EXHIBIT 10.1
USFREIGHTWAYS CORPORATION
LONG-TERM INCENTIVE PLAN
RESTATED AS OF MARCH 8, 2001
USFREIGHTWAYS CORPORATION
LONG-TERM INCENTIVE PLAN
1. PURPOSE
The USFreightways Corporation Long-Term Incentive Plan is adopted January 24,
1997. The Plan is designed to attract and retain selected employees of the
Company and its Affiliates, and reward them for making major contributions to
the success of the Company and its Affiliates. These objectives are accomplished
by making long-term incentive awards under the Plan that will offer Participants
an opportunity to have a greater proprietary interest in, and closer identity
with, the Company and its Affiliates and their financial success.
The Awards may consist of:
(a) Incentive Options;
(b) Nonstatutory Options;
(c) Restricted Stock;
(d) Rights;
(e) Performance Awards; or
(f) Cash Awards
or any combination of the foregoing, as the Committee may determine.
The Plan is intended to qualify certain compensation awarded under the Plan for
tax deductibility under Section 162(m) of the Code to the extent deemed
appropriate by the Committee. The Plan and the grant of Awards hereunder are
expressly conditioned upon the Plan's approval by the stockholders of the
Company. If such approval is not obtained, then this Plan and all Awards
hereunder shall be null and void ab initio.
2. DEFINITIONS
(a) Affiliate means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other
than the Company) that, for purposes of Section 422 of the Code, is a subsidiary
of the Company, direct or indirect.
(b) Award means the grant to any employee of any form of Option, Restricted
Stock, Right, Performance Award, or Cash Award, whether granted singly, in
combination, or in tandem, and pursuant to such terms, conditions, and
limitations as the Committee may establish in order to fulfill the objectives of
the Plan.
(c) Award Agreement means an agreement entered into between the Company and a
Participant under which an Award is granted and which sets forth the terms,
conditions, and limitations applicable to the Award.
(d) Board means the Board of Directors of the Company.
(e) Cash Award means an Award of cash, subject to the requirements of Section 11
and such other restrictions as the Committee deems appropriate or desirable.
(f) Code means the Internal Revenue Code of 1986, as amended from time to time,
or any successor statute thereto.
(g) Committee means the committee to which the Board delegates the power to act
under or pursuant to the provisions of the Plan, or the Board if no committee is
selected. If the Board delegates powers to a committee, and if the Company is or
becomes subject to Section 16 of the Exchange Act, then, if necessary for
compliance therewith, such committee shall consist initially of not less than
two (2) members of the Board, each member of which must be a "non-employee
director," within the meaning of the applicable rules promulgated pursuant to
the Exchange Act. If the Company is or becomes subject to Section 16 of the
Exchange Act, no member of the Committee shall receive any Award pursuant to the
Plan or any similar plan of the Company or any Affiliate while serving on the
Committee, unless the Board determines that the grant of such an Award satisfies
the then current Rule 16b-3 requirements under the Exchange Act. Notwithstanding
anything herein to the contrary, and insofar as it is necessary in order for
compensation recognized by Participants pursuant to the Plan to be fully
deductible to the Company for federal income tax purposes, each member of the
Committee also shall be an "outside director" (as defined in regulations or
other guidance issued by the Internal Revenue Service under Code Section
162(m)).
(h) Common Stock means the common stock of the Company.
(i) Company means USFreightways Corporation, a Delaware corporation, and any
successor or assignee corporation or corporations into which the Company may be
merged, changed, or consolidated; any corporation for whose securities the
securities of the Company shall be exchanged; and any assignee of or successor
to substantially all of the assets of the Company.
(j) Disability or Disabled means a permanent and total disability as defined in
Section 22(e)(3) of the Code.
(k) Exchange Act means the Securities Exchange Act of 1934, as amended from time
to time, or any successor statute thereto.
(l) Fair Market Value means, if the Shares are listed on any national securities
exchange, the closing sales price, if any, on the largest such exchange on the
valuation date, or, if none, on the most recent trade date immediately prior to
the valuation date provided such trade date is no more than thirty (30) days
prior to the valuation date. If the Shares are not then listed on any such
exchange, the fair market value of such Shares shall be the closing sales price
if such is reported, or otherwise the mean between the closing "Bid" and the
closing "Ask" prices, if any, as reported in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") for the valuation date,
or if none, on the most recent trade date immediately prior to the valuation
date provided such trade date is no more than thirty (30) days prior to the
valuation date. If the Shares are not then either listed on any such exchange or
quoted in NASDAQ, or there has been no trade date within such thirty (30) day
period, the fair market value shall be the mean between the average of the "Bid"
and the average of the "Ask" prices, if any, as reported in the National Daily
Quotation System for the valuation date, or, if none, for the most recent trade
date immediately prior to the valuation date provided such trade date is no more
than thirty (30) days prior to the valuation date. If the fair market value
cannot be determined under the preceding three sentences, it shall be determined
in good faith by the Committee.
(m) Incentive Option means an Option that, when granted, is intended to be an
"incentive stock option," as defined in Section 422 of the Code.
(n) Nonstatutory Option means an Option that, when granted, is not intended to
be an "incentive stock option," as defined in Section 422 of the Code.
(o) Normal Retirement means termination of a Participant's employment with the
Company or one of its Affiliates after the Participant reaches the age of 65.
(p)Option means a right or option to purchase Common Stock, including Restricted
Stock if the Committee so determines.
(q)Participant means an employee to whom one or more Awards are granted under
the Plan.
(r) Performance Award means an Award subject to the requirements of Section 10,
and such performance conditions as the Committee deems appropriate or desirable.
(s)Plan means the USFreightways Corporation Long-Term Incentive Plan, as amended
from time to time.
(t) Restricted Stock means an Award made in Common Stock or denominated in units
of Common Stock and delivered under the Plan, subject to the requirements of
Section 8, such other restrictions as the Committee deems appropriate or
desirable, and as awarded in accordance with the terms of the Plan.
(u) Right means a stock appreciation right delivered under the Plan, subject to
the requirements of Section 9 and as awarded in accordance with the terms of the
Plan.
(v) Shares means the following shares of the capital stock of the Company as to
which Options or Restricted Stock have been or may be granted under the Plan and
upon which Rights or units of Restricted Stock may be based: treasury or
authorized but unissued Common Stock, $.01 par value, of the Company, or any
shares of capital stock into which the Shares are changed or for which they are
exchanged within the provisions of Section 17 of the Plan.
3. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Awards may be granted from time to
time shall be 3,350,000 Shares of which no more than 130,000 Shares shall be
available for Awards of Restricted Stock and Performance Awards combined
(subject in each case to adjustments for stock splits, stock dividends, and
other adjustments described in Section 17 hereof). Subject to the limitation set
forth in the preceding sentence, the 400,000 Shares that became available under
the Plan by Plan amendment effective March 8, 2001 shall only be available for
the grant of Awards in the form of Options or Restricted Stock.
In accordance with Code Section 162(m), if applicable, the aggregate number of
Shares as to which Awards may be granted in any one calendar year to any one
employee shall not exceed five hundred thousand (500,000) Shares (subject to
adjustment for stock splits, stock dividends, and other adjustments described in
Section 17 hereof).
From time to time, the Committee and appropriate officers of the Company shall
take whatever actions are necessary to file required documents with governmental
authorities and stock exchanges so as to make Shares available for issuance
pursuant to the Plan. Shares subject to Awards that expire or that are
forfeited, terminated, unexercised, canceled by agreement of the Company and the
Participant, settled in cash in lieu of Common Stock or in such manner that all
or some of the Shares covered by such Awards are not issued to a Participant, or
are exchanged for Awards that do not involve Common Stock, shall immediately
become available for Awards. Awards payable in cash shall not reduce the number
of Shares available for Awards under the Plan.
Except as otherwise set forth herein, the aggregate number of Shares as to which
Awards may be granted shall be subject to change only by means of an amendment
of the Plan duly adopted by the Company and approved by the stockholders of the
Company within one year before or after the date of the adoption of the
amendment.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. A majority of the Committee
shall constitute a quorum at any meeting thereof (including by telephone
conference) and the acts of a majority of the members present, or acts approved
in writing by a majority of the entire Committee without a meeting, shall be the
acts of the Committee for purposes of this Plan. The Committee may authorize one
or more of its members or an officer of the Company to execute and deliver
documents on behalf of the Committee. A member of the Committee shall not
exercise any discretion respecting himself or herself under the Plan. The Board
shall have the authority to remove, replace or fill any vacancy of any member of
the Committee upon notice to the Committee and the affected member. Any member
of the Committee may resign upon notice to the Board. The Committee may allocate
among one or more of its members, or may delegate to one or more of its agents,
such duties and responsibilities as it determines. Subject to the provisions of
the Plan, the Committee is authorized to:
(a) Interpret the provisions of the Plan and any Award or Award Agreement,
and make all rules and determinations that it deems necessary or advisable to
the administration of the Plan;
(b) Determine which employees of the Company or an Affiliate shall be
designated as Participants and which of the employees shall be granted Awards;
(c) Determine whether an Option to be granted shall be an Incentive Option
or Nonstatutory Option;
(d) Determine the number of Shares for which an Option or Restricted Stock
shall be granted;
(e) Determine the number of Rights, the Cash Award or the Performance Award
to be granted;
(f) Provide for the acceleration of the right to exercise any Award; and
(g) Specify the terms, conditions, and limitations upon which Awards may be
granted;
provided, however, that with respect to Incentive Options, all such
interpretations, rules, determinations, terms, and conditions shall be made and
prescribed in the context of preserving the tax status of the Incentive Options
as incentive stock options within the meaning of Section 422 of the Code.
The Committee may delegate to the chief executive officer and to other senior
officers of the Company or its Affiliates its duties under the Plan pursuant to
such conditions or limitations as the Committee may establish, except that only
the Committee may select, and grant Awards to, Participants who are subject to
Section 16 of the Exchange Act. All determinations of the Committee shall be
made by a majority of its members. No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Award.
The Committee shall have the authority at any time to cancel Awards for
reasonable cause and to provide for the conditions and circumstances under which
Awards shall be forfeited.
Any determination made by the Committee pursuant to the provisions of the Plan
shall be made in its sole discretion, and in the case of any determination
relating to an Award, may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter. All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
the Participants. No determination shall be subject to de novo review if
challenged in court.
5. ELIGIBILITY FOR PARTICIPATION
Awards may be granted under this Plan only to employees of the Company or its
Affiliates. The foregoing notwithstanding, each Participant receiving an
Incentive Option must be an employee of the Company or of an Affiliate at the
time the Incentive Option is granted.
The Committee may at any time and from time to time grant one or more Awards to
one or more employees and may designate the number of Shares, if applicable, to
be subject to each Award so granted, provided, however that no Incentive Option
shall be granted after the expiration of ten (10) years from the earlier of the
date of the adoption of the Plan by the Company or the approval of the Plan by
the stockholders of the Company, and provided further, that the Fair Market
Value of the Shares (determined at the time the Option is granted) as to which
Incentive Options are exercisable for the first time by any employee during any
single calendar year (under the Plan and under any other incentive stock option
plan of the Company or an Affiliate) shall not exceed Two Million Dollars
($2,000,000). To the extent that the Fair Market Value of such Shares exceeds
Two Million Dollars ($2,000,000), the Shares subject to Option in excess of Two
Million Dollars ($2,000,000) shall, without further action by the Committee,
automatically be converted to Nonstatutory Options.
Notwithstanding any of the foregoing provisions, the Committee may authorize the
grant of an Award to a person not then in the employ of, or engaged by, the
Company or of an Affiliate, conditioned upon such person becoming eligible to be
granted an Award at or prior to the execution of the Award Agreement evidencing
the actual grant of such Award.
6. AWARDS UNDER THIS PLAN
As the Committee may determine, the following types of Awards may be granted
under the Plan on a stand alone, combination, or tandem basis:
(a) Incentive Option
An Award in the form of an Option that shall comply with the requirements of
Section 422 of the Code. Subject to adjustments in accordance with the
provisions of Section 17, the aggregate number of Shares that may be subject to
Incentive Options under the Plan shall not exceed Two Million (2,000,000).
(b) Nonstatutory Option
An Award in the form of an Option that shall not be intended to comply with the
requirements of Section 422 of the Code.
(c) Restricted Stock
An Award made to a Participant in Common Stock or denominated in units of Common
Stock, subject to future service and such other restrictions and conditions as
may be established by the Committee, and as set forth in the Award Agreement,
including but not limited to continuous service with the Company or its
Affiliates, achievement of specific business objectives, increases in specified
indices, attaining growth rates, and other measurements of Company or Affiliate
performance.
(d) Stock Appreciation Right
An Award in the form of a Right to receive the excess of the Fair Market Value
of a Share on the date the Right is exercised over the Fair Market Value of a
Share on the date the Right was granted.
(e) Performance Awards
An Award made to a Participant that is subject to performance conditions
specified by the Committee, including but not limited to continuous service with
the Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance.
(f) Cash Awards
An Award made to a Participant and denominated in cash, with the eventual
payment subject to future service and such other restrictions and conditions as
may be established by the Committee, and as set forth in the Award Agreement.
Each Award under the Plan shall be evidenced by an Award Agreement. Delivery of
an Award Agreement to each Participant shall constitute an agreement between the
Company and the Participant as to the terms and conditions of the Award.
7. TERMS AND CONDITIONS OF INCENTIVE OPTIONS AND NONSTATUTORY OPTIONS
Each Option shall be set forth in an Award Agreement, duly executed on behalf of
the Company and by the Participant to whom such Option is granted. Except for
the setting of the Option price under Section 7(a), no Option shall be granted
and no purported grant of any Option shall be effective until such Award
Agreement shall have been duly executed on behalf of the Company and by the
Participant. Each such Award Agreement shall be subject to at least the
following terms and conditions:
(a) Option Price
The purchase price of the Shares covered by each Option granted under the Plan
shall be determined by the Committee. In the case of a grant of an Incentive
Option (provided the Participant owns directly or by reason of the applicable
attribution rules ten percent (10%) or less of the total combined voting power
of all classes of share capital of the Company), and in the case of any grant of
a Nonstatutory Option, the Option price per share of the Shares covered by each
such Option shall be not less than the Fair Market Value of the Shares on the
date of the grant of the Option. In all cases of Incentive Options not covered
by the preceding sentence, the Option price shall be not less than one hundred
ten percent (110%) of the Fair Market Value on the date of grant.
(b) Number of Shares
Each Option shall state the number of Shares to which it pertains.
(c) Term of Option
Each Incentive Option shall terminate not more than ten (10) years from the date
of the grant thereof, or such earlier time as the Award Agreement may provide,
and shall be subject to earlier termination as herein provided, except that if
the Option price is required under Section 7(a) to be at least one hundred ten
percent (110%) of Fair Market Value, each such Incentive Option shall terminate
not more than five (5) years from the date of the grant thereof, and shall be
subject to earlier termination as herein provided. The Committee shall determine
the time at which a Nonstatutory Option shall terminate; provided, however, that
such termination date shall not be more than ten (10) years from the date of the
grant thereof.
(d) Date of Exercise
Upon the authorization of the grant of an Option, or at any time thereafter, the
Committee may, subject to the provisions of Section 7(c), prescribe the date or
dates on which the Option becomes exercisable, and may provide that the Option
become exercisable in installments over a period of years, or upon the
attainment of stated goals.
(e) Medium of Payment
The Option price shall be payable upon the exercise of the Option, as set forth
in Section 7(j). It shall be payable in such form (permitted by Section 422 of
the Code in the case of Incentive Options) as the Committee shall, either by
rules promulgated pursuant to the provisions of Section 4 of the Plan, or in the
particular Award Agreement, provide.
(f) Termination of Employment
(1) A Participant who ceases to be an employee of the Company or
of an Affiliate for any reason other than death, Disability,
Normal Retirement or termination "for cause," as defined in
Section 7(f)(2), may exercise any Option granted to such
Participant, to the extent that the right to purchase Shares
thereunder has become exercisable on the date of such
termination, but only within three (3) months after such date
of termination, or, if earlier, within the originally
prescribed term of the Option. A Participant's employment
shall not be deemed terminated by reason of a transfer to
another employer that is the Company or an Affiliate.
(2) A Participant who ceases to be an employee of the Company or
of an Affiliate "for cause" shall, upon such termination,
cease to have any right to exercise any Option. For purposes
of this Plan, cause shall mean (A) a Participant's theft or
embezzlement, or attempted theft or embezzlement, of money or
property of the Company or of an Affiliate, a Participant's
perpetration or attempted perpetration of fraud, or a
Participant's participation in a fraud or attempted fraud, on
the Company or of an Affiliate or a Participant's unauthorized
appropriation of, or a Participant's attempt to
misappropriate, any tangible or intangible assets or property
of the Company or of an Affiliate; (B) any act or acts of
disloyalty, dishonesty, misconduct, moral turpitude, or any
other act or acts by a Participant injurious to the interest,
property, operations, business or reputation of the Company or
of an Affiliate; (C) a Participant's commission of a felony or
any other crime the commission of which results in injury to
the Company or of an Affiliate; or (D) any violation of any
restriction on the disclosure or use of confidential
information of the Company or of an Affiliate or on
competition with the Company or of an Affiliate or any of its
businesses as then conducted. The determination of the
Committee as to the existence of cause shall be conclusive and
binding upon the Participant and the Company or the Affiliate.
(3) A Participant who is absent from work with the Company or an
Affiliate because of temporary disability (any disability
other than a Disability), or who is on leave of absence for
any purpose permitted by any authoritative interpretation
(i.e., regulation, ruling, case law, etc.) of Section 422 of
the Code, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated
his or her employment or relationship with the Company or with
an Affiliate, except as the Committee may otherwise expressly
provide or determine.
(4) Section 7(f)(1) shall control and fix the rights of a
Participant who ceases to be an employee of the Company or of
an Affiliate for any reason other than Disability, death,
Normal Retirement or termination "for cause," and who
subsequently becomes Disabled or dies. Nothing in Section 7(g)
and (h) shall be applicable in any such case.
(g) Total and Permanent Disability
A Participant, who ceases to be an employee of the Company or of an Affiliate by
reason of Disability, may exercise any Option granted to such Participant
(notwithstanding that the Participant might not have been able to exercise the
Option as to some or all of the Shares if the Participant had not become
Disabled) within a period of not more than twelve (12) months after the date
that the Participant became Disabled as determined by the Committee, or, if
earlier, within the originally prescribed term of the Option.
(h) Death
In the event that a Participant to whom an Option has been granted ceases to be
an employee of the Company or of an Affiliate by reason of such Participant's
death, any Option granted to such Participant (notwithstanding that the
Participant might not have been able to exercise the Option as to some or all of
the Shares if the Participant had not died) may be exercised by the
Participant's estate or personal representative within a period of not more than
twelve (12) months after the date of death of such Participant or, if earlier,
within the originally prescribed term of the Option.
(i) Normal Retirement
Except as otherwise mandated by Code Section 422, a Participant, who ceases to
be an employee of the Company or of an Affiliate by reason of such Participant's
Normal Retirement, may exercise any Option (notwithstanding that the Participant
might not have been able to exercise the Option as to some or all of the Shares
if the Participant had not terminated his or her employment because of Normal
Retirement) within a period of not more than twelve (12) months after the date
of Normal Retirement, or, if earlier, within the originally prescribed term of
the Option.
(j) Exercise of Option and Issuance of Stock
Options shall be exercised by giving written notice to the Company. Such written
notice shall: (1) be signed by the person exercising the Option, (2) state the
number of Shares with respect to which the Option is being exercised, (3)
contain the warranty required by Section 7(n), if applicable, and (4) specify a
date (other than a Saturday, Sunday or legal holiday) not less than five (5) nor
more than ten (10) days after the date of such written notice, as the date on
which the Shares will be purchased. Such tender and conveyance shall take place
at the principal office of the Company during ordinary business hours, or at
such other hour and place agreed upon by the Company and the person or persons
exercising the Option. On the date specified in such written notice (which date
may be extended by the Company in order to comply with any law or regulation
that requires the Company to take any action with respect to the Option Shares
prior to the issuance thereof), the Company shall accept payment for the Option
Shares in cash, by bank or certified check, by wire transfer, or by such other
means as may be approved by the Committee and shall deliver to the person or
persons exercising the Option in exchange therefor an appropriate certificate or
certificates for fully paid nonassessable Shares or undertake to deliver
certificates within a reasonable period of time. In the event of any failure to
take up and pay for the number of Shares specified in such written notice on the
date set forth therein (or on the extended date as above provided), the right to
exercise the Option shall terminate with respect to such number of Shares, but
shall continue with respect to the remaining Shares covered by the Option and
not yet acquired pursuant thereto.
If approved in advance by the Committee, payment in full or in part also may be
made (1) by delivering Shares already owned by the Participant having a total
Fair Market Value on the date of such delivery equal to the Option price; (2) by
the execution and delivery of a note or other evidence of indebtedness (and any
security agreement thereunder) satisfactory to the Committee; (3) by authorizing
the Company to retain Shares that otherwise would be issuable upon exercise of
the Option having a total Fair Market Value on the date of delivery equal to the
Option price; (4) by the delivery of cash or the extension of credit by a
broker-dealer to whom the Participant has submitted a notice of exercise or
otherwise indicated an intent to exercise an Option (in accordance with part
220, Chapter II, Title 12 of the Code of Federal Regulations, a so-called
"cashless" exercise); or (5) by any combination of the foregoing.
(k) Rights as a Stockholder
No Participant to whom an Option has been granted shall have rights as a
stockholder with respect to any Shares covered by such Option except as to such
Shares as have been registered in the Company's share register in the name of
such Participant upon the due exercise of the Option and tender of the full
Option price.
(l) Assignability and Transferability of Option
Unless otherwise permitted by the Code and by Rule 16b-3 of the Exchange Act, if
applicable, and approved in advance by the Committee, an Option granted to a
Participant shall not be transferable by the Participant and shall be
exercisable, during the Participant's lifetime, only by such Participant or, in
the event of the Participant's incapacity, his guardian or legal representative.
Except as otherwise permitted herein, such Option shall not be assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment, or similar process and any
attempted transfer, assignment, pledge, hypothecation or other disposition of
any Option or of any rights granted thereunder contrary to the provisions of
this Section 7(l), or the levy of any attachment or similar process upon an
Option or such rights, shall be null and void.
(m) Other Provisions
The Award Agreement for an Incentive Option shall contain such limitations and
restrictions upon the exercise of the Option as shall be necessary in order that
such Option can be an "incentive stock option" within the meaning of Section 422
of the Code. Further, the Award Agreements authorized under the Plan shall be
subject to such other terms and conditions including, without limitation,
restrictions upon the exercise of the Option, as the Committee shall deem
advisable and which, in the case of Incentive Options, are not inconsistent with
the requirements of Section 422 of the Code.
(n) Purchase for Investment
If Shares to be issued upon the particular exercise of an Option shall not have
been effectively registered under the Securities Act of 1933, as now in force or
hereafter amended, the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled. The person who exercises such Option shall warrant to the Company
that, at the time of such exercise, such person is acquiring his or her Option
Shares for investment and not with a view to, or for sale in connection with,
the distribution of any such Shares, and shall make such other representations,
warranties, acknowledgments, and affirmations, if any, as the Committee may
require. In such event, the person acquiring such Shares shall be bound by the
provisions of the following legend (or similar legend) which shall be endorsed
upon the certificate(s) evidencing his or her Option Shares issued pursuant to
such exercise.
"The shares represented by this certificate have been acquired
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the absence
of an effective registration statement for the shares under
the Securities Act of 1933 or an opinion of counsel
satisfactory to the Company that an exemption from
registration is then available."
"The shares of stock represented by this certificate are
subject to all of the terms and conditions of a certain
Agreement dated as of _________________, _____, among the
Company and certain of its stockholders. A copy of the
Agreement is on file in the office of the Secretary of the
Company. The Agreement provides, among other things, for
restrictions upon the holder's right to transfer the shares
represented hereby, and for certain prior rights to purchase
and certain obligations to sell the shares of common stock
evidenced by this certificate at a designated purchase price
determined in accordance with certain procedures. Any
attempted transfer of these shares other than in compliance
with the Agreement shall be void and of no effect. By
accepting the shares of stock evidenced by this certificate,
any permitted transferee agrees to be bound by all of the
terms and conditions of said Agreement."
Without limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining any consent that the
Company deems necessary under any applicable law (including without limitation
state securities or "blue sky" laws).
(o) Repricing
The Committee may not at any time reduce the exercise price of an Option
previously awarded to any Participant, whether through amendment, cancellation
or replacement grants, or any other means (subject to adjustments for stock
splits, stock dividends, and other adjustments described in Section 17 hereof).
8. REQUIRED TERMS AND CONDITIONS OF RESTRICTED STOCK
(a) The Committee may from time to time grant an Award in Shares of Common Stock
or grant an Award denominated in units of Common Stock, for such consideration,
if any, as the Committee deems appropriate (which amount may be less than the
Fair Market Value of the Common Stock on the date of the Award), and subject to
such restrictions and conditions and other terms as the Committee may determine
at the time of the Award (including, but not limited to, continuous service with
the Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance), and subject further to the general
provisions of the Plan, the applicable Award Agreement, and the following
specific rules.
(b) If Shares of Restricted Stock are awarded, such Shares cannot be assigned,
sold, transferred, pledged, or hypothecated prior to the lapse of the
restrictions applicable thereto, and, in no event, prior to six (6) months from
the date of the Award. The Company shall issue, in the name of the Participant,
stock certificates representing the total number of Shares of Restricted Stock
awarded to the Participant, as soon as may be reasonably practicable after the
grant of the Award.
(c) Restricted Stock issued to a Participant under the Plan shall be governed by
an Award Agreement that shall specify whether Shares of Common Stock are awarded
to the Participant, or whether the Award shall be one not of Shares of Common
Stock but one denominated in units of Common Stock, any consideration required
thereto, and such other provisions as the Committee shall determine.
(d) Subject to the provisions of Section 8(b) and (e) hereof and the
restrictions set forth in the related Award Agreement, the Participant receiving
an Award of Shares of Restricted Stock shall thereupon be a stockholder with
respect to all of the Shares represented by such certificate or certificates and
shall have the rights of a stockholder with respect to such Shares, including
the right to vote such Shares and to receive dividends and other distributions
made with respect to such Shares. All Common Stock received by a Participant as
the result of any dividend on the Shares of Restricted Stock, or as the result
of any stock split, stock distribution, or combination of the Shares affecting
Restricted Stock, shall be subject to the restrictions set forth in the related
Award Agreement.
(e) Restricted Stock or units of Restricted Stock awarded to a Participant
pursuant to the Plan will be forfeited, and any Shares of Restricted Stock or
units of Restricted Stock sold to a Participant pursuant to the Plan may, at the
Company's option, be resold to the Company for an amount equal to the price paid
therefor, and in either case, such Restricted Stock or units of Restricted Stock
shall revert to the Company, if the Company so determines in accordance with
Section 13 or any other condition set forth in the Award Agreement, or,
alternatively, if the Participant's employment with the Company or its
Affiliates terminates, other than for reasons set forth in Section 12, prior to
the expiration of the forfeiture or restriction provisions set forth in the
Award Agreement.
(f) The Committee, in its discretion, shall have the power to accelerate the
date on which the restrictions contained in the Award Agreement shall lapse with
respect to any or all Restricted Stock awarded under the Plan.
(g) The Committee may prescribe such other restrictions, conditions, and terms
applicable to Restricted Stock issued to a Participant under the Plan that are
neither inconsistent with nor prohibited by the Plan or the Award Agreement,
including, without limitation, terms providing for a lapse of the restrictions
of this Section or any Award Agreement in installments.
(h) Notwithstanding anything in this Article 8 to the contrary, any restriction
period imposed hereunder shall be for a period of not less than three (3) years,
if such restriction is based upon continuous service with the Company or its
Affiliates.
9. REQUIRED TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
If deemed by the Committee to be in the best interests of the Company, a
Participant may be granted a Right. Each Right shall be granted subject to such
restrictions and conditions and other terms as the Committee may specify in the
Award Agreement at the time the Right is granted, subject to the general
provisions of the Plan, and the following specific rules.
(a) Rights may be granted, if at all, either singly, in combination with another
Award, or in tandem with another Award. At the time of grant of a Right, the
Committee shall specify the base price of Common Stock to be used in connection
with the calculation described in Section 9(b), provided that the base price
shall not be less than one hundred percent (100%) of the Fair Market Value of a
Share of Common Stock on the date of grant, unless approved by the Board.
(b) Upon exercise of a Right, which shall be not less than six (6) months from
the date of the grant, the Participant shall be entitled to receive in
accordance with Section 14, and as soon as practicable, the excess of the Fair
Market Value of one Share of Common Stock on the date of exercise over the base
price specified in such Right, multiplied by the number of Shares of Common
Stock then subject to the Right, or the portion thereof being exercised.
(c) Notwithstanding anything herein to the contrary, if the Award granted to a
Participant allows him or her to elect to cancel all or any portion of an
unexercised Option by exercising an additional or tandem Right, then the Option
price per Share of Common Stock shall be used as the base price specified in
Section 9(a) to determine the value of the Right upon such exercise and, in the
event of the exercise of such Right, the Company's obligation with respect to
such Option or portion thereof shall be discharged by payment of the Right so
exercised. In the event of such a cancellation, the number of Shares as to which
such Option was canceled shall become available for use under the Plan, less the
number of Shares, if any, received by the Participant upon such cancellation in
accordance with Section 14.
(d) A Right may be exercised only by the Participant (or, if applicable under
Section 12, by a legatee or legatees of such Right, or by the Participant's
executors, personal representatives, or distributees).
10. PERFORMANCE AWARDS
(a) A Participant may be granted an Award that is subject to performance
conditions specified by the Committee. The Committee may use business criteria
and other measures of performance it deems appropriate in establishing any
performance conditions (including, but not limited to, continuous service with
the Company or its Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other measurements
of Company or Affiliate performance), and may exercise its discretion to reduce
or increase the amounts payable under any Award subject to performance
conditions, except as otherwise limited under Section 10(c) and (d), below, in
the case of a Performance Award intended to qualify under Code Section 162(m).
(b) Any Performance Award will be forfeited if the Company so determines in
accordance with Section 13 or any other condition set forth in the Award
Agreement, or, alternatively, if the Participant's employment with the Company
or its Affiliates terminates, other than for reasons set forth in Section 12,
prior to the expiration of the time period over which the performance conditions
are to be measured.
(c) If the Committee determines that a Performance Award to be granted to an
employee should qualify as "performance-based compensation" for purposes of Code
Section 162(m), the grant and/or settlement of such Performance Award shall be
contingent upon achievement of preestablished performance goals and other terms
set forth in Section 10(c).
(1) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business
criteria and a targeted level or levels of performance with
respect to such criteria, as specified by the Committee
consistent with this Section 10(c). Performance goals shall be
objective and shall otherwise meet the requirements of Code
Section 162(m), including the requirement that the level or
levels of performance targeted by the Committee result in the
performance goals being "substantially uncertain." The
Committee may determine that more than one performance goal
must be achieved as a condition to settlement of such
Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to
different Participants.
(2) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for
specified Affiliates or business units of the Company (except
with respect to the total stockholder return and earnings per
share criteria), shall be used exclusively by the Committee in
establishing performance goals for such Performance Awards:
(A) total stockholder return; (B) such total stockholder
return as compared to the total return (on a comparable basis)
of a publicly available index such as, but not limited to, the
Standard & Poor's 500 or the Nasdaq-U.S. Index; (C) net
income; (D) pre-tax earnings; (E) EBITDA; (F) pre-tax
operating earnings after interest expense and before bonuses,
service fees, and extraordinary or special items; (G)
operating margin; (H) earnings per share; (I) return on
equity; (J) return on capital; (K) return on investment; (L)
operating income, excluding the effect of charges for acquired
in-process technology and before payment of executive bonuses;
(M) earnings per share, excluding the effect of charges for
acquired in-process technology and before payment of executive
bonuses; (N) working capital; and (O) total revenues. The
foregoing business criteria also may be used in establishing
performance goals for Cash Awards granted under Section 11
hereof.
(3) Compensation Limitation. No employee may receive a
Performance Award in excess of $1 million for any three (3)
year period.
(d) Achievement of performance goals in respect of such Performance Awards shall
be measured over such periods as may be specified by the Committee. Performance
goals shall be established on or before the dates that are required or permitted
for "performance-based compensation" under Code Section 162(m).
(e) Settlement of Performance Awards may be in cash or Shares, or other
property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection
with such Performance Awards, but may not exercise discretion to increase any
such amount payable in respect of a Performance Award subject to Code Section
162(m).
11. REQUIRED TERMS AND CONDITIONS OF CASH AWARDS
(a) The Committee may from time to time authorize the award of cash payments
under the Plan to Participants, subject to such restrictions and conditions and
other terms as the Committee may determine at the time of authorization
(including, but not limited to, continuous service with the Company or its
Affiliates, achievement of specific business objectives, increases in specified
indices, attaining growth rates, and other measurements of Company or Affiliate
performance), and subject to the general provisions of the Plan, the applicable
Award Agreement, and the following specific rules.
(b) Any Cash Award will be forfeited if Company so determines in accordance with
Section 13 or any other condition set forth in the Award Agreement, or,
alternatively, if the Participant's employment with the Company or its
Affiliates terminates, other than for reasons set forth in Section 12, prior to
the attainment of any goals set forth in the Award Agreement or prior to the
expiration of the forfeiture or restriction provisions set forth in the Award
Agreement, whichever is applicable.
(c) The Committee, in its discretion, shall have the power to change the date on
which the restrictions contained in the Award Agreement shall lapse, or the date
on which goals are to be measured, with respect to any Cash Award.
(d) Any Cash Award, if not previously forfeited, shall be payable in accordance
with Section 14 as soon as practicable after the restrictions lapse or the goals
are attained.
(e) The Committee may prescribe such other restrictions, conditions, and terms
applicable to the Cash Awards issued to a Participant under the Plan that are
neither inconsistent with nor prohibited by the Plan or the Award Agreement,
including, without limitation, terms providing for a lapse of the restrictions,
or a measurement of the goals, in installments.
12. TERMINATION OF EMPLOYMENT
Except as may otherwise be (A) provided in Section 7 for Options, (B) provided
for under the Award Agreement, or (C) permitted pursuant to Sections 12(a) and
(c) (subject to the limitations under the Code for Incentive Options), if the
employment of a Participant terminates, all unexpired, unpaid, unexercised, or
deferred Awards shall be canceled immediately.
(a) Retirement under a Company or Affiliate Retirement Plan. When a
Participant's employment terminates as a result of retirement as defined under a
Company or Affiliate retirement plan but such retirement is not a Normal
Retirement as defined under the Section 2(o) of the Plan, the Committee may
permit Awards to continue in effect beyond the date of retirement in accordance
with the applicable Award Agreement, and/or the exercisability and vesting of
any Award may be accelerated.
(b) Resignation in the Best Interests of the Company or an Affiliate. When a
Participant resigns from the Company or an Affiliate and, in the judgment of the
chief executive officer or other senior officer designated by the Committee, the
acceleration and/or continuation of outstanding Awards would be in the best
interests of the Company, the Committee may (i) authorize, where appropriate,
the acceleration and/or continuation of all or any part of Awards granted prior
to such termination and (ii) permit the exercise, vesting, and payment of such
Awards for such period as may be set forth in the applicable Award Agreement,
subject to earlier cancellation pursuant to Section 13 or at such time as the
Committee shall deem the continuation of all or any part of the Participant's
Awards are not in the Company's or its Affiliate's best interests.
(c) Death or Disability of a Participant
(1) In the event of a Participant's death, the Participant's
estate or beneficiaries shall have a period up to the earlier
of (A) the expiration date specified in the Award Agreement,
or (B) the expiration date specified Section 7(h), within
which to receive or exercise any outstanding Awards held by
the Participant under such terms as may be specified in the
applicable Award Agreement. Rights to any such outstanding
Awards shall pass by will or the laws of descent and
distribution in the following order: (i) to beneficiaries so
designated by the Participant; (ii) to a legal representative
of the Participant; or (iii) to the persons entitled thereto
as determined by a court of competent jurisdiction. Awards so
passing shall be made at such times and in such manner as if
the Participant were living.
(2) In the event a Participant is determined by the Company to be
Disabled, and subject to the limitations of Section 7(g),
Awards may be paid to, or exercised by, the Participant, if
legally competent, or by a legally designated guardian or
other representative if the Participant is legally incompetent
by virtue of such Disability.
(3) After the death or Disability of a Participant, the Committee
may in its sole discretion at any time (A) terminate
restrictions in Award Agreements; (B) accelerate any or all
installments and rights; and/or (C) instruct the Company to
pay the total of any accelerated payments in a lump sum to the
Participant, the Participant's estate, beneficiaries or
representative, notwithstanding that, in the absence of such
termination of restrictions or acceleration of payments, any
or all of the payments due under the Awards ultimately might
have become payable to other beneficiaries.
13. CANCELLATION AND RESCISSION OF AWARDS
Unless the Award Agreement specifies otherwise, the Committee may cancel any
unexpired, unpaid, unexercised, or deferred Awards at any time if the
Participant is not in compliance with the applicable provisions of the Award
Agreement, the Plan, or with the following conditions:
(a) A Participant shall not breach any protective agreement entered into between
him or her and the Company or any Affiliates, or render services for any
organization or engage directly or indirectly in any business which, in the
judgment of the chief executive officer of the Company or other senior officer
designated by the Committee, is or becomes competitive with the Company, or
which organization or business, or the rendering of services to such
organization or business, is or becomes otherwise prejudicial to or in conflict
with the interests of the Company. For a Participant whose employment has
terminated, the judgment of the chief executive officer shall be based on terms
of the protective agreement, if applicable, or on the Participant's position and
responsibilities while employed by the Company or its Affiliates, the
Participant's post-employment responsibilities and position with the other
organization or business, the extent of past, current, and potential competition
or conflict between the Company and other organization or business, the effect
of the Participant's assuming the post-employment position on the Company's or
its Affiliate's customers, suppliers, investors, and competitors, and such other
considerations as are deemed relevant given the applicable facts and
circumstances. A Participant may, however, purchase as an investment or
otherwise, stock or other securities of any organization or business so long as
they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than one percent (1%) equity interest
in the organization or business.
(b) A Participant shall not, without prior written authorization from the
Company, disclose to anyone outside the Company or its Affiliates, or use in
other than the Company's or Affiliate's business, any confidential information
or materials relating to the business of the Company or its Affiliates, acquired
by the Participant either during or after employment with the Company or its
Affiliates.
(c) A Participant shall disclose promptly and assign to the Company all right,
title, and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment with the Company or an Affiliate,
relating in any manner to the actual or anticipated business, research, or
development work of the Company or its Affiliates, and shall do anything
reasonably necessary to enable the Company or its Affiliates to secure a patent,
trademark, copyright, or other protectable interest where appropriate in the
United States and in foreign countries.
Upon exercise, payment, or delivery pursuant to an Award, the Participant shall
certify on a form acceptable to the Committee that he or she is in compliance
with the terms and conditions of the Plan, including the provisions of this
Sections 13(a), (b) or (c). Failure to comply with the provisions of this
Sections 13(a), (b) or (c) prior to, or during the one (1) year period after,
any exercise, payment, or delivery pursuant to an Award shall cause such
exercise, payment, or delivery to be rescinded. The Company shall notify the
Participant in writing of any such rescission within two (2) years after such
exercise, payment, or delivery. Within ten (10) days after receiving such a
notice from the Company, the Participant shall pay to the Company the amount of
any gain realized or payment received as a result of the rescinded exercise,
payment, or delivery pursuant to the Award. Such payment shall be made either in
cash or by returning to the Company the number of Shares of Common Stock that
the Participant received in connection with the rescinded exercise, payment, or
delivery.
14. PAYMENT OF RESTRICTED STOCK, RIGHTS, PERFORMANCE AWARDS AND CASH AWARDS
Payment of Restricted Stock, Rights, Performance Awards and Cash Awards may be
made, as the Committee shall specify, in the form of cash, Shares of Common
Stock, or combinations thereof; provided, however, that a fractional Share of
Common Stock shall be paid in cash equal to the Fair Market Value of the
fractional Share of Common Stock at the time of payment.
15. WITHHOLDING
Except as otherwise provided by the Committee,
(a) The Company shall have the power and right to deduct or withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy federal,
state, and local taxes required by law to be withheld with respect to any grant,
exercise, or payment made under or as a result of this Plan; and
(b) In the case of payments of Awards, or upon any other taxable event
hereunder, a Participant may elect, subject to the approval in advance by the
Committee, to satisfy the withholding requirement, if any, in whole or in part,
by having the Company withhold Shares of Common Stock that would otherwise be
transferred to the Participant having a Fair Market Value, on the date the tax
is to be determined, equal to the minimum marginal tax that could be imposed on
the transaction. All elections shall be made in writing and signed by the
Participant.
16. SAVINGS CLAUSE
This Plan is intended to comply in all respects with applicable law and
regulations, including, (A) with respect to those Participants who are officers
or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 of the
Securities and Exchange Commission, if applicable, and (B) with respect to
executive officers, Code Section 162(m). In case any one or more provisions of
this Plan shall be held invalid, illegal, or unenforceable in any respect under
applicable law and regulation (including Rule 16b-3 and Code Section 162(m)),
the validity, legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby and the invalid, illegal, or
unenforceable provision shall be deemed null and void; however, to the extent
permitted by law, any provision that could be deemed null and void shall first
be construed, interpreted, or revised retroactively to permit this Plan to be
construed in compliance with all applicable law (including Rule 16b-3 and Code
Section 162(m)) so as to foster the intent of this Plan. Notwithstanding
anything herein to the contrary, with respect to Participants who are officers
and directors for purposes of Section 16 of the Exchange Act, if applicable, and
if required to comply with rules promulgated thereunder, no grant of, or Option
to purchase, Shares shall permit unrestricted ownership of Shares by the
Participant for at least six (6) months from the date of grant or Option, unless
the Board determines that the grant of, or Option to purchase, Shares otherwise
satisfies the then current Rule 16b-3 requirements.
17. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE
TRANSACTIONS
In the event that the outstanding Shares of the Company are changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, change in par value, stock
split-up, combination of shares or dividends payable in capital stock, or the
like, appropriate adjustments to prevent dilution or enlargement of the Awards
granted to, or available for, Participants shall be made in the manner and kind
of Shares for the purchase of which Awards may be granted under the Plan, and,
in addition, appropriate adjustment shall be made in the number and kind of
Shares and in the Option price per share subject to outstanding Options. The
foregoing notwithstanding, no such adjustment shall be made in an Incentive
Option which shall, within the meaning of Section 424 of the Code, constitute
such a modification, extension, or renewal of an Option as to cause it to be
considered as the grant of a new Option.
Notwithstanding anything herein to the contrary, the Company may, in its sole
discretion, accelerate the timing of the exercise provisions of any Award in the
event of a tender offer for the Company's Shares, the adoption of a plan of
merger or consolidation under which a majority of the Shares of the Company
would be eliminated, or a sale of all or any portion of the Company's assets or
capital stock. Alternatively, the Company may, in its sole discretion, cancel
any or all Awards upon any of the foregoing events and provide for the payment
to Participants in cash of an amount equal to the value or appreciated value,
whichever is applicable, of the Award, as determined in good faith by the
Committee, at the close of business on the date of such event. The preceding two
sentences of this Section 17 notwithstanding, the Company shall be required to
accelerate the timing of the exercise provisions of any Award if (i) any such
business combination is to be accounted for as a pooling-of-interests under APB
Opinion 16 and (ii) the timing of such acceleration does not prevent such
pooling-of-interests treatment.
Upon a business combination by the Company or any of its Affiliates with any
corporation or other entity through the adoption of a plan of merger or
consolidation or a share exchange or through the purchase of all or
substantially all of the capital stock or assets of such other corporation or
entity, the Board or the Committee may, in its sole discretion, grant Options
pursuant hereto to all or any persons who, on the effective date of such
transaction, hold outstanding options to purchase securities of such other
corporation or entity and who, on and after the effective date of such
transaction, will become employees or directors of, or consultants or advisors
to, the Company or its Affiliates. The number of Shares subject to such
substitute Options shall be determined in accordance with the terms of the
transaction by which the business combination is effected. Notwithstanding the
other provisions of this Plan, the other terms of such substitute Options shall
be substantially the same as or economically equivalent to the terms of the
options for which such Options are substituted, all as determined by the Board
or by the Committee, as the case may be. Upon the grant of substitute Options
pursuant hereto, the options to purchase securities of such other corporation or
entity for which such Options are substituted shall be cancelled immediately.
18. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in connection with
a transaction to which Section 17 is applicable, all Awards granted hereunder
shall terminate and become null and void; provided, however, that if the rights
of a Participant under the applicable Award have not otherwise terminated and
expired, the Participant may, if the Committee, in its sole discretion, so
permits, have the right immediately prior to such dissolution or liquidation to
exercise any Award granted hereunder to the extent that the right thereunder has
become exercisable as of the date immediately prior to such dissolution or
liquidation.
19. TERMINATION OF THE PLAN
The Plan shall terminate (10) years from the earlier of the date of its adoption
by the Board or the date of its approval by the stockholders. The Plan may be
terminated at an earlier date by vote of the stockholders or the Board;
provided, however, that any such earlier termination shall not affect any Award
Agreements executed prior to the effective date of such termination.
Notwithstanding anything in this Plan to the contrary, any Options granted prior
to the effective date of the Plan's termination may be exercised until the
earlier of (A) the date set forth in the Award Agreement, or (B) in the case of
an Incentive Option, ten (10) years from the date the Option is granted; and the
provisions of the Plan with respect to the full and final authority of the
Committee under the Plan shall continue to control.
20. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall become effective
upon adoption by the Board; provided, however, that any amendment that (A)
increases the numbers of Shares that may be granted under this Plan, other than
as provided by Section 17, (B) materially modifies the requirements as to
eligibility to participate in the Plan, (C) materially increases the benefits to
Participants, (D) extends the period during which Incentive Options may be
granted or exercised, or (E) changes the designation of the class of employees
eligible to receive Incentive Options, or otherwise causes the Incentive Options
to no longer qualify as "incentive stock options" as defined in Section 422 of
the Code, also shall be subject to the approval of the stockholders of the
Company within one (1) year either before or after such adoption by the Board,
subject to the requirements of Section 16 of the Plan.
21. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the Company or an Affiliate
from terminating the employment of a Participant, nor to prevent a Participant
from terminating the Participant's employment with the Company or an Affiliate.
22. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against all reasonable expenses, including attorneys'
fees, actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken by them as
directors or members of the Committee and against all amounts paid by them in
settlement thereof (provided such settlement is approved by the Board) or paid
by them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that the director or Committee member is liable for gross
negligence or willful misconduct in the performance of his or her duties. To
receive such indemnification, a director or Committee member must first offer in
writing to the Company the opportunity, at its own expense, to defend any such
action, suit or proceeding.
23. UNFUNDED PLAN
Insofar as it provides for payments in cash in accordance with Section 14, or
otherwise, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Participants who are entitled to cash, Common Stock,
or rights thereto under the Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock, or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Company, the Board, or the Committee be deemed to be a trustee of any
cash, Common Stock, or rights thereto to be granted under the Plan. Any
liability of the Company to any Participant with respect to a grant of cash,
Common Stock, or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and any Award Agreement;
no such obligation of the Company shall be deemed to be secured by any pledge or
other encumbrance on any property of the Company. Neither the Company nor the
Board nor the Committee shall be required to give any security or bond for the
performance of any obligation that may be created by the Plan.
24. MITIGATION OF EXCISE TAX
If any payment or right accruing to a Participant under this Plan (without the
application of this Section 24), either alone or together with other payments or
rights accruing to the Participant from the Company or an Affiliate, would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the amount payable or
right accruing under the Plan being subject to an excise tax under Section 4999
of the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Company. The Participant shall cooperate
in good faith with the Company in making such determination and providing any
necessary information for this purpose.
25. EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board, provided that the
Plan is approved by the stockholders of the Company before or at the Company's
next annual meeting, but in no event shall stockholder approval be sought more
than one (1) year after such adoption by the Board.
26. GOVERNING LAW
This Plan shall be governed by the laws of the State of Illinois and construed
in accordance therewith.
Amended and restated this 8th day of March, 2001.
EXHIBIT 10.2
USFREIGHTWAYS CORPORATION
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
AMENDED AND RESTATED AS OF MARCH 8, 2001
I. DEFINITIONS AND PURPOSE
A. Definitions:
Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this Plan, have the
following meanings:
1. Affiliate means a corporation which, for purposes of
Section 422 of the Code, is a parent or subsidiary of
the Company, direct or indirect.
2. Board means the Board of Directors of the Company.
3. Code means the Internal Revenue Code of 1986, as
amended.
4. Committee means the committee to which the Board
delegates the power to act under or pursuant to the
provisions of the Plan, or the Board if no committee
is selected.
5. Company means USFreightways Corporation, a Delaware
corporation, and includes any successor or assignee
corporation or corporations into which the Company
may be merged, changed, or consolidated; any
corporation for whose securities the securities of
the Company shall be exchanged; and any assignee of
or successor to substantially all other assets of the
Company.
6. Disability means a permanent and total disability as
defined in Section 22(e)(3) of the Code.
7. Eligible Director means each person who is a director
of the Company, and who is not an employee of the
Company or any Affiliate of the Company and who has
not been an employee of the Company or any Affiliate
of the Company for all or any part of the preceding
fiscal year.
8. Option means a right or option granted under the
Plan, which right or option shall not be intended to
qualify as an incentive stock option as defined in
Section 422 of the Code.
9. Option Agreement means an agreement between the
Company and a Participant executed and delivered
pursuant to the Plan.
10. Participant means an Eligible Director to whom an
Option is granted under the Plan.
11. Plan means this Stock Option Plan for Non-Employee
Directors, as amended from time to time.
12. Shares means the following shares of the capital
stock of the Company as to which Options have been or
may be granted under the Plan: authorized and
unissued common stock, $0.01 par value, treasury
shares held by the Company or any shares of capital
stock into which the Shares are changed or for which
they are exchanged within the provisions of Article
VI of the Plan.
B. Purpose of the Plan:
The Plan intended to promote the interests of the Company and
its stockholders by attracting and retaining highly qualified
independent directors through an investment interest in the
Company's future success.
II. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Options may be granted from
time to time shall be Six Hundred Thousand (600,000) Shares.
If an Option ceases to be "outstanding", in whole or in part, the
Shares which were subject to such Option, if the Option was not
exercised, shall be available for the granting of other Options. Any
Option, if the Option was not exercised, shall be available for the
granting of other Options. Any Option shall be treated as "outstanding"
until such Option is exercised in full, or terminates or expires under
the provisions of the Plan or Option Agreement.
Subject to the provisions of Article VI, the aggregate number of Shares
as to which Options may be granted shall be subject to change only by
means of an amendment of the Plan duly adopted by the Company and
approved by the stockholders of the Company within such time period as
may be required by the Securities Exchange Act of 1934, as amended from
time to time.
III. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee is authorized to:
A. Interpret the provisions of the Plan or any Option or Option
Agreement and to make all rules and determinations which it
deems necessary or advisable for the administration of
the Plan;
B. Determine the Eligible Directors to whom Options shall be
granted;
C. Determine the number of Shares for which an Option or Options
shall be granted;
D. Provide for the acceleration of the righ to exercise an Option
(or any portion thereof); and
E. Specify the terms and conditions upon which Options may be
granted.
The interpretation and construction by the Committee of any provisions
of the Plan or of any Option granted under it shall be final.
IV. ELIGIBILITY FOR PARTICIPATION
Each Participant must be an Eligible Director of the Company at the
time an Option is granted. Each Eligible Director shall be granted, at
the later of the effective date of the Plan or the date such director
becomes an Eligible Director, and at such other time or times as
described in Article V, an Option to purchase Shares under the Plan. In
addition to the formula-based Shares set forth in Article V, the
Committee may at any time and from time to time grant one or more
additional Options to one or more Eligible Directors ("Discretionary
Options") and may designate the number of Shares to be subject to each
Discretionary Option so granted, provided however that no grant of a
Discretionary Option to purchase Shares shall permit unrestricted
ownership of Shares by the Eligible Director for at least six (6)
months from the date of grant of the Discretionary Option, unless the
Committee determines that the grant of such Discretionary Option to
purchase Shares otherwise satisfies the then current Rule 16b-3
requirements under the Securities Exchange Act of 1934.
V. TERMS AND CONDITIONS OF OPTIONS
Each Option shall be set forth in an Option Agreement, duly executed on
behalf of the Company and by the participant to whom such Option is
granted. Except for the setting of the Option price under Paragraph A
of this Article V, no Option shall be granted and no purported grant of
any Option shall be effective until such Option Agreement shall have
been duly executed on behalf of the Company and by the Participant.
Each such Option Agreement shall be subject to at least the following
terms and conditions:
A. OPTION PRICE:
The exercise price of the Shares covered by each Option
granted under the Plan shall be equal to 100% of the "fair
market value" of the Shares on the date of the granted Option.
If the Shares are listed on any national securities exchange,
the fair market value shall be the mean average of the high
and low sales prices, if any, on the largest such exchange on
the date of the grant of the Option, or, if none, on the most
recent trade date thirty (30) days or less prior to the date
of the grant of the Option. If the Shares are not then listed
on any such exchange, the fair market value of such Shares
shall be the closing "Ask" prices, if any, as reported on the
National Association of Securities Dealers automated Quotation
System ("NASDAQ") for the date of the grant of the Option, or
if none, on the most recent trade date thirty (30) days or
less prior to the date of the grant of the Option for which
such quotations are reported. If the Shares are not then
either listed on any such exchange or quoted on NASDAQ, the
fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported
in the National daily Quotation Service for the date of the
grant of the Option, or, if none, for the most recent trade
date thirty (30) days or less prior to the date of the grant
of the Option for which such quotations are reported.
B. NUMBER OF SHARES:
Each Eligible Director shall automatically, at the later of
the effective date of the Plan or the date such director
becomes an Eligible Director, be granted an Option under this
Plan to acquire 10,000 Shares. Upon the fifth and tenth
anniversaries of such initial grant, each Participant shall
automatically be granted Options under this Plan to acquire an
additional 10,000 Shares at each such anniversary, provided
the Participant is an Eligible Director at such anniversary.
In addition to the foregoing, each Eligible Director may from
time to time be granted by the Committee, in its discretion, a
Discretionary Option.
C. TERM OF OPTION:
No Option granted under the Plan shall be exercisable after
the expiration of ten (10) years from the date of the grant.
D. DATE OF EXERCISE:
1. Options granted to an Eligible Director under the
Plan on the Plan's effective date shall become
exercisable cumulatively in accordance with the
following schedule:
Years Elapsed Since Cumulative Number of Shares
Date of Grant For Which Option May Be Exercised
_________________ ________________
Less than 1 2,000
1 3,600
2 5,200
3 6,800
4 8,400
5 or more 10,000
2. Options granted to an Eligible Director under the
Plan after the Plan's effective date shall become
exercisable cumulatively in accordance with the
following schedule:
Years Elapsed Since Cumulative Number of Shares
Date of Grant For Which Option May Be Exercised
_________________ ________________
Less than 1 0
1 2,000
2 4,000
3 6,000
4 8,000
5 or more 10,000
The foregoing schedules notwithstanding, if a Participant
shall cease to be a director of the Company because of death
or Disability, all Shares for which an Option has been granted
shall become immediately exercisable and shall be exercisable
in accordance with Paragraph F.
Not withstanding anything herein to the contrary, upon the
authorization of the grant of a Discretionary Option, or at
anytime thereafter, the Committee may prescribe the date or
dates on which the Discretionary Option becomes exercisable,
and may provide that the Discretionary Option become
exercisable in installments over a period of years, or upon
the attainment of stated goals.
E. MEDIUM OF PAYMENT:
The Option price shall be paid on the date of purchase
specified in the notice of exercise, as set forth in Paragraph
G. It shall be paid in the legal tender of the United States,
or, at the election of the Participant, by surrender to the
Company of previously owned shares with an aggregate fair
market value (on the date of the exercise) equal to the Option
price to be paid; provided, however, that if such shares were
acquired pursuant to an incentive stock option plan (as
defined in Code Section 422) of the Company or Affiliate, then
the applicable holding period requirements of said Section 422
have been met with respect to such shares, and, provided
further, that if (i) such shares were granted pursuant to an
option, then such option must have been granted at least six
(6) months prior to the exercise of the Option hereunder; and
(ii), such shares were purchased other than through the grant
and exercise of an option, such shares were owned by the
Participant for more than six (6) months prior to the exercise
of the Option hereunder.
F. TERMINATION OF STATUS:
1. In the event that a Participant shall cease to be a director
of the Company for any reason other than death, Disability, or
voluntary termination as a director of the Company on or after
the attainment of his or her 65th birthday, his or her Option
shall be exercisable, only to the extent that it was
exercisable at the date he or she ceased to be a director and
only until the first to occur of one (1) year after such date
or until the date on which the Option otherwise expires
according to its terms.
2. In the event that a Participant shall cease to be a director
of the Company because of death or Disability, his or her
Option may be exercised in its entirety (notwithstanding the
vesting schedule set forth in Paragraph D of this Article V or
in any Option Agreement) within the originally prescribed term
of the Option by the Participant or by any person or persons
designated by the Participant as the executors or
administrators of the Participant's estate, or by any person
or persons who shall have acquired the Option directly from
the Participant by his or her will or the applicable law of
descent and distribution.
3. In the event that a Participant shall cease to be a director
of the Company because of voluntary termination as a director
of the Company on or after the attainment of his or her 65th
birthday and that Participant has served as a director of the
Company for five (5) years or more, his or her Option may be
exercised in its entirety (notwithstanding the vesting
schedule set forth in Paragraph D of this Article V or in any
Option Agreement) within the originally prescribed term of the
Option by the Participant; provided that the Committee, in its
sole discretion, approves the exercise of the Option in its
entirety.
4. In the event that a Participant shall cease to be a
director of the Company because of voluntarytermination
as a director of the Company on or after the attainment of his
or her 72nd birthday and that Participant has not served as
a director of the Company for five (5) years, his or her
Option shall be exercisable (notwithstanding the vesting
schedule set forth in Paragraph D of this Article V or in any
Option Agreement) within the originally prescribed term of
the Option by the Participant, to the extent that (a) it was
exercisable at the date he or she ceased to be a director
and (b) if the Option was exercisable periodically, to the
extent of any additional rights that would have become
exercisable (had the Participant not voluntarily terminated as
a director of the Company) during successive one year periods
from the Participant's date of termination for each year the
Participant served as a director of theCompany.
G. EXERCISE OF OPTION AND ISSUE OF STOCK:
Option shall be exercised by giving written notice to the
Company. Such written notice shall: (1) be signed by the
person exercising the Option, (2) state the number of Shares
with respect to which the Option is being exercised, and (3)
specify a date (other than a Saturday, Sunday or legal
holiday) not less than five (5) nor more than ten (10) days
after the date of such written notice, as the date on which
the Shares will be purchased. Such tender and conveyance shall
take place at the principal office of the Company during
ordinary business hours, or at such other hour and place
agreed upon by the Company and the person or persons
exercising the Option. On the date specified in such written
notice (which date may be extended by the Company in order to
comply with any law or regulation which requires the Company
to take any action with respect to the Option Shares prior to
the issuance thereof, whether pursuant to the provisions of
Article VI or otherwise), the Company shall accept payment for
the Option Shares and shall deliver to the person or persons
exercising the Option in exchange therefor an appropriate
certificate or certificates for paid non-assessable Shares. In
the event of any failure to take up and pay for the number of
Shares specified in such written notice on the date set forth
therein (or on the extended date as above provided), the right
to exercise the Option shall terminate with respect to such
number of Shares, but shall continue with respect to the
remaining Shares covered by the Option and not yet acquired
pursuant thereto.
H. RIGHTS AS A STOCKHOLDER:
No Participant to whom an Option has been granted shall have
rights as a stockholder with respect to any Shares covered by
such Option except as to such Shares as have been issued to or
registered in the Company's share register in the name of such
Participant upon the due exercise of the Option and tender of
the full Option price.
I. ASSIGNABILITY AND TRANSFERABILITY OF OPTION:
By its terms, an Option granted to a participant shall not be
transferable by the Participant and shall be exercisable,
during the Participant's lifetime, only by such Participant.
Such Option shall not be assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment, or similar process.
Any attempted transfer, assignment, pledge, hypothecation or
other disposition of any Option or of any rights granted
thereunder contrary to the provisions of this Paragraph I, or
the levy of any attachment or similar process upon an Option
or such rights, shall be null and void.
VI. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding shares of the Company are changed
into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization , merger, consolidation, recapitalization,
reclassification, change in par value, stock split-up, combination of
shares or dividend payable in capital stock , or the like, appropriate
adjustments to prevent dilution or enlargement of the rights granted
to, or available for, Participants shall be made in the number and kind
of shares for the purchase of which Options may be granted under the
Plan, and, in addition, appropriate adjustment shall be made in the
number and kind of Shares and in the Option price per share subject to
outstanding options. Notwithstanding anything herein to the contrary,
in the event of an offer for the Company's shares, the adoption of a
plan of merger or consolidation under which all of the shares of the
Company would be eliminated, or a sale of substantially all of the
Company's assets, a Participant shall be entitled to exercise
immediately all or any portion of the Shares to which he or she
received an Option, regardless of the number of years elapsed since the
date of the grant .
VII. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than in
connection with a transaction to which the preceding Article VI is
applicable, all Options granted hereunder shall terminate and become
null and void; provided, however, that if the rights of a Participant
under the applicable Options have not otherwise terminated and expired,
the Participant shall have the right immediately prior to such
dissolution or liquidation to exercise any Option granted hereunder to
the extent that the right to purchase Shares thereunder has become
exercisable as of the date immediately prior to such dissolution or
liquidation.
VIII. TERMINATION OF THE PLAN
The Plan shall terminate fifteen (15) years from the date of its
adoption. The Plan may be terminated at an earlier date by vote of the
Board; provided, however, that any such earlier termination shall not
affect any Options granted or Option Agreements executed prior to the
effective date of such termination. Except as may otherwise by provided
for under Articles VI and VII, and notwithstanding anything in this
Plan to the contrary, any Options granted prior to the effective date
of the Plan's termination may be exercised, if otherwise exercisable
until ten (10) years have elapsed from the date the Option is granted,
and the provisions of the Plan with respect to the full and final
authority of the Committee under the Plan shall continue to control.
IX. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall become
effective upon adoption by the Board; provided, however, that any
amendment to Article II above or that otherwise requires the approval
of the stockholders of the Company in accordance with the Rule 16b-3
requirements of the Securities Exchange Act of 1934, as amended from
time to time, shall be subject to approval of the stockholders within
the requisite time period of such Act, and provided, further, that the
Plan may not be amended more frequently than once every six (6) months,
unless an amendment is necessary to comply with the Code or the
Employee Retirement Income Security Act of 1974, as amended, and is
otherwise permitted by Rule 16b-3.
X. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or members of the Committee, the members of the Committee
shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be
a party by reason of any action taken by them as members of the
Committee and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding
that the Committee member is liable for gross negligence or willful
misconduct in the performance of his or her duties. To receive such
indemnification, a Committee member must first offer in writing to the
Company the opportunity, at his own expense, to defend any such action,
suit or proceeding.
XI. RESTRICTIONS
If the Company shall determine, in its discretion, that the Shares
under the Plan must be registered or qualified under any applicable
state or federal securities law before they may be offered or sold to
the Participant, or that the consent or approval of any governmental
regulatory body is necessary or desirable in connection with the
issuance of such Shares, such Option may not be exercised by the
Participant unless the Shares have been so registered, qualified, or
listed, or until such consent or approval shall have been obtained,
free of any conditions not acceptable to the Company. The Company shall
use reasonable efforts to qualify the Shares, obtain the benefit of any
applicable exemption from such qualification, or obtain any such
consent or approval, provided that no Participant shall have any right
to require the company to undertake any registration or other action
which the Company determines, in its sole discretion, to be unduly
burdensome.
XII. SAVINGS CLAUSE
This Plan intended to comply in all respects with applicable law and
regulations, including Rule 16b-3 of the Securities and Exchange
Commission. In case any one or more provisions of this Plan shall be
held invalid, illegal, or unenforceable in any respect under applicable
law and regulation (including Rule 16b-3), the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and the invalid, illegal, or unenforceable
provisions shall be deemed null and void; however, to the extent
permitted by law, any provision that could be deemed null and void
shall first be construed, interpreted, or revised retroactively to
permit this Plan to be construed in compliance with all applicable law
(including Rule 16b-3) so as to foster the intent of this Plan.
Notwithstanding anything herein to the contrary, no grant of, or Option
to purchase, Shares shall permit unrestricted ownership of Shares by
the Participant for at least six (6) months from the date of grant or
Option to purchase.
XIII. EFFECTIVE DATE
This Plan shall become effective upon adoption by the Board. The
adoption of the Plan shall be subject to subsequent approval by the
stockholders of the Company at the next annual meeting of the company's
stockholders unless such approval is not required by any rules or
regulations promulgated by the Securities and Exchange Commission under
Section 16(b) of the Securities Exchange Act of 1934, as amended from
time to time. Notwithstanding the foregoing, if the Plan shall have
been approved by the Board prior to such annual meeting, Options shall
be granted to Eligible Directors prior to the date of such annual
meeting in accordance with Article V, subject to such subsequent
stockholder approval but such Options shall not become exercisable
until such approval is obtained or its is determined that such approval
is not required.
XIV. GOVERNING LAW
This Plan shall be governed by the laws of the State of Delaware and
construed in accordance therewith.
Originally adopted and effective on the 29th day of October, 1993 by the Board
of Directors. Amended and restated this 8th day of March 2001 by the Board of
Directors.
EXHIBIT 10.3
USFREIGHTWAYS CORPORATION
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of ___________, 20__, by
and between USFreightways Corporation, a Delaware corporation (the "Company"),
and _________________ (the "Executive").
RECITALS
A. The Board recognizes that the possibility of a Change in Control
exists and that the threat or the occurrence of a Change in Control can distract
its key management personnel because of the uncertainties inherent in such a
situation.
B The Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure his continued dedication and efforts in such event.
C. In order to induce the Executive to remain in the employ of the
Company, the Company desires to enter into this Agreement with the Executive to
provide the Executive with certain benefits in the event his employment is
terminated as a result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, the parties agree as follows:
1. Term of Agreement. This Agreement shall commence as of ___________, 20__ and
shall continue in effect until December 31, 2002; provided, however, that
commencing on January 1, 2003 and on each January 1 thereafter, the term of this
Agreement shall automatically be extended for one (1) year unless either the
Company or the Executive shall have given written notice to the other at least
ninety (90) days prior thereto that the term of this Agreement shall not be so
extended; and provided, further, that notwithstanding any such notice by the
Company not to extend, if a Change in Control shall occur during the term
hereof, the term of this Agreement shall not expire prior to the expiration of
twenty-four (24) months after the occurrence of a Change in Control.
Notwithstanding anything in this Paragraph 1 to the contrary, this Agreement
shall terminate prior to any date set forth above, and shall be considered null
and void, if termination is necessary for a business combination involving the
Company to be accounted for as a pooling-of-interests under APB Opinion No. 16.
2. Definitions.
- --------------------
2.1. "Accrued Compensation" shall mean all amounts earned or accrued through the
Termination Date, but not paid as of the Termination Date, including (a) base
salary, (b) reimbursement for reasonable and necessary expenses incurred by the
Executive on behalf of the Company during the period ending on the Termination
Date, (c) vacation pay, and (d) bonuses and other incentive compensation (other
than the Pro Rata Bonus).
2.2. "Act" shall mean the Securities Exchange Act of 1934, as amended.
2.3. "Base Amount" shall mean the greater of the Executive's annual base salary
(a) at the rate in effect on the Termination Date or (b) at the highest rate in
effect at any time during the ninety (90) day period prior to the Change in
Control, and shall include all amounts of his base salary that are deferred
under any qualified or non-qualified employee benefit plan of the Company or any
other agreement or arrangement.
2.4. "Board" shall mean the Board of Directors of the Company.
2.5. "Bonus Amount" shall mean the Executive's target bonus as established by
the Company for the fiscal year in which the Change of Control occurs which
shall be no less than fifty percent (50%) of the Executive's maximum payout as
established by the Company for the fiscal year in which the Change in Control
occurs.
2.6. Termination of employment is for "Cause" if the Executive has been
convicted of a felony or the termination is evidenced by a resolution adopted in
good faith by two-thirds of the Board that the Executive (a) failed to perform
his reasonably assigned duties with the Company (other than a failure resulting
from the Executive's incapacity due to physical or mental illness or from the
Executive's assignment of duties that would constitute Good Reason), which
failure continued for a period of at least thirty (30) days after a written
notice of demand for performance had been delivered to the Executive specifying
the manner in which the Executive had failed to perform, or (b) intentionally
engaged in conduct that is demonstrably and materially injurious to the Company;
provided, however, that no termination of the Executive's employment shall be
for Cause as set forth in clause (b) above until (i) there shall have been
delivered to the Executive a written notice setting forth that the Executive
committed the conduct set forth in clause (b) and specifying the particulars
thereof in detail, and (ii) the Executive shall have been provided an
opportunity to be heard in person by the Board (with the assistance of the
Executive's counsel if the Executive so desires).
2.7. "Change in Control" shall mean the occurrence of any of the following
events:
(a) any person (as such term is defined in Section 3 of the Act and used in
Rule 13d-5 of the SEC under the Act) or group (as such term is defined
in Section 13(d) of the Act), other than a Subsidiary or any employee
benefit plan (or any related trust) of the Company or a Subsidiary,
becomes the beneficial owner of twenty-five percent (25%) or more of
the common stock of the Company or of Voting Securities representing
twenty-five percent (25%) or more of the combined voting power of all
Voting Securities of the Company;
(b) individuals who, as of the Effective Date, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a
majority of the Board; provided that any individual who becomes a
director after the Effective Date whose election, or nomination for
election by the Company's stockholders, was approved by a vote or
written consent of at least two-thirds of the directors then comprising
the Incumbent Directors shall be considered an Incumbent Director, but
excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the
Company (as such terms are used in Rule 14a-11 of the SEC under the
Act); or
(c) approval by the stockholders of the Company of any of the following:
(i) a merger, reorganization or consolidation ("Merger") with
respect to which the individuals and entities who were the
respective beneficial owners of the Voting Securities of the
Company immediately before such Merger do not, after such
Merger, beneficially own, directly or indirectly, more than
seventy-five percent (75%) of the Voting Securities of the
corporation resulting from such Merger, or
(ii) the sale or other disposition of all or substantially all of the assets
of the Company.
Clauses (a), (b) and (c) of this definition notwithstanding, a Change in Control
shall not occur if the Executive is, by written agreement executed before such
Change in Control, a participant on such Executive's own behalf in a transaction
in which, pursuant to the written agreement, the Executive has an equity
interest in the resulting entity or a right to acquire such an equity interest.
2.8. "Disability" shall mean a physical or mental condition that impairs the
Executive's ability to substantially perform his duties with the Company for a
period of one hundred eighty (180) consecutive days and, as a result of which,
the Executive has not returned to employment prior to the Termination Date as
stated in the Notice of Termination.
2.9. "Effective Date" shall mean the date on which this Agreement is executed.
2.10. "Good Reason" shall mean the occurrence after a Change in Control of any
of the events or conditions described in paragraphs (a) through (h) hereof:
(a) a change in the Executive's status, title, position or responsibilities
(including reporting responsibilities) which, in the Executive's
reasonable judgment, represents an adverse change from his status,
title, position or responsibilities as in effect at any time within
ninety (90) days preceding the date of a Change in Control or at
any time thereafter; the assignment to the Executive of any
duties or responsibilities which, in the Executive's reasonable
judgment, are inconsistent with his status, title, position or
responsibilities as in effect at any time within ninety (90) days
preceding the date of a Change in Control or at any time thereafter;
or any removal of the Executive from or failure to reappoint or
reelect him to any of such positions, except in connection with the
termination of his employment for Disability, Cause, as
a result of his death, or by the Executive other than for Good Reason;
(b) a reduction in the Executive's base salary or any failure to pay the
Executive any compensation or benefits to which he is entitled within
five (5) days of the date due;
(c) the Company's requiring the Executive to be based at any place outside
a 40-mile radius of the location of the Company's corporate
headquarters immediately prior to the Change of Control, except for
reasonably required travel that is not materially greater than such
travel requirements prior to the Change in Control;
(d) the failure by the Company to (1) continue in effect (without reduction
in benefit levels and/or reward opportunities) any material
compensation or employee benefit plan in which the Executive was
participating at any time within ninety (90) days preceding the date of
a Change in Control or at any time thereafter, unless such plan is
replaced with a plan that provides substantially equivalent
compensation or benefits to the Executive or (2) provide the Executive
with compensation and benefits, in the aggregate, at least equal (in
terms of benefit levels and/or reward opportunities) to those provided
for under each other employee benefit plan, program and practice in
which the Executive was participating at any time within ninety (90)
days preceding the date of a Change in Control or at any time
thereafter;
(e) the insolvency or the filing (by any party, including the Company)
of a petition for bankruptcy of the Company, which petition is not
dismissed within sixty (60) days;
(f) any material breach by the Company of any provision of this Agreement;
(g) any purported termination of the Executive's employment for Cause
by the Company which does not comply with the terms of Section 2.6; or
(h) the failure of the Company to obtain an agreement, satisfactory to the
Executive, from any Successors and Assigns to assume and agree to
perform this Agreement.
Any event or condition described in this Section 2.10(a) through (h) that occurs
prior to a Change in Control, but which the Executive reasonably demonstrates
(1) was at the request of a third party, or (2) otherwise arose in connection
with, or in anticipation of, a Change in Control that actually occurs, shall
constitute Good Reason for purposes of this Agreement notwithstanding that it
occurred prior to the Change in Control.
2.11. "Notice of Termination" shall mean, following a Change in Control, a
written notice of termination of the Executive's employment from the Company
that indicates, if applicable, the specific termination provision in this
Agreement relied upon and that sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated.
2.12. "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied
by a fraction the numerator of which is the number of days in the fiscal year
through the Termination Date and the denominator of which is three hundred
sixty-five (365).
2.13. "SEC" shall mean the Securities and Exchange Commission.
2.14. "Subsidiary" shall mean a corporation in which greater than fifty percent
(50%) of the shares are owned, directly or indirectly, by the Company or a
subsidiary of the Company.
2.15. "Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the stock, assets and/or business of the
Company whether by operation of law or otherwise.
2.16. "Termination Date" shall mean in the case of the Executive's death, his
date of death; in the case of Good Reason, the last day of his employment; and
in all other cases, the date specified in the Notice of Termination, provided,
however, that if the Executive's employment is terminated by the Company for
Cause or due to Disability, the date specified in the Notice of Termination
shall be at least thirty (30) days from the date the Notice of Termination is
given to the Executive, and provided further, that in the case of Disability,
the Executive shall not have returned to the full-time performance of his duties
during such period of at least thirty (30) days.
2.17. "Voting Securities" shall mean those securities of a corporation that are
entitled to vote generally in the election of directors of such corporation.
3. Termination of Employment.
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3.1. If, during the term of this Agreement, the Executive's employment with the
Company shall be terminated within twenty-four (24) months following a Change in
Control, the Executive shall be entitled to the following compensation and
benefits:
(a) If the Executive's employment with the Company shall be terminated (1)
by the Company for Cause or Disability, (2) by reason of the
Executive's death, or (3) by the Executive other than for Good Reason,
the Company shall pay to the Executive the Accrued Compensation and, if
such termination is other than by the Company for Cause, the Pro Rata
Bonus.
(b) If the Executive's employment with the Company shall be terminated for
any reason other than as specified in Section 3.1(a), the Executive
shall be entitled to the following:
(i) The Company shall pay the Executive his Accrued Compensation and the
Pro Rata Bonus;
(ii) The Company shall pay the Executive as severance pay and, in
lieu of any further compensation for periods subsequent to the
Termination Date, a payment equal to two (2) times the sum of
(A) the Base Amount and (B) the Bonus Amount.
(iii) For eighteen (18) months (the "Continuation Period") following such
termination, the Company shall continue to provide, at
its expense, life insurance coverage to the Executive on the
same terms as provided to the Executive by the Company
under any life insurance plan or program as in existence at
any time during the 90-day period prior to the Change in
Control or at any time thereafter or, if such coverage, in
whole or in part, is no longer provided to similarly
situated executives who continue in the employ of the Company
during the Continuation Period, such life insurance
coverage as is provided to those similarly situated executives
during the Continuation Period, in either case to the
extent such insurance coverage is permissible under the
terms of the Company's life insurance plans or programs.
The Company agrees that it shall, if necessary for the
continuation of such insurance coverage, take any steps that
are reasonably necessary to amend its life insurance plans or
programs in order to permit the Executive to continue
to receive coverage under such plans, provided the cost to
the Company of taking such actions is not commercially
unreasonable. The Company's obligation hereunder with
respect to the foregoing life insurance benefits shall be
limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's employee
benefit plans, in which case the Company may reduce the
coverage of any life insurance benefits it is required to
provide the Executive hereunder as long as the aggregate
insurance coverage of the combined plans is no less
favorable to the Executive than the life insurance coverage
required to be provided hereunder. In addition to the
foregoing, if the Executive elects any benefits mandated
under the Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA), the Company agrees that it shall pay the full
cost of such coverage during the Continuation Period, or
if shorter, until the Executive is no longer eligible for
COBRA continuation coverage. This subsection (iii) shall
not be interpreted so as to limit benefits to which the
Executive or his dependents or beneficiaries may otherwise
be entitled under any of the Company's employee benefit
plans, programs or practices following the Executive's
termination of employment, including without limitation,
their entitlement to retiree medical and life insurance
benefits.
(iv) (A) The restrictions on any outstanding incentive awards granted
to the Executive under the USFreightways Corporation
Long-Tem Incentive Plan (the "Stock Plan") or under any
other incentive plan or arrangement (including any
restricted stock plan) shall lapse and such incentive awards
shall become one hundred percent (100%) vested, all
stock options and stock appreciation rights granted to the
Executive shall become immediately exercisable and shall
become one hundred percent (100%) vested, and all
performance units granted to the Executive shall become one
hundred percent (100%) vested and (B) the Executive shall
have the right to require the Company to purchase, for
cash, any shares of unrestricted stock or shares purchased
upon exercise of any options, at a price equal to the
fair market value of such shares on the date of purchase by
the Company. For purposes of this Agreement, if the
shares are listed on any national securities exchange, the
fair market value shall be the mean average of the high
and low sales prices, if any, on the largest such exchange
on the date of purchase by the Company or, if there are
no sales on such date, on the most recent trade date thirty
(30) days or less prior to the date of purchase by the
Company. If the shares are not listed on any national
securities exchange, the fair market value of such shares
shall be determined by a nationally recognized investment
banking firm mutually agreed upon by the Company and the
Executive. If the parties shall be unable to mutually agree
upon an investment banking firm, then each of the
Company and the Executive shall designate an investment
banking firm within ten (10) days of the date on which it is
determined that the parties are unable to mutually agree upon
an investment banking firm. The two (2) independent
firms shall, within ten (10) days, jointly select a third
nationally recognized investment banking firm, whose
determination of the fair market value shall be final,binding
and conclusive on the Company and the Executive. All
costs associated with the determination of fair market
value shall be borne by the Company. Notwithstanding
anything in this paragraph (iv) to the contrary, if there
exists an inconsistency between the terms of the Stock
Plan and this paragraph (iv), such that the terms of this
paragraph (iv) cannot be applied in a manner that is
consistent with the Stock Plan, then the terms of the Stock
Plan shall govern, provided, however, that the Company
shall pay the Executive in one single sum the difference
between (1) the amount that the Executive would receive by
applying this paragraph most favorably to the Executive,
without regard to the Stock Plan, and (2) the amount that
the Executive would receive under this paragraph after
applying any limitations imposed by the Stock Plan.
(v) The Company shall pay the full cost of outplacement services
for the Executive for a period of six (6) months following
such termination or, if earlier, until the Executive obtains
full-time employment, to be provided by an outplacement
services firm selected by the Executive.
(c) The amounts provided for in Sections 3.1(a) and 3.1(b)(i) and (ii)
shall be paid in a single lump sum cash payment within thirty (30) days
after the Executive's Termination Date (or earlier if required by
applicable law).
(d) The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment and
no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent
employment, except as provided in Section 3.1(b)(iii).
3.2. The severance pay and benefits provided for in this Section 3 shall also be
in lieu of any other severance or termination pay to which the Executive may be
entitled under any Company severance or termination plan, program, practice or
arrangement.
3.3. Other than as set forth in Section 3.2, the Executive's entitlement to any
other compensation or benefits shall be determined in accordance with the
Company's employee benefit plans and other applicable programs, policies and
practices then in effect.
4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by the
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Company shall be communicated by Notice of Termination to the Executive.
5. Excise Tax Payments.
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5.1. If any payment (within the meaning of Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the "Code")) to the Executive pursuant to the
terms of this Agreement or otherwise in connection with, or arising out of, his
employment with the Company or a change in ownership or effective control of the
Company (a "Payment" or "Payments") would be subject to an excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive will be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties, other than interest
and penalties imposed by reason of the Executive's failure to file timely a tax
return or pay taxes shown due on his return, imposed with respect to such taxes
and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment,
the Executive will receive an amount as a Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
5.2. An initial determination as to whether a Gross-Up Payment is required
pursuant to this Agreement and the amount of such Gross-Up Payment shall be made
at the Company's expense by an accounting firm selected by the Company and
reasonably acceptable to the Executive (the "Accounting Firm"). If the Company
and the Executive shall be unable to mutually agree upon an accounting firm,
then each of the Company and the Executive shall designate an independent
accounting firm within ten (10) days of the date on which it is determined that
the parties are unable to mutually agree upon an accounting firm. The two (2)
independent accounting firms shall, within ten (10) days, jointly select a third
independent accounting firm, which third firm shall be the Accounting Firm for
purposes of this Section 5.2. The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation to the Company and the Executive within five (5)
days of the Termination Date, or such other time as requested by the Company or
by the Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax), and if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to a
Payment or Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
any such Payment or Payments. Within ten (10) days of the delivery of the
Determination to the Executive, the Executive shall have the right to dispute
the Determination (the "Dispute"). The Gross-Up Payment, if any, as determined
pursuant to this Section 5.2 shall be paid by the Company to the Executive
within fifteen (15) days of the receipt of the Determination. The existence of
the Dispute shall not in any way affect the Executive's right to receive the
Gross-Up Payment in accordance with the Determination. If there is no Dispute,
the Determination shall be binding, final and conclusive upon the Company and
the Executive subject to the application of Section 5.3 below.
5.3. As a result of the uncertainty in the application of Sections 4999 and 280G
of the Code, it is possible that a Gross-Up Payment (or a portion thereof) will
be paid which should not have been paid (an "Excess Payment") or a Gross-Up
Payment (or a portion thereof) which should have been paid will not have been
paid (an "Underpayment"). An Underpayment shall be deemed to have occurred (a)
upon notice (formal or informal) to the Executive from any governmental taxing
authority that the Executive's tax liability (whether in respect of the
Executive's current taxable year or in respect of any prior taxable year) may be
increased by reason of the imposition of the Excise Tax on a Payment or Payments
with respect to which the Company has failed to make a sufficient Gross-Up
Payment, (b) upon a determination by a court, (c) by reason of a determination
by the Company, or (d) upon the resolution of the Dispute to the Executive's
satisfaction. If an Underpayment occurs, the Executive shall promptly notify the
Company and the Company shall promptly, but in any event, at least five (5) days
prior to the date on which the applicable government taxing authority has
requested payment, pay to the Executive an additional Gross-Up Payment equal to
the amount of the Underpayment plus any interest and penalties (other than
interest and penalties imposed by reason of the Executive's failure to file
timely a tax return or pay taxes shown due on the Executive's return) imposed on
the Underpayment. An Excess Payment shall be deemed to have occurred upon a
"Final Determination" (as hereinafter defined) that the Excise Tax shall not be
imposed upon a Payment or Payments (or portion thereof) with respect to which
the Executive had previously received a Gross-Up Payment. A "Final
Determination" shall be deemed to have occurred when the Executive has received
from the applicable government taxing authority a refund of taxes or other
reduction in the Executive's tax liability and upon either (a) the date a
determination is made by, or an agreement is entered into with, the applicable
governmental taxing authority which finally and conclusively binds the Executive
and such taxing authority, or in the event that a claim is brought before a
court of competent jurisdiction, the date upon which a final determination has
been made by such court and either all appeals have been taken and finally
resolved or the time for all appeals has expired or (b) the statute of
limitations with respect to the Executive's applicable tax return has expired.
If an Excess Payment is determined to have been made, the amount of the Excess
Payment shall be treated as a loan by the Company to the Executive and the
Executive shall pay to the Company on demand (but not less than ten (10) days
after the determination of such Excess Payment and written notice has been
delivered to the Executive) the amount of the Excess Payment plus interest at an
annual rate equal to the Applicable Federal Rate provided for in Section 1274(d)
of the Code from the date the Gross-Up Payment (to which the Excess Payment
relates) was paid to the Executive until the rate of repayment to the Company.
6. Successors; Binding Agreement.
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6.1. This Agreement shall be binding upon and shall inure to the benefit of the
Company and its Successors and Assigns, and the Company shall require any
Successors and Assigns to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place.
6.2. Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive or his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution, and
this Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
7. Fees and Expenses. The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred by the Executive
as they become due as a result of (a) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement (including, but not limited to,
any such fees and expenses incurred in connection with (i) the Dispute, and (ii)
the Gross-Up Payment whether as a result of any applicable government taxing
authority proceeding, audit or otherwise) or by any other plan or arrangement
maintained by the Company under which the Executive may be entitled to receive
benefits, and (b) the Executive's hearing before the Board as contemplated in
Section 2.6 of this Agreement.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of a change of address shall be effective only upon receipt.
9. 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 plan or program provided by the Company (except as otherwise
expressly provided herein) and for which the Executive may qualify, nor shall
anything herein limit or reduce such rights as the Executive may have under any
other agreements with the Company (except as otherwise expressly provided
herein). Amounts that are vested benefits or that the Executive is otherwise
entitled to receive under any plan or program of the Company shall be payable in
accordance with such plan or program, except as expressly modified by this
Agreement.
10. Settlement of Claims. The Company'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
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others.
11. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
12. Payments to Beneficiary. If the Executive dies before receiving amounts to
which the Executive is entitled under this Agreement, such amounts shall be paid
in a lump sum to the beneficiary designated in writing by the Executive, or if
none is so designated, to the Executive's estate.
13. Non-alienation of Benefits. Benefits payable under this Agreement shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
14. Severability. If any one or more articles, sections or other portions of
this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but
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all of which together constitute one and the same instrument.
16. Tax Withholding. The Company may withhold from any amounts payable
under this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
17. Obligations Unfunded. The obligations of the Company under this
Agreement shall be unfunded and unsecured. The Company is not required to
segregate any assets that may at any time be required to provide benefits under
this Agreement.
18. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State Illinois, to the extent that
such laws are not preempted by the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
19. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.
20. Application of ERISA. This Agreement constitutes part of a welfare plan for
certain selected employees, as set forth in Department of Labor Regulation ss.
2520.104-24. Accordingly, nothing herein shall be deemed to limit or restrict
any rights or entitlements to which the Executive is entitled under ERISA, and
any such rights or entitlements are expressly incorporated herein by reference.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
USFREIGHTWAYS CORPORATION
By: By:
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Name: Executive
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Title:
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