stock issuable
upon exercise of the Warrants.

         2.       Registration.

                  (a)      On or prior to the Filing Date, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of all Registrable Securities not already covered by an existing and
effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall contain (except if
otherwise required pursuant to written comments received from the Commission
upon a review of such Registration Statement) the "Plan of Distribution"
attached hereto as Annex A. The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act as soon
as possible in accordance with the time frames set forth in Section 2(c), below,
and shall use its best efforts to keep the Registration Statement continuously
effective under the Securities Act until the date which is the earlier of (i)
five years after the Effective Date, (ii) such time as all of the Registrable
Securities have been publicly sold by the Holders, or (iii) such time as all of
the Registrable Securities may be sold pursuant to Rule 144(k) (the
"EFFECTIVENESS PERIOD").

                  (b)      If for any reason the Commission does not permit all
of the Shares and all Warrant Shares to be included in the Registration
Statement filed pursuant to Section 2(a), or for any other reason any
Registrable Securities are not included in a Registration Statement filed under
this Agreement, then the Company shall prepare and file as soon as possible
after the date on which the Commission shall indicate as being the first date or
time that such filing may be made, but in any event by its Filing Date, an
additional Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415.
Each such Registration Statement shall contain (except if otherwise required
pursuant to written comments received from the Commission upon a review of such
Registration Statement) the "Plan of Distribution" attached hereto as Annex A.
The Company shall use its best efforts to cause each such Registration Statement
to be declared effective under the Securities Act as soon as possible in
accordance with the time frames set forth in Section 2(c), below, and shall use
its best efforts to keep such Registration Statement continuously effective
under the Securities Act during its entire Effectiveness Period.

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                  (c)      If: (i) a Registration Statement is not filed on or
prior to its Filing Date (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (i)), or (ii) the Company fails to file a pre-effective
amendment responsive to comments received from the Commission to a Registration
Statement filed hereunder by the tenth day following the date such comments are
received from the Commission, (iii) a Registration Statement is not declared
effective by the Commission on or prior to its required Effectiveness Date, or
(iv) after its Effective Date, without regard for the reason thereunder or
efforts therefor, such Registration Statement ceases for any reason to be
effective and available to the Holders as to all Registrable Securities to which
it is required to cover at any time prior to the expiration of its Effectiveness
Period, for an aggregate of 20 Trading Days for all such events (any such
failure or breach being referred to as an "EVENT," and for purposes of clauses
(i), and (iii), for purposes of clause (ii) the date on which such ten days are
exceeded or for purposes of clause (iv) the date on which such twenty Trading
Day period is exceeded, being referred to as "EVENT DATE"), then, in addition to
any other rights available to the Holders under the Transaction Documents or
under applicable law, (x) on each such Event Date the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a penalty, equal to
1.0% of the aggregate unsold portion of the Investment Amount of such Holder
pursuant to the Purchase Agreement (the full amount of such liquidated damages
being due and payable without pro ration on such Event Date; and (y) on each
monthly anniversary of each such Event Date thereof (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured, the
Company shall pay to each Holder an amount in cash, as liquidated damages and
not as a penalty, equal to 1.0% of the aggregate unsold portion of the
Investment Amount paid by such Holder pursuant to the Purchase Agreement;
provided, however, that the parties agree that the total amount of liquidated
damages that are payable by the Company for all Events is limited with respect
to each Holder to an amount equal to 12% (for all Events aggregated) of the
aggregate unsold portion of the Investment Amount of such Holder pursuant to the
Purchase Agreement. If the Company fails to pay any liquidated damages pursuant
to this Section in full within seven days after the date payable, the Company
will pay interest thereon at a rate of 12% per annum (or such lesser maximum
amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such liquidated damages are due until such amounts, plus all
such interest thereon, are paid in full. The liquidated damages pursuant to the
terms hereof shall apply on a pro rata basis for any portion of a month prior to
the cure of an Event.

         3.       Registration Procedures

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a)      Not less than four Trading Days prior to the filing
of a Registration Statement or any related Prospectus or any amendment or
supplement thereto, the Company shall furnish to the Holders copies of the
"Selling Stockholders" section of such document, the "Plan of Distribution" and
any risk factor contained in such document that addresses specifically this
transaction or the Selling Stockholders, as proposed to be filed which documents
will be subject to the review of such Holders. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements
thereto that does not contain the disclosure

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containing such Holder as a "Selling Stockholder" as provided to the Company by
such Holder in connection therewith; provided, however, that notwithstanding any
provision in this Agreement, all periods under Section 2 of this Agreement shall
be tolled for each day more than two Trading Days that the Company does not
receive the written disclosure of a Holder's beneficial ownership of Common
Stock, "control person" with respect to the Registrable Securities, and the name
and address of such Holder following the Company's delivery to the Holder of the
Registration Statement, related Prospectus or information request.

                  (b)      (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to each Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep such
Registration Statement continuously effective as to the applicable Registrable
Securities for its Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) use its best efforts
to cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424; (iii) use its best efforts to respond as promptly as reasonably
possible to any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and, as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from
and to the Commission relating to such Registration Statement that would not
result in the disclosure to the Holders of material and non-public information
concerning the Company; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
Registration Statements and the disposition of all Registrable Securities
covered by each Registration Statement.

                  (c)      Notify the Holders as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than three Trading Days prior to
such filing) and (if requested by any such Person) confirm such notice in
writing no later than one Trading Day following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company shall
provide true and complete copies thereof and all written responses thereto to
each of the Holders that pertain to the Holders as a Selling Stockholder or to
the Plan of Distribution, but not information which the Company believes would
constitute material and non-public information); and (C) with respect to each
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a Registration Statement
or Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or

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that requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

                  (d)      Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

                  (e)      Furnish to each Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto and all
exhibits to the extent requested by such Person (including those previously
furnished) promptly after the filing of such documents with the Commission.

                  (f)      Promptly deliver to each Holder, without charge, as
many copies of each Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

                  (g)      Prior to any public offering of Registrable
Securities, use its best efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of all
jurisdictions within the United States reasonably requested by any Holder
proposing to sell securities in such jurisdiction, to keep each such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statements; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or subject the Company to any material tax in
any such jurisdiction where it is not then so subject.

                  (h)      Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statements, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may request.

                  (i)      Upon the occurrence of any event contemplated by
Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the affected Registration
Statements or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, no Registration
Statement nor any Prospectus will contain an untrue statement of a material fact
or omit to state a material fact required to be

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stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

         4.       Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.

         5.       Indemnification.

                  (a)      Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, investment advisors, partners,
members and employees of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable costs of preparation and reasonable attorneys'
fees) and expenses (collectively, "LOSSES"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact contained
in any Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that (1) such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex A hereto for this
purpose) or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or

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defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of an Advice or an amended or supplemented Prospectus, but only if and to the
extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have been
corrected. The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.

                  (b)      Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses, as incurred, arising solely out of or based solely upon: (x)
such Holder's failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading to the extent, but only to the extent
that, (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement (it being understood that the
Holder has approved Annex A hereto for this purpose), such Prospectus or such
form of Prospectus or in any amendment or supplement thereto or (2) in the case
of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of an Advice or an amended or supplemented
Prospectus, but only if and to the extent that following the receipt of the
Advice or the amended or supplemented Prospectus the misstatement or omission
giving rise to such Loss would have been corrected. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

                  (c)      Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.

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                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld, delayed or conditioned. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

                  All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).

                  (d)      Contribution. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

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                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

                  The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.

         6.       Miscellaneous

                  (a)      Remedies. In the event of a breach by the Company or
by a Holder, of any of their obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate. Notwithstanding anything to the
contrary contained in this Agreement, specifically including, but not limited
to, the liquidated damages provisions set forth in Section 2(c), above, each
Holder and the Company hereby agree that the maximum amount of liquidated
damages permitted in accordance with Section 2(c), above, is not, and shall not
be deemed to be, (x) the sole remedy of any of the Holders hereunder, (y) a bar
against any Holder pursuing any action against the Company to enforce any of
such Holder's respective rights hereunder (or in respect of other agreements
related to the transactions contemplated hereby or executed contemporaneously
herewith) or to obtain the benefits of this Agreement (or of any of the other
agreements related to the transactions contemplated hereby or executed
contemporaneously herewith), or (z) a limitation of any remedy to which any
Holder may otherwise be entitled to pursue and be awarded against the Company;
provided, however, that, if any such economic remedy shall be awarded against
the Company, it shall be reduced, on a dollar-for-dollar basis, by an amount
equivalent to the amount of liquidated damages tendered to such Holder by the
Company in connection with the Company's obligations, as set forth in Section
2(c).

                  (b)      No Piggyback on Registrations. Except as and to the
extent specified in Schedule 3.1(u) to the Purchase Agreement, neither the
Company nor any of its security holders (other than the Holders in such capacity
pursuant hereto) may include securities of the Company in a Registration
Statement to be filed pursuant to this Agreement other than the Registrable
Securities, and the Company shall not after the date hereof enter into any
agreement providing any such right to any of its security holders. Except as and
to the extent specified in Schedule 3.1(u) of the Purchase Agreement, the
Company has not previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person, which agreements
have not been fully satisfied.

                                       10
<PAGE>

                  (c)      Compliance. Each Holder covenants and agrees that it
will comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

                  (d)      Discontinued Disposition. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Section
3(c), such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or
until it is advised in writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

                  (e)      Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.

                  (f)      Amendments and Waivers. No provision of this
Agreement may be waived or amended except in a written instrument signed by the
Company and the Investors holding a majority of the Registrable Securities. No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.

                  (g)      Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time) on a Trading Day, (ii) the Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 5:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by

                                       11
<PAGE>

the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

         If to the Company:                 Verso Technologies, Inc.
                                            400 Galleria Parkway, Suite 300
                                            Atlanta, GA 30339
                                            Attention: Chief Financial Officer
                                            (678) 589-3750 (facsimile)

         With a copy to:
         (which shall not                   Rogers & Hardin LLP
         constitute a notice)               2700 International Tower
                                            229 Peachtree Street, NE
                                            Atlanta, GA 30303
                                            Attention: Robert C. Hussle, Esq.
                                            (404) 525-2224 (facsimile)

         If to an Investor:                 To the address set forth under such
                                            Investor's name on the signature
                                            pages hereto.

         If to any other Person who is then the registered Holder:

                                            To the address of such Holder as it
                                            appears in the stock transfer books
                                            of the Company

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

                  (h)      Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder. The Company may
not assign its rights or obligations hereunder without the prior written consent
of each Holder. Each Holder may assign its respective rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.

                  (i)      Execution and Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.

                  (j)      Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be

                                       12
<PAGE>

commenced exclusively in the state and federal courts sitting in the City of New
York, Borough of Manhattan (the "NEW YORK COURTS"). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any Proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Agreement,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its attorney's fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

                  (k)      Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                  (l)      Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

                  (m)      Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  (n)      Independent Nature of Investors' Obligations and
Rights. The obligations of each Investor hereunder are several and not joint
with the obligations of any other Investor hereunder, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor hereunder. The decision of each Investor to purchase Securities
pursuant to the Transaction Documents has been made independently of any other
Investor. Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Investor pursuant hereto or
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its

                                       13
<PAGE>

investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Investor to be joined as an additional
party in any Proceeding for such purpose.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                           SIGNATURE PAGES TO FOLLOW]

                                       14
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                        VERSO TECHNOLOGIES, INC.

                                        By: /s/ Steven A. Odom
                                            -----------------------------------
                                        Name:  Steven A. Odom
                                        Title: Chairman of the Board and
                                               Chief Executive Officer

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES OF INVESTOR TO FOLLOW]

<PAGE>

                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

                                    [INVESTOR]

                                    By:_____________________________________
                                       Name:
                                       Title:

                                    Address for Notice:

                                    Facsimile No.:
                                    Attn:

<PAGE>

                                                                         Annex A

                              Plan of Distribution

         The Selling Stockholders and any of their pledgees, donees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The Selling Stockholders may use any one or more of
the following methods when selling shares:

-    ordinary brokerage transactions and transactions in which the broker-dealer
     solicits purchasers;

-    block trades in which the broker-dealer will attempt to sell the shares as
     agent but may position and resell a portion of the block as principal to
     facilitate the transaction;

-    purchases by a broker-dealer as principal and resale by the broker-dealer
     for its account;

-    an exchange distribution in accordance with the rules of the applicable
     exchange;

-    privately negotiated transactions;

-    to cover short sales made after the date that this Registration Statement
     is declared effective by the Securities and Exchange Commission;

-    broker-dealers may agree with the Selling Stockholders to sell a specified
     number of such shares at a stipulated price per share;

-    a combination of any such methods of sale; and

-    any other method permitted pursuant to applicable law.

         The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

         Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

         The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the Shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of Common Stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling

<PAGE>

stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.

         Upon the Company being notified in writing by a Selling Stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of Common Stock through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed, if required, pursuant to Rule
424(b) under the Securities Act, disclosing (i) the name of each such Selling
Stockholder and of the participating broker-dealer(s), (ii) the number of shares
involved, (iii) the price at which such the shares of Common Stock were sold,
(iv) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this prospectus, and (vi) other facts material to the transaction.
In addition, upon the Company being notified in writing by a Selling Stockholder
that a donee or pledge intends to sell more than 500 shares of Common Stock, a
supplement to this prospectus will be filed if then required in accordance with
applicable securities law.

         The Selling Stockholders also may transfer the shares of Common Stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.

         The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, that can be attributed to the
sale of Securities will be paid by the Selling Stockholder and/or the
purchasers.

         Each Selling Stockholder has represented and warranted to the Company
that, at the time it acquired the securities subject to this Registration
Statement, it did not have any agreement or understanding, directly or
indirectly, with any person to distribute any of such securities. The Company
has advised each Selling Stockholder that it may not use shares registered on
this Registration Statement to cover short sales of our Common Stock made prior
to the date on which this Registration Statement was declared effective by the
Securities and Exchange Commission.

         The Company is required to pay all fees and expenses incident to the
registration of the shares, but the Company will not receive any proceeds from
the sale of the Common Stock. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.EX-10.1

 

EXHIBIT 10.1

Change of Control

Severance Agreement

          THIS AGREEMENT between RYDER SYSTEM, INC., a Florida corporation (the
“Corporation”), and name (the “Executive”), dated as of the first day of
November, 2000.

WITNESSETH:

     WHEREAS, the Executive is an officer and/or key employee of the
Corporation and/or its subsidiaries or affiliates and an integral part of its
management; and

     WHEREAS, in order to retain the Executive and to assure both the Executive
and the Corporation of the continuity of management in the event of any actual
or threatened Change of Control (as defined in Section 2) of the Corporation,
the Corporation desires to provide severance benefits to the Executive if the
Executive’s employment with the Corporation and/or its subsidiaries or
affiliates terminates as provided herein concurrent with or subsequent to a
Change of Control;

     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:

     l.     Term of Agreement. This Agreement shall become effective as of the
date hereof and shall terminate upon the occurrence of the earliest of the
events specified below; provided, however, that Section 5, including the
release referenced therein, shall survive termination of this Agreement:

          (a) the last day of the Severance Period (as defined in Section 3(f));

          (b) the termination of the Executive’s employment by the Corporation or
its subsidiaries or affiliates for Death, Disability or Cause, or by the
Executive other than for Good Reason (as defined in Section 3(b), (a), and (c)
respectively);

          (c) one (1) year following the date of receipt of a mailing (by overnight
express mail or registered or certified mail, return receipt requested) or hand
delivery to the Executive by the Corporation of written notice of its intent to
terminate this Agreement; provided, however, that such written notice shall
have been received by the Executive prior to the date of a Change of Control
(as defined in Section 2);

          (d) three (3) years following the date of a Change of Control (as defined
in Section 2) if the Executive’s employment with the Corporation or its
subsidiaries or affiliates has not been terminated as of such time; or

          (e) the material breach by the Executive of the provisions of Section 5,
including the release referenced therein.

 

 

          Additionally, notwithstanding anything in this Agreement to the contrary,
if the Executive should die while receiving severance pay or benefits pursuant
to Section 4 as a result of the termination of the Executive’s employment by
the Corporation or its subsidiaries or affiliates other than for Death,
Disability or Cause, or by the Executive for Good Reason (as defined in
Sections 3(b), (a), and (c) respectively), this Agreement shall terminate
immediately upon the Executive’s death and both parties shall be released from
all obligations under this Agreement other than those under the release
referenced in Section 5(b)(II) and those relating to amounts or benefits which
are payable under this Agreement within five (5) business days after the
Executive’s Date of Termination (if not already paid), are vested under any
plan, program, policy or practice, or the Executive is otherwise entitled to
receive upon his death, including, but not limited to, life insurance. Any
payment due pursuant to the preceding sentence upon the Executive’s death shall
be made to the estate of the deceased Executive, unless the plan, program,
policy, practice or law provides otherwise.

     2.     Change of Control. For the purpose of this Agreement, a “Change of
Control” shall be deemed to have occurred if:

          (a) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)) (a “Person”) becomes the beneficial owner, directly or indirectly,
of twenty percent (20%) or more of the combined voting power of the
Corporation’s outstanding voting securities ordinarily having the right to vote
for the election of directors of the Corporation; provided, however, that for
purposes of this subparagraph (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by any employee benefit
plan or plans (or related trust) of the Corporation and its subsidiaries and
affiliates or (ii) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subparagraph (c) of this
Section 2; or

          (b) the individuals who, as of August 18, 1995, constituted the Board of
Directors of the Corporation (the “Board” generally and as of August 18, 1995
the “Incumbent Board”) cease for any reason to constitute at least two-thirds
(2/3) of the Board, provided that any person becoming a director subsequent to
August 18, 1995 whose election, or nomination for election, was approved by a
vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened election contest, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934
Act) shall be, for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or

          (c) there is a reorganization, merger or consolidation of the Corporation
(a “Business Combination”), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Corporation’s outstanding
common stock and outstanding voting securities ordinarily having the right to
vote for the election of directors of the Corporation immediately prior to such
Business Combination beneficially own, directly or indirectly, more than fifty
percent (50%) of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities ordinarily
having the right to vote for the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Corporation or all

2

 

or substantially all of the Corporation’s assets either directly or through one
or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Corporation’s
outstanding common stock and outstanding voting securities ordinarily having
the right to vote for the election of directors of the Corporation, as the case
may be, (ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan or plans (or related trust) of the
Corporation or such corporation resulting from such Business Combination and
their subsidiaries and affiliates) beneficially owns, directly or indirectly,
20% or more of the combined voting power of the then outstanding voting
securities of the corporation resulting from such Business Combination and
(iii) at least two-thirds (2/3) of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or

          (d) there is a liquidation or dissolution of the Corporation approved by
the shareholders; or

          (e) there is a sale of all or substantially all of the assets of the
Corporation.

If a Change of Control occurs and if the Executive’s employment is terminated
prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment
(A) was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (B) otherwise arose in connection
with or in anticipation of a Change of Control, a Change of Control shall be
deemed to have retroactively occurred on the date immediately prior to the date
of such termination of employment.

     3.     Certain Definitions.

          (a) Cause. The Executive’s employment may be terminated for Cause only if
a majority of the Incumbent Board determines that Cause (as defined below)
exists. For purposes of this Agreement, “Cause” means (i) an act or acts of
fraud, misappropriation, or embezzlement on the Executive’s part which result
in or are intended to result in his or another’s personal enrichment at the
expense of the Corporation or its subsidiaries or affiliates, (ii) conviction
of a felony, (iii) conviction of a misdemeanor involving moral turpitude, or
(iv) willful failure to report to work for more than thirty (30) continuous
days not attributable to eligible vacation or supported by a licensed
physician’s statement.

          (b) Death or Disability.

               (i) The Executive’s employment will be terminated by the Corporation or
its subsidiaries or affiliates automatically upon the Executive’s death
(“Death”).

               (ii) After having established the Executive’s Disability (as defined
below), the Corporation may give to the Executive written notice of the
Corporation’s and/or its subsidiaries’ or affiliates’ intention to terminate
the Executive’s employment for Disability. The Executive’s employment will
terminate for Disability effective on the thirtieth (30th) day after the
Executive’s receipt of such notice (the “Disability Effective Date”) if within
such thirty (30) day period after such receipt the Executive shall fail to
return to full-time performance of his duties.

3

 

For purposes of this Agreement, “Disability” means disability which after the
expiration of more than five (5) months after its commencement is determined to
be total and permanent by an independent licensed physician mutually agreeable
to the parties.

          In the event of the Executive’s termination for Death or Disability, the
Executive and, to the extent applicable, his legal representatives, executors,
heirs, legatees and beneficiaries, shall have no rights under this Agreement
and their sole recourse, if any, shall be under the death or disability
provisions of the plans, programs, policies and practices of the Corporation
and/or its subsidiaries and affiliates, as appropriate.

          (c) Good Reason. For purposes of this Agreement, “Good Reason” means:

               (i) any failure by the Corporation and/or its subsidiaries or affiliates
to furnish the Executive and/or where applicable, his family, with (A) total
annual cash compensation (including annual incentive compensation), (B) total
aggregate value of perquisites, (C) total aggregate value of benefits, or (D)
total aggregate value of long term compensation, including but not limited to,
stock options, in each case at least equal to or otherwise comparable to in the
aggregate or exceeding the highest level received by the Executive from the
Corporation and/or its subsidiaries or affiliates during the six (6) month
period (or the one (1) year period for compensation, perquisites and benefits
which are paid less frequently than every six (6) months) immediately preceding
the Change of Control, other than an inadvertent failure remedied by the
Corporation within five (5) business days after receipt of notice thereof given
by the Executive;

               (ii) the Corporation’s and/or its subsidiaries’ or affiliates’ requiring
the Executive to be based or to perform services at any site or location more
than fifteen (15) miles from the site or location at which the Executive is
based at the time of the Change of Control, except for travel reasonably
required in the performance of the Executive’s responsibilities (which does not
materially exceed the level of travel required of the Executive in the six (6)
month period immediately preceding the Change of Control);

               (iii) any failure by the Corporation to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by Section
8(b);

               (iv) any failure by the Corporation to pay into the Trust(s) (as defined
in Section 4(c)) the amounts and at the time or times as are required pursuant
to the terms of such Trust(s);

               (v) any purported termination by the Corporation or its subsidiaries or
affiliates of the Executive’s employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 3(d), which
purported termination shall not be effective for purposes of this Agreement; or

               (vi) if the Executive is in management level 14 or above immediately prior
to the Change of Control, (A) any assignment to the Executive of duties
inconsistent in any material respect with the highest level of the Executive’s
position (including titles and reporting relationships), authority,
responsibilities or status as in effect at any time during the six (6) month

4

 

period immediately preceding the Change of Control without the express prior
written consent of the Executive (which consent the Executive has the absolute
right to withhold), or (B) any other material adverse change in such position,
authority, responsibilities or status without the express prior written consent
of the Executive (which consent the Executive has the absolute right to
withhold).

          For the purposes of this Section 3(c), any good faith interpretation by
the Executive of the foregoing definitions of “Good Reason” shall be conclusive
on the Corporation. Additionally, the Executive’s continued employment shall
not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.

          (d) Notice of Termination. Any termination of the Executive’s employment
by the Executive for Good Reason or by the Corporation or its subsidiaries or
affiliates for any reason other than Death shall be communicated by a Notice of
Termination to the other party, with a copy to the Trustee (as defined in
Section 4(c)) hereto given in accordance with Section 9(b). For purposes of
this Agreement, a “Notice of Termination” means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the
provision so indicated, and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination
date (which date shall be not more than fifteen (15) days after the giving of
such notice or, in the event of Disability, the Disability Effective Date).

          (e) Date of Termination. Date of Termination means the date of receipt by
the Executive or the Corporation or its subsidiaries or affiliates of the
Notice of Termination or any later date specified therein, as the case may be;
provided, however, that if the Executive’s employment is terminated by reason
of Death or Disability, the Date of Termination shall be the date of Death of
the Executive or the Disability Effective Date, as the case may be.

          (f) Severance Period. Unless terminated sooner pursuant to Section 1, the
Severance Period means the period set forth below depending on the Executive’s
management level immediately preceding either the Notice of Termination or, if
greater, the Change of Control, which period shall begin on the day following
the Executive’s Date of Termination:

	 	 	 
	Chief Executive Officer	 	
Three (3) years
	Mgmt. Level 19 or above	 	
Three (3) years
	Mgmt. Level 15-18	 	
Two (2) years
	Mgmt. Level 14	 	
One (1) year and six (6) months
	Mgmt. Level 13	 	
One (1) year
	Mgmt. Level 12	 	
Nine (9) months
	Mgmt. Level 11	 	
Six (6) months

     4.     Obligations of the Corporation.

          (a) Circumstances of Termination.

5

 

               (i) If, within the three (3) year period commencing on a Change of Control
of the Corporation, (A) the Corporation or its subsidiaries or affiliates shall
terminate the Executive’s employment for any reason other than for Death,
Disability or Cause, or (B) the Executive shall terminate his employment with
the Corporation or its subsidiaries or affiliates for Good Reason, the
Corporation agrees to provide the Executive with compensation, benefits and
perquisites in accordance with the terms and provisions set forth in Subsection
(iii) below and the other provisions of this Agreement, and the Executive
agrees that he shall be subject to such terms and provisions. The Executive
shall not be deemed to have terminated his employment with the Corporation or
any of its subsidiaries or affiliates if he leaves the employ of the
Corporation or any of its subsidiaries or affiliates for immediate reemployment
with the Corporation or any of its subsidiaries or affiliates.

               (ii) If during the term of this Agreement, (A) the Corporation or its
subsidiaries or affiliates shall terminate the Executive’s employment for
Death, Disability or Cause or (B) the Executive shall terminate his employment
with the Corporation or its subsidiaries or affiliates other than for Good
Reason, then the Executive shall not be entitled to any of the benefits set
forth in Subsection (iii) below or in any other section of this Agreement,
except to the extent of the amounts which represent vested benefits or which
the Executive is otherwise entitled to receive under any plan, program, policy
or practice of the Corporation or any of its subsidiaries or affiliates at or
subsequent to the Executive’s Date of Termination.

               (iii) If the Executive is entitled to receive severance pay and benefits
under Subsection (i) above, the Corporation agrees to provide the Executive
with the following compensation, benefits and perquisites, subject to Section
5(b):

		
	 	     (I) Cash Entitlement. The Corporation and/or the Trustee (as
defined in Section 4(c)) shall pay to the Executive the aggregate of the
amounts determined pursuant to clauses a through f below:
	 
	 	          a. Unpaid Salary and Vacation. If not already paid, the Executive’s
base salary and unused vacation entitlement through the Executive’s Date
of Termination at the rate in effect at the time the Notice of
Termination was given, or if greater, at the highest rate in effect
during the six (6) month period immediately preceding the Change of
Control.
	 
	 	          b. Salary Multiple. The Executive’s annual base salary at the rate
in effect at the time the Notice of Termination was given, or if greater,
at the highest rate in effect during the six (6) month period immediately
preceding the Change of Control (“Annual Base Salary”), multiplied by the
following salary multiple depending on the Executive’s management level
immediately preceding either the Notice of Termination or, if greater,
the Change of Control:

	 	 	 	 	 
	Chief Executive Officer	 	 	
3	 
	Mgmt. Level 19 or above	 	 	
3	 
	Mgmt. Level 15-18	 	 	
2	 
	Mgmt. Level 14	 	 	
1.5	 
	Mgmt. Level 13	 	 	
1	 

6

 

	 	 	 	 	 
	Mgmt. Level 12	 	 	
..75	 
	Mgmt. Level 11	 	 	
..5	 

                    c.
Tenure - Related Bonus. An amount equal to the product of (i) the
Executive’s Annual Base Salary multiplied by (ii) the stated target bonus
opportunity percentage available to the Executive under the respective
incentive compensation plan immediately preceding either the Notice of
Termination or, if greater, the Change of Control multiplied by (iii) the
“Executive’s Three Year Average Bonus Percentage” (as defined below) (the
product of (i), (ii) and (iii) hereinafter referred to as the “Bonus Average”)
multiplied by the number of the Executive’s full and prorated partial years of
service with the Corporation and/or its subsidiaries or affiliates, subject to
a maximum of twelve (12) years, divided by twelve (12).

		
	 	     The “Executive’s Three Year Average Bonus Percentage” is the sum of
the Bonus Percentages Paid to the Executive divided by the stated target
bonus opportunity percentages available to the Executive rounded to one
decimal place (e.g., 86.3%) for each of the three (3) fiscal years
immediately preceding either the Notice of Termination or, if greater,
the Change of Control divided by three (3). Bonus Percentage Paid
constitutes the actual bonus paid to the Executive in the related fiscal
year expressed as a percentage of annual base salary.
	 
	 	     If the Executive has been employed by the Corporation and/or its
subsidiaries or affiliates for less than three (3) fiscal years prior to
the Change of Control, or if the Executive was not eligible to receive an
incentive compensation award pursuant to an incentive compensation plan
of the Corporation and/or its subsidiaries or affiliates for one (1) or
more of the three (3) fiscal years immediately preceding either the
Change of Control or the Notice of Termination, the bonus percentage to
be applied in the “Executive’s Three Year Bonus Percentage” calculation
for any year in which the Executive was not employed or eligible to
receive an incentive award will be the average bonus percentage paid for
such year to all executives in the Corporation or the Executive’s
respective level or division, as appropriate.

7

 

CALCULATION EXAMPLE OF EXECUTIVE’S THREE YEAR AVERAGE

BONUS PERCENTAGE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	(2)	 	 	 	 
	 	 	 	 	(1)	 	Stated	 	(1)/(2)
	 	 	 	 	Bonus	 	Target	 	Bonus
	 	 	 	 	Percentage	 	Bonus	 	Opportunity
	Year	 	Paid	 	Opportunity	 	Percent
	
	 	
	 	
	 	

	 	 	1
	 	 	55.1	%	 	 	70.0	%	 	 	78.7	%
	 	 	2
	 	 	57.9	%	 	 	70.0	%	 	 	82.7	%
	 	 	3
	 	 	55.0	%	 	 	70.0	%	 	 	78.6	%
	 	Sum
	 	 	 	 	 	 	 	 	 	 	240.0	%
	Executive’s Three Year Average
Bonus Percentage (Sum divided by 3)
	 	 	 	 	 	 	 	 	 	 	80.0	%

		
	 	          d. Bonus Multiple. For the Chief Executive Officer and executives
in management level 17 and above only, an amount equal to the product of
the Bonus Opportunity determined in clause c above multiplied by the
following multiple depending on the Executive’s management level
immediately preceding either the Notice of Termination or, if greater,
the Change of Control:

	 	 	 	 	 
	Chief Executive Officer	 	 	
2	 
	Mgmt. Level 17 or above	 	 	
1	 

		
	 	          e. Change of Control Year Bonus. If the Executive has not yet been
paid an incentive compensation award for the calendar year in which the
Change of Control occurred in accordance with the terms of the incentive
compensation plan in effect immediately preceding the Change of Control,
the Executive shall receive an amount equal to the product of (i) the
actual salary earned by the Executive during the calendar year in which
the Change of Control occurred multiplied by (ii) the greater of bonus
percentage based on actual company performance or one hundred twenty
percent (120%) of stated target bonus opportunity for such calendar year
under the incentive compensation plan as in effect immediately preceding
the Change of Control; provided, however, if a “Big Five” accounting firm
chosen by the Corporation does not verify the actual company performance
in accordance with the terms of the incentive compensation plan in effect
immediately preceding the Change of Control, the Executive shall receive
an amount equal to the product of (i) above multiplied by one hundred
percent (100%) of stated target bonus opportunity for such calendar year
under the incentive compensation plan as in effect immediately preceding
the Change of Control.
	 
	 	          f. Prior Year Bonus. If bonuses for the calendar year prior to the
Executive’s Date of Termination (other than those payable pursuant to
clause e above) have been distributed and the Executive is entitled to
and has not yet been paid his incentive compensation award for such
calendar year, and his Date of Termination is subsequent to the incentive
compensation award payment date for such calendar year, then the
Executive shall receive an additional amount equal to the product of the
actual

8

 

		
	 	salary earned by the Executive during the prior calendar year multiplied
by the actual bonus percentage approved for the Executive for such
calendar year under the respective incentive compensation plan.

		
	 	          The Corporation and/or the Trustee (as defined in Section 4(c))
shall pay to the Executive the aggregate of the amounts determined
pursuant to clauses a through d and clause f above in a lump sum by
cashier’s check within five (5) business days after the later of the
Executive’s Date of Termination or the date of receipt by the Corporation
and the Trustee (as defined in Section 4(c)) of the Executive’s written
demand for payment accompanied by notarized copies of the Notice of
Termination, release and, to the extent applicable, letter of resignation
(as described in Section 5(b)(II)). The Corporation and/or the Trustee
(as defined in Section 4(c)) shall pay to the Executive the amount
determined pursuant to clause e above by cashier’s check no later than
(i) the first March 15th following the calendar year in which the Change
of Control occurred or (ii) five (5) business days after the later of the
Executive’s Date of Termination or the date of receipt by the Corporation
and the Trustee (as defined in Section 4(c)) of the Executive’s written
demand for payment accompanied by notarized copies of the Notice of
Termination, release and, to the extent applicable, letter of resignation
(as described in Section 5(b)(II)), whichever is the last to occur.

		
	 	               (II) Medical, Dental, Disability, Life Insurance and Other Similar
Plans and Programs. Until the earliest to occur of (i) the last day of
the Severance Period, (ii) the date on which the Executive becomes
eligible for the designated or comparable coverage as an employee of
another employer which provides or offers such coverage to its employees,
or (iii) in the case of benefits requiring employee contributions, the
date the Executive fails to make such contributions pursuant to the
Corporation’s or the plan’s instructions (which instructions shall be
reasonable and given to the Executive by the Corporation within five (5)
business days following the Executive’s Date of Termination) or otherwise
cancels his coverage in accordance with plan provisions (the “Benefits
Continuation Period”), the Corporation shall continue to provide all
benefits which the Executive and/or his family is or would have been
entitled to receive under all medical, dental, disability, supplemental
life, group life, and accidental death and dismemberment insurance plans
and programs, and other similar plans and programs of the Corporation
and/or its subsidiaries or affiliates not otherwise provided for in this
Agreement, in each case on a basis providing the Executive and/or his
family with the opportunity to receive benefits at least equal to the
greatest level of benefits provided by the Corporation and/or its
subsidiaries or affiliates for the Executive under such plans and
programs if and as in effect at any time during the six (6) month period
immediately preceding either the Notice of Termination or, if greater,
the Change of Control whether or not such plans or programs were in
effect at the time of the execution of this Agreement. The
non-contributory benefits will be paid for by the Corporation. The
medical and dental plan benefits, to the extent applicable, will be
provided in accordance with the provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”), except that the
Corporation shall pay the COBRA premiums for the standard medical and
dental plan benefits during the Benefits Continuation Period minus the
Executive’s contributory obligation determined as if the Executive were
still an executive employee of the Corporation. If the Executive’s
participation in any such plan

9

 

		
	 	or program is barred by COBRA or for any other reason, the Corporation
shall pay or provide for payment of such benefits or substantially
similar benefits to the Executive and/or his family. Upon termination of
his coverage under this paragraph, the Executive may be eligible under
COBRA to continue some of his benefits for an additional period of time.
If such is the case, the Executive will be responsible for the entire
COBRA premium. Additionally, the Executive has thirty-one (31) days from
last day of coverage in which to convert his group life insurance,
dependent group life insurance and/or long-term disability to an
individual policy (“Insurance Conversion Period”). For the purposes of
short-term disability, coverage will terminate on the Executive’s Date of
Termination unless the Executive has an established disability. The
Executive shall not be eligible to receive both severance payments and
short term disability. For the purposes of long-term disability, the
last day of coverage is defined as the last day of the month in which
occurred the Executive’s Date of Termination. The Executive must arrange
for conversion to an individual policy during the Insurance Conversion
Period through the Benefits Service Center, or such other company as is
then providing coverage.

		
	 	          (III) Car Allowance. Notwithstanding the Executive’s management
level, if the Executive was receiving a car allowance at the time the
Notice of Termination was given, the Corporation shall pay to the
Executive, in a lump sum within five (5) business days after the
Executive’s Date of Termination, an amount equal to the product of the
Executive’s monthly car allowance in effect at the time the Notice of
Termination was given multiplied by 12, multiplied by the following
multiple depending on the Executive’s management level at the time the
Notice of Termination was given:

	 	 	 	 	 
	Chief Executive Officer	 	 	
3	 
	Mgmt. Level 19 or above	 	 	
3	 
	Mgmt. Level 15-18	 	 	
2	 
	Mgmt. Level 14	 	 	
1	
..5
	Mgmt. Level 13	 	 	
1	 
	Mgmt. Level 12	 	 	 	
..75
	Mgmt. Level 11	 	 	
 	
..5

		
	 	          (IV) Outplacement. The Corporation and/or the Trustee (as defined
in Section 4(c)) shall pay to the Executive, in a lump sum by cashier’s
check within five (5) business days after the later of the Executive’s
Date of Termination or the date of receipt by the Corporation and the
Trustee (as defined in Section 4(c)) of the Executive’s written demand
for payment accompanied by notarized copies of the Notice of Termination,
release and, to the extent applicable, letter of resignation (as
described in Section 5(b)(II)), an amount equal to twenty percent (20%)
of the aggregate of the Executive’s Annual Base Salary and Bonus
Opportunity (as defined in clauses (I)b and (I)c above respectively),
subject to a maximum cost of $50,000 if the Executive was in management
level 11-19 immediately prior to either the Notice of Termination, or if
greater, the Change of Control and a maximum cost of $75,000 if the
Executive was above management level 19 or Chief Executive Officer
immediately prior to either the Notice of Termination, or if greater, the
Change of Control, which amount may be used by the Executive as he sees
fit and, at his sole discretion, in seeking new employment, including
outplacement services.

10

 

		
	 	          (V) Perquisite, Country Club, and Financial Planning/Tax Preparation
Allowances. The Corporation and/or the Trustee (as defined in Section
4(c)) shall pay to the Executive, in a lump sum by cashier’s check within
five (5) business days after the later of the Executive’s Date of
Termination or the date of receipt by the Corporation and the Trustee (as
defined in Section 4(c)) of the Executive’s written demand for payment
accompanied by notarized copies of the Notice of Termination, release
and, to the extent applicable, letter of resignation (as described in
Section 5(b)(II)), an amount equal to the perquisite, country club, and
financial planning/tax preparation allowances, as appropriate, the
Executive would have been entitled to receive under the plans, programs,
policies and practices of the Corporation and/or its subsidiaries or
affiliates for the twelve (12) month perquisite, country club, and
financial planning/tax preparation payment period of the Corporation or
the Executive’s respective division, as appropriate (i.e., January -
December or September - August), in which the Notice of Termination was
given, if not yet paid, and one (1) additional twelve (12) month period
thereafter, but in no event for longer than the Severance Period, in each
case on a basis providing the Executive with benefits at least equal to
the greatest level of benefits provided by the Corporation and/or its
subsidiaries or affiliates for the Executive under such plans, programs,
policies and practices if and as in effect at any time during the six (6)
month period immediately preceding either the Notice of Termination, or
if greater, the Change of Control.

		
	 	          (VI) Split-Dollar Life. If the Executive is covered by the
Corporation’s split-dollar life insurance policy as of the date of this
Severance Agreement, the Corporation shall continue and pay for the
Executive’s coverage until the end of the Severance Period. At the end
of the Severance Period, the Corporation will recover its collateral
interest in the policy and the Executive shall have the option to (i)
retain the policy and continue its life insurance death benefit or (ii)
surrender the policy for its remaining cash surrender value, if any. If
the Executive elects to continue the life insurance death benefit, the
Executive may be required to make additional premium payments. The
Executive should contact the Corporation’s Vice President, Compensation
and Benefits Administration, to ascertain whether any premiums may be
required.
	 
	 	          (VII) Supplemental Long Term Disability Insurance. If applicable,
the cost of the Executive’s Supplemental Long Term Disability insurance
will continue to be paid by the Corporation through the last day of the
Severance Period, provided the Executive remains enrolled in the
underlying basic long term disability coverage with the Standard
Insurance Company of Oregon or any successor carrier appointed by the
Company or has other coverage with an equivalent benefit. If the
Executive obtains other disability coverage during the Severance Period
and/or no longer participates in the Corporation’s basic long term
disability program, the Executive must advise the Corporation of the
amount of coverage the Executive has with the new carrier for purposes of
adjusting the coverage provided under the Supplemental Long Term
Disability insurance.

11

 

          (b) Gross-Up for Excise Tax. In the event that it shall be determined
that any payment or benefit by the Corporation to or for the benefit of the
Executive pursuant to the terms of this Agreement or any other payments or
benefits received or to be received by the Executive in connection with or as a
result of the Change of Control or the Executive’s termination of employment or
any event which is deemed by the Internal Revenue Service or any other taxing
authority to constitute a change in the ownership or effective control of the
Corporation, or in the ownership of a substantial portion of the assets of the
Corporation (“Change of Control Payments”) shall be subject to the tax (the
“Excise Tax”) imposed by Section 4999 (or any successor section) of the
Internal Revenue Code of 1986, as it may be amended from time to time (the
“Code”), the Corporation and/or the Trustee (as defined in Paragraph 4(c))
shall pay to the Executive an additional amount (the “Gross-Up Payment”) such
that the net amount retained by the Executive, after (i) payment of any Excise
Tax on the Change of Control Payments and (ii) payment of any federal and state
and local income tax and Excise Tax upon the Gross-Up Payment, shall be equal
to the Change of Control Payments. The determination of whether the Executive
is subject to the Excise Tax and the amount of the Gross-Up Payment, if any,
shall be made by a “Big Five” accounting firm chosen by the Trustee (as defined
in Section 4(c)) and reasonably agreeable to the Executive, which determination
shall be binding upon the Executive and the Corporation. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed
to pay federal income taxes 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
calendar year in which the Gross-Up Payment is to be made in the state or
locality of the Executive’s residence on the Executive’s Date of Termination.
The Gross-Up Payment shall be paid to the Executive by cashier’s check within
five (5) business days following the receipt by the Trustee (as defined in
Section 4(c)) of the Gross-Up Payment determination from the selected “Big
Five” accounting firm.

          (c) Trust(s).

               (i) In order to ensure in the event of a Change of Control that timely
payment will be made of certain obligations of the Corporation to the Executive
provided for under this Agreement, the Corporation shall pay into one or more
trust(s) (the “Trust(s)”) established between the Corporation and any financial
institution with assets in excess of $100 million selected by the Corporation
prior to the Change of Control, as trustee (the “Trustee”), such amounts and at
such time or times as are required in order to fully pay all amounts due the
Executive pursuant to Section 4 that are payable in cash or by cashier’s check,
or as are otherwise required pursuant to the terms of the Trust(s).
Thereafter, all such payments required to be paid hereunder shall be made out
of the Trust(s); provided, however, that the Corporation shall retain liability
for and pay the Executive any amounts or provide for such other benefits due
the Executive under this Agreement for which there are insufficient funds in
the Trust(s), for which no funding of the Trust(s) is required or in the event
that the Trustee fails to make such payment to the Executive within the time
frames set forth in this Agreement. Prior to the Change of Control, and to the
extent necessary because of a change in the Trustee, after the Change of
Control, the Corporation shall provide the Executive with the name and address
of the Trustee.

               (ii) For purposes of this Agreement, the term “the Corporation and/or the
Trustee” shall mean the Trustee to the extent the Corporation has put funds in
the Trust(s) and the Corporation to the extent the Corporation has not funded
or fully funded the Trust(s);

12

 

provided, however, that in accordance with Subsection (i) above, the
Corporation shall retain liability for and pay the Executive any amounts or
provide for such other benefits due the Executive under this Agreement for
which the Trustee fails to make adequate payment to the Executive within the
time frames set forth in this Agreement.

     5.     Obligations of the Executive.

          (a) Covenant of Confidentiality. All documents, records, techniques,
business secrets and other information, including this Agreement, of the
Corporation, its subsidiaries and affiliates, which have or will come into the
Executive’s possession from time to time during the Executive’s affiliation
with the Corporation and/or any of its subsidiaries or affiliates and which the
Corporation treats as confidential and proprietary to the Corporation and/or
any of its subsidiaries or affiliates shall be deemed as such by the Executive
and shall be the sole and exclusive property of the Corporation, its
subsidiaries and affiliates. The Executive agrees that the Executive will keep
confidential and not use or divulge to any other party any of the Corporation’s
or its subsidiaries’ or affiliates’ confidential information and business
secrets, including, but not limited to, such matters as costs, profits,
markets, sales, products, product lines, key personnel, pricing policies,
operational methods, customers, customer requirements, suppliers, plans for
future developments, and other business affairs and methods and other
information not readily available to the public. Additionally, the Executive
agrees that upon his termination of employment, the Executive shall promptly
return to the Corporation any and all confidential and proprietary information
of the Corporation and/or its subsidiaries or affiliates that is in his
possession.

     Executive agrees that the terms and provisions of this Change of Control
Severance Agreement, as well as any and all incidents leading to or resulting
from this Change of Control Severance Agreement, are confidential and may not
be discussed with anyone without the prior written consent of the Corporation’s
President, except as required by law.

          (b) If, within the three (3) year period commencing on a Change of Control
of the Corporation, (i) the Corporation or its subsidiaries or affiliates shall
terminate the Executive’s employment for any reason other than for Death,
Disability or Cause, or (ii) the Executive shall terminate his employment with
the Corporation or its subsidiaries or affiliates for Good Reason, and the
Executive shall elect to receive severance pay and benefits in accordance with
Section 4, the Executive shall be subject to the following additional
provisions:

		
	 	     (I) Covenant Against Competition and Solicitation. During the
Severance Period (without any reduction or modification) or the one (1)
year period following the Executive’s Date of Termination, whichever is
shorter, the Executive shall not, without the prior written consent of
the Corporation’s Chief Executive Officer, directly or indirectly engage
or become a partner, director, officer, principal, employee, consultant,
investor, creditor or stockholder in/for any business, proprietorship,
association, firm or corporation not owned or controlled by the
Corporation or its subsidiaries or affiliates which is engaged or
proposes to engage or hereafter engages in a business competitive
directly or indirectly with the business conducted by the Corporation or
any of its subsidiaries or affiliates immediately prior to the Change of
Control in any geographic area where such business of the Corporation or
its subsidiaries or affiliates is conducted;

13

 

		
	 	provided, however, that the Executive is not prohibited from owning one
percent (1%) or less of the outstanding capital stock of any corporation
whose stock is listed on a national securities exchange.

		
	 	     During the Severance Period (without any reduction or modification)
or the one (1) year period following the Executive’s Date of Termination,
whichever is shorter, the Executive shall not, either on the Executive’s
own account or for any person, firm or company, solicit, interfere with
or induce, or attempt to induce, any employee of the Corporation or any
of its subsidiaries or affiliates to leave his employment or to breach
his employment agreement, if any.
	 
	 	     (II) Release. Upon the Executive’s termination of employment, the
Executive and the Corporation shall execute a release agreement in the
form attached as Exhibit A. The only condition to the Executive’s
receipt of any payments or benefits pursuant to this Agreement shall be
his tender of such release, executed by him, to the Corporation, and the
Executive’s obligations and limitations under such release as executed by
him shall be conditioned upon the execution of such release by the
Corporation and delivery to the Executive within thirty (30) days of the
Executive’s tender thereof to the Corporation. In addition, to the
extent applicable, upon the Executive’s termination of employment, the
Executive shall execute a resignation letter in the form attached as
Exhibit B.

		
	 	     (III) Amendment. The Covenant Against Competition and Solicitation
and Release may be amended from time to time solely to comply with any
federal, state or local law in order to effectuate their intent.

          (c) Specific Remedy. The Executive acknowledges and agrees that if the
Executive commits a material breach of the Covenant of Confidentiality or, if
applicable, the Covenant Against Competition and Solicitation (as provided in
Subsections (a) and (b) above), the Corporation shall have the right to have
the covenant specifically enforced by any court having appropriate jurisdiction
on the grounds that any such breach will cause irreparable injury to the
Corporation, and that money damages will not provide an adequate remedy to the
Corporation. The Executive further acknowledges and agrees that the Covenant
of Confidentiality and, if applicable, the Covenant Against Competition and
Solicitation, contained in this Agreement are fair, do not unreasonably
restrict the Executive’s future employment and business opportunities, and are
commensurate with the compensation arrangements set out in this Agreement. In
addition, once the Executive makes an election to receive severance pay and
benefits pursuant to Section 4 and is subject to Subsection (b) above, the
Executive shall have no right to return any amounts or benefits that are
already paid or to refuse to accept any amounts or benefits that are payable in
the future in lieu of his specific performance of his obligations under
Subsection (b) above.

     6.     Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Corporation or any of its subsidiaries or affiliates and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under such plans, programs, policies or
practices or under any

14

 

stock option or other agreements with the Corporation or any of its
subsidiaries or affiliates, specifically including but not limited to the
Corporation’s 1980 and 1995 Stock Incentive Plans, the deferred compensation
agreements, the Stock for Merit Increase Replacement Plan, the Profit Incentive
Stock Plan, the Corporation’s and/or its subsidiaries’ or affiliates’
retirement, 401(k) and profit sharing plans, the Corporation’s Benefit
Restoration Plan, Deferred Compensation Plan, supplemental disability and
retiree life insurance. In the event there are any amounts which represent
vested benefits or which the Executive is otherwise entitled to receive under
these or any other plans, programs, policies or practices, including any plan,
program, policy or practice adopted after the execution of this Agreement, of
the Corporation or any of its subsidiaries or affiliates at or subsequent to
the Executive’s Date of Termination, the Corporation shall pay or cause the
relevant plan, program, policy or practice to pay such amounts, to the extent
not already paid, in accordance with the provisions of such plan, program,
policy or practice. The phrase “Termination Date” as used in the Corporation’s
1980 and 1995 Stock Incentive Plans shall mean the end of the Severance Period
with respect to Non-Qualified Stock Options granted to the Executive, if any,
pursuant to such plan, and the Executive’s Date of Termination with respect to
Incentive Stock Options and Restricted Stock Rights granted to the Executive,
if any, thereunder. The last day of the Severance Period will be considered to
be the Executive’s termination date for purposes of the Executive’s deferred
compensation agreement(s), if any.

     7.     Full Settlement. Except as specifically provided otherwise in this
Agreement, the Corporation’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which the Corporation may have
against the Executive or others. The Executive shall not be obligated to seek
other employment by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement nor, except as specifically
provided otherwise in this Agreement, shall the amount of any payment provided
for under this Agreement be reduced by any compensation or benefits earned by
the Executive as the result of employment by another employer after the Date of
Termination, or otherwise. The Corporation agrees to pay all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Corporation, the Executive or others
of the validity or enforceability of, or liability under any provision of this
Agreement or any guarantee of performance thereof, in each case plus interest,
compounded daily, on the total unpaid amount determined to be payable under
this Agreement, such interest to be calculated on the basis of the greater of
(a) two percent (2%) over the base or prime commercial lending rate announced
by the First National Bank of Boston in effect from time to time during the
period of such nonpayment or (b) eighteen percent (18%), but in no event
greater than the highest interest rate permitted by law for such payments.

     8.     Successors. (a) This Agreement is personal to the Executive and the
Executive does not have the right to assign this Agreement or any interest
herein.

          (b) This Agreement shall inure to the benefit of and be binding upon the
Corporation and its successors. The Corporation shall require any successor to
all or substantially all of the business and/or assets of the Corporation,
whether directly or indirectly, by purchase, merger, consolidation, acquisition
of stock, or otherwise, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent as the Corporation

15

 

would be required to perform if no such succession had taken place, by a
written agreement in form and substance reasonably satisfactory to the
Executive, delivered to the Executive within five (5) business days after such
succession. As used in this Agreement, “Corporation” shall mean the
Corporation as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

     9.     Miscellaneous. (a) This Agreement shall be governed by and construed
in accordance with the laws of the state of Florida, without reference to
principles of conflict of laws. The parties agree to submit to the
non-exclusive jurisdiction of the courts in the state of Florida. The captions
of this Agreement are not part of the provisions hereof and shall have no force
or effect. Except as provided in Section 5(b)(III), this Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

          (b) All notices and other communications hereunder shall be in writing and
shall be given to the other party and/or the Trustee, as applicable, by hand
delivery, by overnight express mail or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

		
	 	   If to the Executive: at the Executive’s last address appearing in
the payroll/personnel records of the Corporation;

	 	 	 	If to the Corporation:

Ryder System, Inc.

3600 N.W. 82nd Avenue

Miami, Florida 33166

Attention: General Counsel

          If to the Trustee: at the address provided pursuant to Section 4(c);

or to such other address as either party or the Trustee shall have furnished to
the other in writing in accordance herewith. Notice and communications shall
be effective when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement. The Executive’s failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.

          (d) The Executive understands and acknowledges that the payment and
benefits provided to the Executive pursuant to this Agreement may be unsecured
obligations of the Corporation. The Executive further understands and
acknowledges that the payments and benefits under this Agreement may be
compensation and as such may be included in either the Executive’s W-2 earnings
statements or 1099 statements. The Corporation may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required

16

 

to be withheld pursuant to any applicable law or regulation, as well as any
other deductions consented to in writing by the Executive.

          (e) This Agreement, including its attached Exhibits, contains the entire
understanding of the Corporation and the Executive with respect to the subject
matter hereof. No agreements or representations, oral or written, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement and its attached
Exhibits.

          (f) The employment of the Executive by the Corporation or its subsidiaries
or affiliates may be terminated by either the Executive or the Corporation or
its subsidiaries or affiliates at any time and for any reason, with or without
cause. Nothing contained in this Agreement shall affect such rights to
terminate; provided, however, that nothing in this Section 9(f) shall prevent
the terms and provisions of this Agreement from being enforced in the event of
a termination described in Section 4(a).

          (g) Whenever used in this Agreement, the masculine gender shall include
the feminine or neuter wherever necessary or appropriate and vice versa and the
singular shall include the plural and vice versa.

17

 

          (h) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

     IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused these presents to be executed in its name on its behalf,
and its corporate seal to be hereunto affixed and attested by its assistant
secretary, all as of the day and year first above written.

	 	 	 	 	 	 	 
	
	 	

	Witness	 	
Executive
	 	 	 	 	 	 	 
	
	 	

	Witness	 	
Social Security Number
	 	 	 	 	 	 	 
	ATTEST:	 	
RYDER SYSTEM, INC.
	 	 	
(the “Corporation”)
	 	 	 	 	 	 	 
	 	 	By:
	
	 	 	

	Asst. Secretary	 	 	
Vice President
	                    (Seal)	 	 	 	 	 	 

18

 

Change of Control

Severance Agreement

EXHIBIT A

MUTUAL RELEASE AGREEMENT

     FOR AND IN CONSIDERATION OF (A) THE PAYMENT TO (Executive’s Name) OF THE
SEVERANCE BENEFITS PURSUANT TO THE CHANGE OF CONTROL SEVERANCE AGREEMENT
BETWEEN RYDER SYSTEM, INC. (“THE CORPORATION”) AND (Executive’s Name) DATED      
     , 19      (THE “CHANGE OF CONTROL SEVERANCE AGREEMENT”) AND (B)
THE EXECUTION OF THIS MUTUAL RELEASE AGREEMENT (THE “RELEASE AGREEMENT”) BY
BOTH THE CORPORATION AND (Executive’s Name), WITH THE EXECUTION OF THIS RELEASE
AGREEMENT BY THE CORPORATION AND THE DELIVERY THEREOF TO (Executive’s Name)
OCCURRING WITHIN THIRTY (30) DAYS OF (Executive’s Name)’S TENDER OF THIS
RELEASE AGREEMENT TO THE CORPORATION, (Executive’s Name), ON BEHALF OF
HIMSELF/HERSELF, HIS/HER HEIRS, SUCCESSORS AND ASSIGNS (COLLECTIVELY THE
“EXECUTIVE”), AND THE CORPORATION, ON BEHALF OF ITSELF, AND AS AGENT FOR ALL OF
ITS SUBSIDIARIES AND AFFILIATES, THEIR CURRENT AND FORMER AGENTS, EMPLOYEES,
OFFICERS, DIRECTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY “RYDER”), HEREBY
RELEASE AND FOREVER DISCHARGE EACH OTHER AND RYDER FROM ANY AND ALL CLAIMS,
DEMANDS, ACTIONS, AND CAUSES OF ACTION, AND ALL LIABILITY WHATSOEVER, WHETHER
KNOWN OR UNKNOWN, FIXED OR CONTINGENT, WHICH THEY HAVE OR MAY HAVE AGAINST EACH
OTHER AND RYDER AS A RESULT OF THE EXECUTIVE’S EMPLOYMENT BY AND SUBSEQUENT
TERMINATION AS AN EMPLOYEE OF RYDER, UP TO THE DATE OF THE EXECUTION OF THIS
RELEASE AGREEMENT. THIS INCLUDES BUT IS NOT LIMITED TO CLAIMS AT LAW OR EQUITY
OR SOUNDING IN CONTRACT (EXPRESS OR IMPLIED) OR TORT ARISING UNDER FEDERAL,
STATE, OR LOCAL LAWS PROHIBITING AGE, SEX, RACE, DISABILITY, VETERAN OR ANY
OTHER FORMS OF DISCRIMINATION. THIS FURTHER INCLUDES ANY AND ALL CLAIMS
ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE AMERICANS WITH
DISABILITIES ACT OF 1990, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, OR THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA), AS AMENDED, OR CLAIMS GROWING
OUT OF ANY LEGAL RESTRICTIONS ON RYDER’S RIGHT TO TERMINATE ITS EMPLOYEES.

     This Release Agreement does not release Ryder or the Executive from any of
their current, future or ongoing obligations under the Change of Control
Severance Agreement, specifically including but not limited to cash payments
and benefits due the Executive in the case of the Corporation, and the Covenant
of Confidentiality and, to the extent applicable, the Covenant Against
Competition and Solicitation, in the case of the Executive.

     The Executive and the Corporation understand and agree that this Release
Agreement and the Change of Control Severance Agreement shall not in any way be
construed as an admission by Ryder or the Executive of any unlawful or wrongful
acts whatsoever against each other or any other person, and both Ryder and the
Executive specifically disclaim any liability to or wrongful acts against each
other or any other person.

19

 

     The Corporation and the Executive agree that the terms and provisions of
this Release Agreement and the Change of Control Severance Agreement, as well
as any and all incidents leading to or resulting from this Release Agreement
and the Change of Control Severance Agreement, are confidential and may not be
discussed with anyone without the prior written consent of the other party,
except as required by law; provided, however, that the Executive and the
Corporation or its successor agree to immediately give the other party notice
of any request to discuss this Release Agreement or the Change of Control
Severance Agreement and to provide the other party with the opportunity to
contest such request prior to their response.

     This Release Agreement shall be governed by and construed in accordance
with the laws of the State of Florida, without reference to principles of
conflict of laws. Except as provided in Section 5(b)(III) of the Change of
Control Severance Agreement, this Release Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.

     The invalidity or unenforceability of any provision of this Release
Agreement shall not affect the validity or enforceability of any other
provision of this Release Agreement.

WE CERTIFY THAT WE HAVE FULLY READ, HAVE RECEIVED AN EXPLANATION OF, HAVE
NEGOTIATED AND COMPLETELY UNDERSTAND THE PROVISIONS OF THIS RELEASE AGREEMENT,
THAT WE HAVE HAD ADEQUATE TIME TO REVIEW AND CONSIDER THE PROVISIONS OF THIS
RELEASE AGREEMENT, AND THAT WE ARE SIGNING THIS RELEASE AGREEMENT FREELY AND
VOLUNTARILY, WITHOUT DURESS, COERCION OR UNDUE INFLUENCE. IN ADDITION, THE
EXECUTIVE FURTHER CERTIFIES THAT THE EXECUTIVE HAS BEEN ADVISED BY THE
CORPORATION THAT THE EXECUTIVE SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING
THIS RELEASE AGREEMENT.

Executive’s Date of Termination: _________________________

Dated this ______ day of _________, 19_____.

	 	 	 	 	 	 	 
	
	 	

	Witness	 	
Executive
	 	 	 	 	 	 	 
	
	 	

	Witness	 	
Social Security Number
	 	 	 	 	 	 	 
	ATTEST:	 	
RYDER SYSTEM, INC., on behalf of
	 	 	
itself and as agent for the Corporation
	 	 	 	 	 	 	 
	 	 	By:
	
	 	 	

	Secretary	 	 	
 
	                    (Seal)	 	
Its:	 	 	 	 
	 	 	 	

20

 

	 	 	 	 	 
	STATE OF                     	 	 	 	)
	
 	) ss:
	COUNTY OF                 	 	 	 	)

Before me personally appeared      , to me well known and known to me to be
the person described in and who executed the foregoing instrument, and
acknowledged to and before me that he/she executed said instrument for the
purposes therein expressed.

WITNESS my hand and official seal this ______ day of _________, 19____.

	 
	

	Notary Public

My Commission Expires:

	 	 	 
	
	 	
(Seal)

	 	 	 	 	 
	STATE OF                     	 	 	 	)
	
 	) ss:
	COUNTY OF                 	 	 	 	)

Before me personally appeared           and           , to me well known
and known to me to be the           and           of
Ryder System, Inc. who executed the foregoing instrument, and acknowledged to
and before me that they executed said instrument for the purposes therein
expressed.

WITNESS my hand and official seal this ________ day of _________, 19_________.

	 
	

	Notary Public

My Commission Expires:

	 	 	 
	
	 	
(Seal)

21

 

Change of Control

Severance Agreement

EXHIBIT B

Resignation Letter

TO THE BOARD OF DIRECTORS

OF RYDER SYSTEM, INC.

Ladies and Gentlemen:

Effective immediately, I hereby resign as an officer and/or director of Ryder
System, Inc. and/or its subsidiaries and affiliates and, to the extent
applicable, from all committees of which I am a member.

	 	 
	 	Sincerely,
	 
	 	

	 	Executive’s Name
	 
	 	

	 	Date

22

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