SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 5, 2003, OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO
____________
Commission File Number 0-19791
USF CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3790696
(State of Incorporation) (IRS Employer Identification No.)
8550 W. Bryn Mawr Ave.,Suite 700 60631
Chicago, Illinois
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
including area code: (773) 824-1000
Not applicable
(Former name or former address, if changed since the last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 6, 2003, 27,248,984 shares of common stock were outstanding.
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements.
USF Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in Thousands)
As of
________________________________
July 5, December 31,
2003 2002
- -------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 57,451 $ 54,158
Accounts receivable, net 278,588 269,583
Operating supplies and prepaid expenses 36,280 33,180
Deferred income taxes 48,726 53,086
------------ ------------
Total current assets 421,045 410,007
------------ ------------
Property and equipment, net 777,444 760,153
Goodwill 100,762 100,504
Other assets 29,054 24,607
------------ ------------
Total assets $ 1,328,305 $ 1,295,271
------------ ------------
Liabilities and Stockholders' Equity
Current liabilities:
Current debt $ 61 $ 367
Accounts payable 57,699 59,691
Accrued salaries, wages and benefits 98,938 89,765
Accrued claims and other 97,915 90,245
------------ -----------
Total current liabilities 254,613 240,068
------------ -----------
Long-term liabilities:
Notes payable and long-term debt 250,124 252,129
Accrued claims and other 89,603 84,079
Deferred income taxes 101,748 99,864
------------ -----------
Total long-term liabilities 441,475 436,072
------------ -----------
Total stockholders' equity 632,217 619,131
---------- -----------
Total liabilities and stockholders' equity $ 1,328,305 $ 1,295,271
----------- -----------
See accompanying Notes to Condensed Consolidated Financial Statements
USF Corporation
Condensed Consolidated Statements of Operations
Unaudited (Dollars in Thousands, Except Per-Share Amounts)
Three-Months Ended Six-Months Ended
_________________________ ______________________
July 5, June 29, July 5, June 29,
2003 2002 2003 2002
- ------------------------------------------------------------------------------------------------------------
Operating revenue:
LTL Trucking $ 472,472 $ 475,173 $ 961,335 $ 905,391
TL Trucking 31,244 28,518 62,994 53,835
Logistics 65,738 69,593 141,413 136,145
Intercompany eliminations (2,369) (2,097) (4,955) (4,019)
_______ ________ _______ _________
Total operating revenue 567,085 571,187 1,160,787 1,091,352
Operating expenses:
LTL Trucking 447,172 446,660 919,223 860,013
TL Trucking 30,282 26,989 61,509 51,417
Logistics 63,953 67,517 139,075 131,779
Freight Forwarding-
Asia exit costs - - - 12,760
Corporate and other 8,682 7,100 13,918 13,133
Intercompany eliminations (2,369) (2,097) (4,955) (4,019)
________ _________ _________ __________
Total operating expenses 547,720 546,169 1,128,770 1,065,083
Income from operations 19,365 25,018 32,017 26,269
________ _________ _________ __________
Non-operating income (expense)
Interest expense (5,191) (5,119) (10,483) (10,230)
Interest income 207 1,051 418 1,398
Other, net (171) (172) (426) (381)
________ ________ _________ __________
Total non-operating expense (5,155) (4,240) (10,491) (9,213)
________ ________ _________ __________
Income/(loss)from continuing operations
before income taxes, and cumulative
effects of accounting changes 14,210 20,778 21,526 17,056
Income tax expense (6,096) (7,797) (9,172) (10,876)
_______ _______ _________ __________
Income from continuing operations before
cumulative effects of accounting changes 8,114 12,981 12,354 6,180
Discontinued operations:
Loss from operations, net of tax
benefits of $29, $3,961, $34 and
$4,445 respectively (38) (7,041) (45) (7,903)
_______ _______ ________ __________
Income before cumulative effect of 8,076 5,940 12,309 (1,723)
accounting changes
Cumulative effect of change in accounting
for revenue recognition, net of tax
benefits of $1,064 - - (1,467) -
Cumulative effect of change in
accounting for goodwill - - - (70,022)
______ _______ _________ __________
Net income/(loss) $ 8,076 $ 5,940 $ 10,842 $ (71,745)
====== ======= ========= ==========
Income per share from continuing operations:
Basic $ 0.30 $ 0.48 $ 0.46 $ 0.23
Diluted 0.30 0.47 0.45 0.23
Loss per share from discontinued operations:
Basic 0.00 (0.26) 0.00 (0.29)
Diluted 0.00 (0.26) 0.00 (0.29)
Loss per share - cumulative effects of
changes in accounting:
Basic 0.00 0.00 (0.05) (2.61)
Diluted 0.00 0.00 (0.05) (2.56)
Income/(loss) per share: Basic 0.30 0.22 0.40 (2.67)
Diluted 0.30 0.22 0.40 (2.62)
Average shares outstanding:Basic 27,105,724 26,892,426 27,054,311 26,845,749
Diluted 27,235,970 27,469,968 27,167,674 27,385,140
See accompanying Notes to Condensed Consolidated Financial Statements.
USF Corporation
Condensed Consolidated Statements of Cash Flows
Unaudited (Dollars in Thousands)
Six-Months Ended
___________________________
July 5, June 29,
2003 2002
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net income/(loss) $ 10,842 $ (71,745)
Net loss from discontinued operations 45 7,903
-------- --------
Income/(loss) from continuing operations after
cumulative effects of accounting changes 10,887 (63,842)
Adjustments to reconcile net income/ (loss) from
continuing operations after accounting change to
net cash provided by operating activities:
Depreciation of property and equipment 51,139 48,671
Cumulative effects of accounting changes 1,467 70,022
Amortization of intangible assets 895 625
Deferred taxes 6,244 (10,870)
Gains on sale of property and equipment (1,785) (1,493)
Increase/ (decrease) in other items affecting
cash from operating activities 8,798 (14,487)
-------- --------
Net cash provided by operating activities 77,645 28,626
-------- --------
Cash flows from investing activities:
Acquisitions (4,883) -
Capital expenditures (69,409) (53,408)
Proceeds from sale of property and equipment 5,912 4,305
Disposition of USF Asia - (6,000)
-------- --------
Net cash used in investing activities (68,380) (55,103)
-------- --------
Cash flows from financing activities:
Dividends paid (7,581) (4,986)
Employee and director stock transactions 7,050 6,241
Repurchase of common stock (336) -
Payments on long-term bank debt (1,909) (194)
Net change in short-term bank debt (3,196) (384)
-------- --------
Net cash (used in)/ provided by financing activities (5,972) 677
-------- --------
Net cash provided by discontinued operations - 7,287
-------- --------
Net increase/(decrease) in cash 3,293 (18,513)
-------- --------
Cash at beginning of period 54,158 72,105
-------- --------
Cash at end of period $ 57,451 $ 53,592
-------- --------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 9,875 $ 9,675
Income taxes 3,534 9,841
Non-cash transactions: debt assumed in connection
with acquisition 2,794 -
See accompanying Notes to Condensed Consolidated Financial Statements.
USF Corporation
Condensed Consolidated Statements of Changes in Stockholders' Equity
Unaudited (Dollars in Thousands)
Six-Months Ended
_______________________
July 5, June 29,
2003 2002
Balance as of December 31, 2002, and 2001,
respectively $ 619,131 $ 687,652
Net income/(loss) 10,842 (71,745)
Foreign currency translation adjustments - 13
-------- -------
Comprehensive income/(loss) 10,842 (71,732)
Employee and director stock transactions 7,642 6,241
Repurchase of common stock (336) -
Dividends declared (5,061) (5,018)
------- --------
Balance as of July 5, 2003 and
June 29, 2002, respectively $ 632,217 $ 617,143
======= =======
See accompanying Notes to Condensed Consolidated Financial Statements.
Notes to Condensed Consolidated Financial Statements
(Dollars in Thousands, Except Share and Per Share Amounts,
unless otherwise indicated)
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
These interim financial statements of USF Corporation have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and the instructions to Quarterly Report on
Form 10-Q and Rule 10-01 of Regulation S-X, and should be read in conjunction
with our Annual Report on Form 10-K for the year ended December 31,
2002. Accordingly, significant accounting policies and other disclosures
normally provided have been omitted since such items are disclosed therein.
In our opinion, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments (including normal recurring adjustments)
necessary to present fairly our consolidated financial position as of July 5,
2003, the consolidated results of our operations for both the three-month and
six-month periods ended July 5, 2003 and June 29, 2002, and our consolidated
cash flows for the six-month periods ended July 5, 2003 and June 29, 2002.
Operating results for the six-month period ended July 5, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003.
Revenue Recognition
Effective January 1, 2003, we changed our method of accounting for revenue
and expense recognition for our less-than-truckload ("LTL") and truckload ("TL")
segments. In 2002, revenue for LTL and TL operations was recognized when freight
was picked up from the customer and direct transportation expenses were accrued.
Under the new accounting method, we allocate revenue between reporting periods
for LTL and TL based on relative transit times with expenses recognized as
incurred.
Logistics revenue from warehousing continues to be recognized under the
terms of the various contracts. Revenue from dedicated fleet shipments also
continues to be recognized upon delivery, which is generally the same day as the
pickup. Domestic ocean freight forwarding transportation revenue is recognized
at the time freight is tendered to an ocean going vessel at origin.
2. Earnings per share
Basic earnings/ (loss) per share are calculated on net income/ (loss)
divided by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share are calculated by dividing net income by the
weighted-average number of common shares outstanding plus the shares that would
have been outstanding assuming the issuance of common shares for all dilutive
potential common shares for the period. Unexercised stock options are the only
reconciling items between our basic and diluted earnings per share.
The following table presents information necessary to calculate basic and
diluted earnings per share:
Three-Months Ended Six-Months Ended
____________________________________________________
July 5, June 29, July 5, June 29,
2003 2002 2003 2002
____________________________________________________
Weighted-average shares
Outstanding - basic 27,105,724 26,892,426 27,054,311 26,845,749
Common stock equivalents 130,246 577,542 113,363 539,391
__________ __________ __________ __________
Weighted-average shares
Equivalent - diluted 27,235,970 26,469,968 27,167,674 27,385,140
========== ========== ========== ==========
Anti-dilutive unexercised
options excluded
from calculations 1,451,300 463,500 1,451,300 463,500
3. Debt
Our debt includes $100,000 of unsecured guaranteed notes due May 1, 2009
and $150,000 of unsecured guaranteed notes due April 15, 2010.
Our guaranteed notes are fully and unconditionally guaranteed, on a joint
and several basis, and on an unsecured senior basis, by substantially all of our
direct and indirect domestic subsidiaries (the Subsidiary Guarantors ). All of
the assets were owned by the Subsidiary Guarantors and substantially all of our
operations were conducted by the Subsidiary Guarantors. Accordingly, the
aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors
were substantially equivalent to the assets, liabilities, earnings and equity
shown in our consolidated financial statements. Our subsidiaries, other than the
Subsidiary Guarantors, are minor. There are no restrictions on our ability to
obtain funds from our subsidiaries by dividend or loan. We, therefore, are not
required to present separate financial statements of our Subsidiary Guarantors,
and other disclosures relating to them.
We have a $200,000 credit facility with a group of banks that will expire
in October 2005. This facility is for working capital, general corporate
funding needs, and up to $125,000 for letters of credit under our self-insurance
program. As of July 5, 2003 we had no borrowings drawn under the facility, but
we had approximately $88,000 in issued letters of credit.
4. Stock repurchases
On July 24, 2000, we announced the authorized buyback of up to 1,000,000
shares of our common stock in either the public market or private transactions.
This buyback program is not yet completed. In February of 2003, we repurchased
14,000 common shares in the public market. The purchase price was $24 per share.
From July 24, 2000 through July 5, 2003, we repurchased 468,200 shares.
5. Goodwill and other intangible assets
Under Statement of Financial Accounting Standards (SFAS) No. 142 "Goodwill
and Other Intangible Assets", which became effective January 1, 2002, goodwill
and other intangible assets with indefinite lives are no longer amortized
but are subject to impairment tests annually. Upon adoption of this new standard
on January 1, 2002, we recorded an impairment charge of $70,022 at USF
Worldwide, our discontinued freight forwarding segment. The charge was shown
as a cumulative effect of change in accounting for goodwill in the 2002 first
quarter. Goodwill and other intangible assets consist of the following:
As of As of
July 5, 2003 December 31, 2002
______________________ ______________________
Gross Gross
Average Carrying Accumulated Carrying Accumulated
Life (Yrs) Amount Amortization Amount Amortization
__________ ________ ____________ ________ ____________
Amortized
intangible
assets:
Customer lists 5 $ 9,343 $ (5,951) $ 6,073 $ (5,078)
Non-competes 5 5,347 (5,178) 5,156 (5,156)
________ ____________ ________ ____________
Total $ 14,690 $(11,129) $ 11,229 $ (10,234)
======== ============ ======== ============
Aggregate amortization expenses through July 5, 2003 and June 29, 2002 for the
three-month period was $636 and $313, respectively and for the six-month period
$895 and $625, respectively. Estimated amortization expense for 2003 is
expected to be approximately $2,100.
The changes in carrying amounts of goodwill for the six-month period ended
July 5, 2003 were as follows:
LTL TL Logistics Corporate
And other
Segment Segment Segment Segment Total
_______ _______ _______ _______ _______
Balance as of January 1, 2003 $ 57,273 $ 10,574 $ 32,657 $ - $100,504
Additions - 260 - - 260
_______ _______ _______ _______ _______
Balance as of July 5, 2003 $ 57,273 $ 10,834 $ 32,657 $ - $100,764
======= ======= ======= ======= =======
See Footnote 7 - Acquisitions, for further information relating to goodwill
additions during the first half of 2003.
6. Recent Accounting Pronouncements
On November 25, 2002, the Financial Accounting Standards Board ("FASB")
issued Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees", Including Indirect Guarantees of Indebtedness to
Others ("Interpretation"), which elaborates on the disclosures to be made by a
guarantor about its obligations under certain guarantees issued. It also
clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The Interpretation expands on the accounting guidance of
Statement of Financial Accounting Standard ("SFAS") No. 5, Accounting for
Contingencies, SFAS No. 57 Related Party Disclosures, and SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The Interpretation also
incorporates, without change, the provisions of FASB Interpretation No. 34,
Disclosure of Indirect Guarantees of Indebtedness of Others, which it
supersedes. The Interpretation does identify several situations where the
recognition of a liability at inception for a guarantor's obligation is not
required. The initial recognition and measurement provisions of Interpretation
No. 45 apply on a prospective basis to guarantees issued or modified after
December 31, 2002, regardless of the guarantor's fiscal year-end. The
disclosures are effective for financial statements of interim or annual periods
ending after December 15, 2002. Adoption of this Interpretation did not have a
material impact on our financial position or results of operations.
In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of SFAS No.123". This
Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation" to
provide alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.
In addition, this Statement amends the disclosure requirements of SFAS No. 123
to require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. Finally, this Statement amends
Accounting Principals Board ("APB") Opinion No. 28, "Interim Financial
Reporting", to require disclosure about those effects in interim financial
information. The amendments to SFAS No. 123 in paragraphs 2(a) - 2(e) of this
Statement are effective for financial statements for fiscal years ending after
December 15, 2002. The amendment to SFAS No. 123 in paragraph 2(f) of this
Statement and the amendment to Opinion No. 28 in paragraph 3 of this
statement were effective for financial reports containing condensed financial
statements for interim periods beginning after December 15, 2002. As is allowed,
we are adopting the disclosure requirements under SFAS No. 148.
In May 2003, the FASB issued SFAS No. 150 - "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". This
Statement provides guidance as to the appropriate classification of certain
financial statement instruments that have characteristics of both liabilities
and equity. This statement is effective at the beginning of the first interim
period after June 15, 2003. Adoption of this Statement is not expected to have
a material impact on our financial position or results of operations.
7. Acquisitions
In February 2003, USF Glen Moore acquired the stock of System 81 Express,
Inc. a truckload carrier based in Tennessee for approximately $4,700 in cash and
assumed debt. After conducting a preliminary purchase price allocation, we
estimate that resultant goodwill will be approximately $260. Contingent
payments, to the former owners of System 81 Express, of approximately $320
based upon driver and revenue retention goals are estimated to be paid during
the 2003 third quarter. System 81 Express owned or operated approximately 140
tractors and 260 trailers and reported revenue in 2002 of approximately
$16,000. The acquisition contributed approximately $3,800 in revenue to USF
Glen Moore's total revenue during the first half of 2003.
On April 14, 2003, USF Red Star acquired, for $3,000 in cash the business
of Plymouth Rock Transportation Corporation, a Massachusetts based LTL carrier
that provided overnight freight service to 11 Northeastern states. Contingent
purchase price payments may be made to the former owners of Plymouth Rock
Transportation Corporation if certain retained revenue goals are achieved. The
earliest contingent purchase price payment would be made in the 2004 third
quarter. The acquisition contributed approximately $5,000 in revenue to USF Red
Star's total revenue during the second quarter of 2003.
8. Segment Reporting Three-Months Ended Six-Months Ended
(Dollars in Thousands) ______________________ _______________________
July 5, June 29, July 5, June 29,
2003 2002 2003 2002
- ---------------------------------------------------------- --------------------
Revenue
LTL Group:
USF Holland $ 243,775 $ 245,125 $ 502,350 $ 469,400
USF Reddaway 73,826 68,878 145,175 130,583
USF Red Star 57,900 69,641 118,197 129,731
USF Dugan 58,354 53,605 117,569 103,595
USF Bestway 38,617 37,924 78,044 72,082
- --------------------------------------------------------------------------------
Subtotal LTL Group 472,472 475,173 961,335 905,391
Truckload - USF Glen Moore 31,244 28,518 62,994 53,835
Logistics 65,738 69,593 141,413 136,145
Intercompany eliminations (2,369) (2,097) (4,955) (4,019)
Corporate and other - - - -
- --------------------------------------------------------------------------------
Total revenue from
continuing operations $ 567,085 $ 571,187 $1,160,787 $1,091,352
Income/(loss) from operations
LTL Group:
USF Holland $ 15,750 $ 19,264 $ 31,400 $ 32,844
USF Reddaway 8,968 7,285 14,595 10,976
USF Red Star (2,079) (1,236) (7,373) (3,663)
USF Dugan 921 845 420 1,472
USF Bestway 1,740 2,355 3,070 3,749
- --------------------------------------------------------------------------------
Subtotal LTL Group 25,300 28,513 42,112 45,378
Truckload - USF Glen Moore 962 1,529 1,485 2,418
Logistics 1,785 2,076 2,338 4,366
Freight forwarding
- Asia exit costs - - - (12,760)
Corporate and other (8,046) (6,787) (13,023) (12,508)
Amortization of intangibles (636) (313) (895) (625)
- ---------------------------------------------------------------------- ---------
Income from operations $ 19,365 $ 25,018 $ 32,017 $ 26,269
- --------------------------------------------------------------------------------
9. Stock No. 123, "Accounting for Stock Based Compensation", establishes a fair
value based method of accounting for stock options. We have elected to continue
using the intrinsic value method prescribed under APB No. 25 as permitted by
SFAS No. 123. If we had elected to recognize compensation cost based on the fair
value of the options at grant date, as prescribed by SFAS No. 123, our net
income and earnings per share would have been reduced to the proforma amounts
indicated in the table below:
Three-Months Ended Six-Months Ended
___________________ ____________________
July 5, June 29, July 5, June 29,
2003 2002 2003 2002
________ ________ ________ ________
Net income / (loss),
as reported $ 8,076 $ 5,940 $ 10,842 $(71,745)
Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax benefits (1,285) (1,303) (2,403) (2,578)
________ ________ ________ ________
Pro forma net income/ (loss) $ 6,791 $ 4,637 $ 8,439 $(74,323)
Earnings/ (loss) per share:
Basic - as reported $ 0.30 $ 0.22 $ 0.40 $ (2.67)
Basic - proforma $ 0.25 $ 0.17 $ 0.31 $ (2.77)
Diluted - as reported $ 0.30 $ 0.22 $ 0.40 $ (2.62)
Diluted - proforma $ 0.25 $ 0.17 $ 0.31 $ (2.71)
10. Discontinued Freight Forwarding Segment (Presented in these Financial
Statements as Discontinued Operations)
On October 30, 2002, we sold our freight forwarding businesses, USF
Worldwide, Inc. and USF Worldwide Logistics (UK) to GPS Logistics, Inc. and Seko
Worldwide Acquisitions LLC (collectively "the Transferees"). As part of the
agreement, the Transferees returned their interest in certain assets (now
operating as our Domestic Ocean forwarding division within our Logistics
segment) to us late in December 2002. The results of the freight forwarding
business that was sold are presented in our financial statements as
Discontinued Operations.
As part of our divestiture of our freight forwarding businesses, there were
$6,000 in loans made to Asia that were forgiven in January 2002.
11. CEO Retirement
On May 26, 2003 our Chairman, President and Chief Executive Officer
retired. Under the terms of his retirement agreement of April 22, 2003, he is
entitled to certain retirement benefits that resulted in a $1,200 after tax
charge to income in the second quarter.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
We ("USF Corporation") reported net income of $8.1 million for the second
quarter ended July 5, 2003, compared to $5.9 million reported for the second
quarter ended June 29, 2002. For the first half of 2003 and 2002, we reported
net income of $10.8 million and a net loss of $71.7 million, respectively.
The net income per share for the current year's quarter was equivalent to
$0.30 diluted earnings per share compared to $0.22 for the 2002 quarter.
Earnings in the current year's quarter from continuing operations were also
$0.30 diluted earnings per share compared to $0.47 in the 2002 second quarter.
Net income for the current year's quarter included an after tax charge of
$1.2 million (equivalent to approximately $0.05 diluted earnings per share)
relating to the retirement of our CEO. Net income in the 2002 quarter included
an after tax loss from discontinued operations of our freight forwarding
segment of $7.0 million (equivalent to a $0.26 loss per diluted share) in the
2002 quarter.
The year to date net income for 2003 was $10.8 million, equivalent to $0.40
diluted earnings per share compared to a net loss of $71.7 million for 2002.
On January 1, 2003, we changed our method of accounting for revenue recognition
in our LTL and TL segments, resulting in an after tax cumulative effect of
change in accounting charge of $1.5 million (equivalent to a loss of $0.05 per
diluted share) - see Footnote 1. Included in the 2002 first half net loss were:
a $12.8 million charge (equivalent to $0.47 diluted loss per share) to
relinquish our interest in a non-core Asian joint venture; a cumulative effect
of change in accounting (required under Statement of Financial Accounting
Standard ("SFAS") No. 142 "Goodwill and Other Intangible Assets") for
goodwill impairment that amounted to $70 million (equivalent to a $2.56 loss
per diluted share); and an after tax loss from discontinued operations of $7.9
million (equivalent to a $0.29 diluted loss per share). Of the $95.1 million
total pre-tax charges recorded, $80.6 million were non-cash.
We reported revenue from continuing operations for the 2003 second quarter
of $567.1 million, a 0.7% decrease compared to the $571.2 million reported for
the 2002 second quarter. This year's quarter included 62.5 working days compared
to 64.0 working days in the 2002 second quarter. On a daily basis, total
operating revenue increased 1.7% over last year's quarter. Revenue for the first
half of 2003 was $1.2 billion, a 6.4% increase compared to the $1.1 billion in
revenue reported for the first half of 2002.
LESS-THAN-TRUCKLOAD
Total revenue for the current quarter at the regional trucking subsidiaries
decreased 0.6% to $472.5 million compared to $475.2 million in the 2002 second
quarter. Revenue from our USF PremierPlus SM ("PremierPlus") product (revenue
from shipments moving between our regional trucking subsidiaries) which
accounted for 10.2% of total revenue in the regional trucking subsidiaries in
the 2002 second quarter increased by 23% and accounted for 12.4% of total
revenue in the current quarter. A General Rate Increase of 5.9% was implemented
on June 2nd, approximately three weeks earlier than last year's increase.
On a comparable working day basis, total revenue in the 2003 second quarter
increased by 1.8% over the second quarter of 2002. Fuel surcharges, which are
included in the reported revenue, increased by 75% percent to $15.2 million in
the current quarter from $8.7 million in last year's second quarter. Second
quarter 2003 revenue per working day before fuel surcharges increased
approximately 0.4%.
Both LTL shipments and tonnage decreased 6.2% from last year's second
quarter. Billed LTL revenue per shipment increased 6.7% from $119.59 to
$127.66, including fuel surcharges. Billed LTL revenue per hundredweight
increased by 6.8%, from $10.58 to $11.30. Average weight per LTL shipment was
1,130 pounds in the current quarter unchanged from the 2002 second quarter.
Per working day LTL shipments and LTL tons declined by 4.0% compared to last
year. Overall average length of haul increased 5.6% in the current quarter
to 492 miles compared to 466 miles in last year's second quarter.
Operating income for the regional trucking subsidiaries in the current
year's quarter was $25.3 million compared to $28.5 million for the same period
of 2002. The consolidated operating ratio ("OR") for the LTL group increased to
94.6% from 94.0% from last year. USF Reddaway reported improved second quarter
results, growing revenue by 7.2% (9.8% on a daily basis) and improving its OR
in the current quarter to 87.9% compared to last year's 89.4%. During the
quarter, USF Reddaway improved operating efficiencies as a percentage of
revenue and recorded a gain on the sale of a terminal. USF Holland's revenue
decreased by 0.6% (increased 1.8% on a daily basis) and operating income
decreased by 18.2%. It also reported an OR of 93.5% compared to 92.1% in 2002.
Contributing to the relatively flat revenue and increased OR was the continuing
soft economy which has resulted in extreme pricing pressure and contractual
labor increases. USF Bestway's revenue increased by 1.8% (4.3% on a daily
basis), and its OR increased to 95.5% in the quarter compared to 93.8% last
year, primarily from higher health care and workers' compensation expenses and
increased pricing pressures in the intra California/Texas markets. USF Dugan's
revenue grew 8.9% (11.5% on a daily basis) and it reported an OR of 98.4%, the
same as in 2002 as labor, fuel and purchased transportation expenses increased
as well as expenses incurred at its Oklahoma City terminal as a result of
weather related damage.
USF Red Star's revenue decreased 16.9% (14.9% on a daily basis) and its OR
increased to 103.6% in the second quarter this year from 101.8% last year. The
decrease in revenue was primarily attributable to the elimination of low yield
revenue from its largest customer. To further reduce expenses, during the
quarter USF Red Star continued making operational changes including the closure
of terminal operations in North and South Carolina, and the consolidation of two
terminals in the Boston area.
Total revenue for the first half of 2003 at the regional trucking
subsidiaries increased by 6.2% to $961.3 million compared to $905.4 million in
the first half of 2002. Year to date LTL shipments and LTL tonnage were
relatively the same compared to last year, and LTL revenue per shipment
increased by 7.1% to $127.75 from $119.29 in the first half of 2002, and the
weight per shipment increased by 0.4% to 1,132 pounds from 1,128 in the first
half of 2002. Fuel surcharges, included in the reported revenue, increased by
188.4% to $35.8 million from $12.4 million in last year's first half as fuel
prices increased.
Operating earnings for the regional trucking companies in the first half of
2003 was $42.1 million, a decrease of 7.2% compared to operating earnings of
$45.4 million in the first half of 2002 due mainly to the continued softness in
the economy. The consolidated OR for the regional trucking companies for the
first half of 2003 was 95.6% compared to 95.0% for the first half of 2002. USF
Reddaway's OR improved during the first half of 2003 compared to 2002 as a
result of improved cost controls in the 2003 first half. USF Red Star's OR
increased in the first half of 2003 to 106.2% compared to 102.8% in the first
half of 2002. However, USF Red Star's OR reported for the second quarter was
significantly improved from the OR of 108.8% in the first quarter of 2003 as
it continues to make operational changes to reduce costs as well as
restructure to its core business markets in the Northeast. Bestway's OR
increased in the first half of 2003 to 96.1% compared to 94.8% in the first
half of 2002. USF Holland reported an increase in its year to date OR to 93.7%
in the first half of 2003 compared to a 93.0% in the first half of 2002, as a
result of the continued soft economy and increased labor costs. USF Dugan
reported an increase in OR in the first half of 2003 to 99.6% compared to
98.6% in the first half of 2002.
Continuing from the first quarter, we are reporting on our Web site
(www.ir.usfc.com) LTL operating statistics in a new format which, we believe,
more accurately reflects shipment and pricing details. In prior years, the
operating statistics included PremierPlus shipments in each of our LTL companies
that handled the shipment and allocated to each company its portion of the
revenue. While this prior treatment was consistent throughout all reporting
periods, the total shipment count for our overall LTL trucking group was
greater than the actual shipments handled. This revised presentation eliminates
the double counting of PremierPlus shipments. Additionally, these statistics
are presented on an as-billed basis and not as presented in the financial
statements. Differences between the operating statistics data and reported
revenue in the financial statements result from, among other items, revenue
recognition between accounting periods, adjustments for volume discounts that
are not attributable to specific invoices and other adjustments to invoices that
occur during later periods.
TRUCKLOAD
USF Glen Moore recorded a 9.6% revenue increase (7.0% before fuel
surcharge revenue) to $31.2 million in the current quarter compared to $28.5
million in the 2002 second quarter. Approximately 93% of the revenue increase
was attributable to the System 81 acquisition. USF Glen Moore's operating
earnings were $1.0 million with an OR of 96.9%, compared to $1.5 million
profit and an OR of 94.6% in last year's second quarter. This year's OR was
impacted by higher claims and to a lesser extent, higher empty miles.
USF Glen Moore reported revenue in the first half of 2003 of $63.0 million,
an increase of 17.2% compared to $53.8 million in the first half of 2002.
Operating income for the first half of 2002 declined by 38.6% to $1.5 million
from $2.4 million in the first half of 2002 and its OR increased to 97.6% in
2003 from 95.5% in 2002 due mainly to increases in fuel costs. In late February
2003, USF Glen Moore acquired System 81, a small truckload company based in
Tennessee, which contributed approximately $3.8 million in revenue in the
2003 first half (see Acquisition Footnote 7). At the beginning of the 2003
first quarter USF Glen Moore increased the estimate for depreciable lives for
a portion of its tractor fleet to match service life experience. Tractor lives
were extended from five to seven years and as a result, USF Glen Moore
recorded a first half decrease in depreciation expense of approximately $1.2
million.
LOGISTICS
Revenue for the Logistics group was $65.7 million, a 5.5% decrease compared
to last year's second quarter of $69.6 million. Revenue declined primarily due
to decreased business with major customers including Fleming Companies who filed
for bankruptcy in April. Partially offsetting this reduction was $6.2 million
revenue contribution from the ocean forwarding division that was acquired late
in 2002 (see Footnote 10 - Discontinued Freight Forwarding Segment) which was
slightly profitable. The Logistics group recorded an operating profit of $1.8
million compared to $2.1 million last year. Profits in the cross-dock division,
that are heavily influenced by its retail customer base, were lower in the 2003
second quarter compared to last year's second quarter as a result of a sluggish
economy. USF Processors contributed $8.9 million in revenue in the current
quarter compared to $10.9 million last year and reported a profit of $0.2
million in the current quarter compared to a small loss reported last year.
Year to date revenue for the Logistics group in the first half of 2003
increased by 3.9% to $141.4 million compared to $136.1 million in the first half
of 2002. USF Logistics increased revenue as new distribution centers and
new contracts started up while USF Processors reported lower revenue of $18.0
million in the 2003 first half compared to $20.5 million in last year's first
half. Operating earnings for the Logistics group decreased by 46.4% to $2.3
million in the first half of 2003 as USF Logistics reported lower profits
from recently opened distribution centers, but USF Processors reported a
small profit in the current year compared to a loss of $1.5 million in the
first half of 2002. Included in this year's first half results was a $2.0
million charge relating to the bankruptcy of Fleming Companies.
FREIGHT FORWARDING - ASIA EXIT COSTS
Freight Forwarding - Asia exit costs are the $12.8 million charge taken in
the 2002 first half to relinquish our interest in USF Asia; our former
non-core Asian joint venture. (see also Footnote 10 - Discontinued Freight
Forwarding Segment).
CORPORATE AND OTHER
Corporate and Other expenses increased by $1.6 million to $8.7 million in
the 2003 second quarter compared to $7.1 million in the 2002 second quarter.
Expenses for the current year's quarter included an after tax charge of $1.2
million (equivalent to approximately four cents diluted earnings per share)
relating to the retirement of our CEO. Net expenses in our information
technology group ("IT") were lower than last year by $0.3 million, as several
major software development projects that were begun in 2002 and were in the
non-capitalizable initial phases last year (AICPA SOP 98-1), are now moving
into phases where these development costs are being capitalized.
Corporate and other expenses for the first half of 2003 amounted to $13.9
million compared to $13.1 million in the first half of 2002. Corporate expenses
increased to $13.0 million in the first half of 2003 compared to $12.5 million
in the first half of 2002. Our IT group reduced its non - capital expenses by
$1.0 million in the first half of 2003 compared to the same period in 2002 as
several major software development projects that were begun in 2002 are now
being capitalized
Amortization of non-goodwill intangible assets amounted to $0.6 million in
the current quarter compared to $0.3 million in last year's second quarter.
Amortization for the first half of 2003 was $0.9 million compared to $0.6
million in the 2002 first half. Amortization expense increased in 2003 due to
the intangible assets acquired by Glen Moore and Red Star in February and
April of 2003 (see Footnote 7 - Acquisitions).
Discontinued Operations
On October 30, 2002, we sold our non-core freight forwarding businesses,
USF Worldwide, Inc. and USF Worldwide Logistics (UK). Results of operations in
the 2002 first half are reported under discontinued operations in our
statements of operations and cash flows (See Footnote 10 - Discontinued
Freight Forwarding Segment).
Income Taxes
Income tax expense is calculated on income from continuing operations
before income taxes and cumulative effects of accounting changes and before the
$12.8 million Asia exit costs (in the 2002 first half as there were no tax
benefits associated with this charge). There were also no tax benefits
associated with the $70 million cumulative effect of change in accounting for
goodwill in the 2002 first half. State income tax refunds, in the 2002 first
half, lowered the effective tax rate.
The following table provides an analysis of the effective tax rates for the
first halves of 2003 and 2002:
Six-Months Six-Months
Ended July 5, Ended June 29,
2003 2002
_______ _______
Reported income from continuing operations $21,526 $ 17,056
before income taxes, and cumulative effects of
accounting changes
Add back Asia exit costs - 12,760
_______ _______
Income subject to income taxes $21,526 $ 29,816
Income tax expense (9,172) (10,876)
Effective tax rate - reported 42.6% 36.5%
Subtract from income taxes:
Net state tax refunds received - 636
_______ _______
Adjusted income tax expense $(9,172) $(11,512)
Effective tax rate - adjusted 42.6% 38.6%
OTHER MATTERS
A five-year National Master Freight Agreement ("NMFA") was negotiated and
ratified by the International Brotherhood of Teamsters replacing the agreement
that expired March 31, 2003. This agreement affects USF Holland and USF Red Star
primarily.
Mr. Samuel K. Skinner, our Chairman, President and Chief Executive Officer,
retired on May 26, 2003. The search for a new Chief Executive Officer is ongoing
and a selection is expected during the third quarter.
Liquidity and Capital Resources
Cash flows from operating activities contributed $77.1 million during the
first half of 2003 compared to $28.6 million during the same period last year.
Our net loss of $71.7 million in the 2002 first half included a non-cash
charge for a write-off of goodwill of $70 million in our discontinued operations
and a $12.8 million charge (including a $10 million cash payment) to relinquish
our interest in our non-core Asian joint venture. Non-cash expenses in net
income included depreciation of property and equipment and amortization of
non-goodwill intangibles along with the aforementioned non-cash goodwill
write-off of $70 million. We plan to fund our ongoing operations through
operating cash flows and existing credit facilities
Other items affecting cash from operating activities included in the
increase / (decrease) for the 2003 first half amounting to $14.4 million,
included an increase of $7.1 million in accounts receivable, a decrease of $6.2
million in deferred tax assets and an increase in other current assets of $2.8
million. These were offset by increases in accounts payable and other
liabilities amounting to $24.5 million. Last year's net increase in accounts
receivable and other amounting to $(25.4) million, were due mainly to increases
in accounts receivable of $26.2 million and $10.9 million of increases in
deferred tax assets offset by increases in accounts payable and other
liabilities.
Capital expenditures for the first half of 2003 amounted to approximately
$69.4 million including additions of $23.8 million for revenue equipment, $19.0
million for terminal facilities, $18.6 million for information technology and
$8.0 for other capital items. Last year for the same period, capital
expenditures amounted to approximately $53.4 million, including additions of
$24.0 million for revenue equipment, $14.0 million for terminal facilities, $4.3
million for IT equipment and $11.1 million for other capital items.
USF Glen Moore acquired System 81, a Tennessee based truckload carrier, in
February 2003 for $1.9 million in cash and assumed debt of $2.8 million.
On April 14, 2003, USF Red Star paid $3.0 million in cash for certain
assets and the business of Plymouth Rock Transportation Corporation, a
Massachusetts based LTL carrier that provided overnight freight service to 11
Northeastern states. Contingent purchase price payments may be made to the
former owners of Plymouth Rock Transportation Corporation if certain retained
revenue goals are achieved. The earliest contingent purchase price payment would
be made in the third quarter of 2004.
Total borrowings, decreased by $5.1 million during the first half of 2003
and we had approximately $52.0 million invested in overnight money market
deposits. Our net debt to capital ratio (decreasing debt by cash) was 23.4% at
July 5, 2003 compared to 24.3% at December 31, 2002.
Our debt includes $150 million of unsecured guaranteed notes that were
floated in late April, 2000 and are due on April 15, 2010 and $100 million of
unsecured guaranteed notes due May 1, 2009.
Our guaranteed notes are fully and unconditionally guaranteed, on a joint
and several basis, on an unsecured senior basis, by substantially all of our
direct and indirect domestic subsidiaries (the Subsidiary Guarantors ). All of
the assets were owned by the Subsidiary Guarantors and substantially all of our
operations were conducted by the Subsidiary Guarantors. Accordingly, the
aggregate assets, liabilities, earnings and equity of the Subsidiary Guarantors
were substantially equivalent to the assets, liabilities, earnings and equity
shown in our consolidated financial statements. Our subsidiaries, other than the
Subsidiary Guarantors, are minor. There are no restrictions on our ability to
obtain funds from our subsidiaries by dividend or loan. We, therefore, are not
required to present separate financial statements of our Subsidiary Guarantors,
and other disclosures relating to them.
At July 5, 2003, we have a $200 million credit facility with a group of
banks that will expire in October 2005. This facility is for working capital,
general corporate funding needs, and up to $125 million for letters of credit
under our self-insurance program. As of July 5, 2003 we had no borrowings drawn
under the facility, but we had approximately $88 million in issued letters of
credit.
The facility bears interest at LIBOR plus a margin depending on our debt
rating. In addition, there are other fees associated with the facility and
certain financial covenants including minimum net worth and maximum funded debt
to adjusted cash flow.
On July 24, 2000, we announced the authorized buyback of up to 1 million
additional shares of our common stock. This repurchase program is not yet
completed. In February of 2003, we repurchased 14,000 common shares in the
public market at $24 per share. There were no shares repurchased in the first or
second quarters of 2002. From July 24, 2000 through July 5, 2003, we have
repurchased 468,200 shares.
A dividend of 9 1/3 cents per share equivalent to $2.5 million was paid on
July 3, 2003 to shareholders of record on June 20, 2003.
Recent Accounting Pronouncements
On November 25, 2002, the Financial Accounting Standards Board ("FASB")
issued Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees", Including Indirect Guarantees of Indebtedness to
Others ("Interpretation"), which elaborates on the disclosures to be made by a
guarantor about its obligations under certain guarantees issued. It also
clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The Interpretation expands on the accounting guidance of
Statement of Financial Accounting Standard ("SFAS") No. 5, Accounting for
Contingencies, SFAS No. 57 Related Party Disclosures, and SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The Interpretation also
incorporates, without change, the provisions of FASB Interpretation No. 34,
Disclosure of Indirect Guarantees of Indebtedness of Others, which it
supersedes. The Interpretation does identify several situations where the
recognition of a liability at inception for a guarantor's obligation is not
required. The initial recognition and measurement provisions of Interpretation
No. 45 apply on a prospective basis to guarantees issued or modified after
December 31, 2002, regardless of the guarantor's fiscal year-end. The
disclosures are effective for financial statements of interim or annual periods
ending after December 15, 2002. Adoption of this Interpretation did not have a
material impact on our financial position or results of operations.
In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of SFAS No.123". This
Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation" to
provide alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.
In addition, this Statement amends the disclosure requirements of SFAS No. 123
to require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. Finally, this Statement amends
Accounting Principals Board ("APB") Opinion No. 28, "Interim Financial
Reporting", to require disclosure about those effects in interim financial
information. The amendments to SFAS No. 123 in paragraphs 2(a) - 2(e) of this
Statement are effective for financial statements for fiscal years ending after
December 15, 2002. The amendment to SFAS No. 123 in paragraph 2(f) of this
Statement and the amendment to Opinion No. 28 in paragraph 3 of this
statement were effective for financial reports containing condensed financial
statements for interim periods beginning after December 15, 2002. As is allowed,
we are adopting the disclosure requirements under SFAS No. 148.
In May 2003, the FASB issued SFAS No. 150 - "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
Statement provides guidance as to the appropriate classification of certain
financial statement instruments that have characteristics of both liabilities
and equity. This statement is effective at the beginning of the first interim
period after June 15, 2003. Adoption of this Statement is not expected to have
a material impact on our financial position or results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to the impact of interest rate changes. Our exposure to
changes in interest rates is limited to borrowings under a line of credit
agreement which has variable interest rates tied to the LIBOR rate. There have
been no borrowings under this agreement in the 2003 first half nor during 2002.
In addition, we have $150 million of unsecured notes with an 8 1/2% fixed annual
interest rate and $100 million of unsecured notes with a 6 1/2% fixed annual
interest rate at July 5, 2003. We have no hedging instruments. From time to
time, we invest excess cash in overnight money market accounts. At July 5, 2003,
we had invested approximately $52 million in overnight money market accounts
that yielded approximately 1.5% per annum.
At July 5, 2003, we have a $200 million credit facility with a group of
banks that will expire in October 2005. This facility is for working capital,
general corporate funding needs, and up to $125 million for letters of credit we
issue under our self-insurance program. As of July 5, 2003 we had no borrowings
drawn under the facility, but we had approximately $88 million in issued letters
of credit.
The facility bears interest at LIBOR plus a margin depending on our debt
rating. In addition, there are other fees associated with the facility and
certain financial covenants including minimum net worth and maximum funded debt
to adjusted cash flow.
Item 4. Controls and Procedures
In order to ensure information for disclosure in our filings of periodic
reports with the Securities and Exchange Commission is identified, recorded,
processed, summarized and reported on a timely basis, we have adopted disclosure
controls and procedures. Our Lead Director, Neil Springer, and our Chief
Financial Officer, Christopher L. Ellis, have reviewed and evaluated our
disclosure controls and procedures as of August 6, 2003 and have concluded that
our disclosure controls and procedures were adequate as of that date.
There have been no significant changes in our internal controls, which we
define to include our control environment, control procedures, and accounting
systems, or in other factors that could significantly affect our internal
controls, since August 6, 2003.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
Our trucking subsidiaries are a party to a number of proceedings brought under
the Comprehensive Environmental Response, Compensation and Liability Act,
(CERCLA). They have been made a party to these proceedings as an alleged
generator of waste disposed of at hazardous waste disposal sites. In each case,
the Government alleges that the parties are jointly and severally liable for the
cleanup costs. Although joint and several liability is alleged, these
proceedings are frequently resolved on the basis of the quantity of waste
disposed of at the site by the generator. Our potential liability varies greatly
from site to site. For some sites the potential liability is de minimis and for
others the costs of cleanup have not yet been determined. It is not feasible to
predict or determine the outcome of these or similar proceedings brought by
state agencies or private litigants. However, we believe the ultimate recovery
or liability, if any, resulting from such litigation, individually or in total,
would not materially adversely affect our financial condition, results of
operations or cash flows. We believe such liability, if any, would represent
less than 1% of our annual revenue.
Our Dugan subsidiary is currently the subject of a criminal investigation by the
City of Houston and an administrative investigation by the Texas Commission on
Environmental Quality arising from inadvertent diesel releases from Dugan's
Northfield facility located in Houston, Texas. Dugan has taken measures to
respond to the environmental effects of these releases and to curtail further
releases. Dugan has also brought suit against the environmental consultant who
reviewed the Northfield facility prior to Dugan's acquisition of the property in
1998.
Also, we are involved in other litigation arising in the ordinary course of
business, primarily involving claims for bodily injury, property damage, and
workers' compensation. We believe the ultimate recovery or liability, if any,
resulting from such litigation, individually or in total, would not materially
adversely affect our financial condition, results of operations, or cash flow.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) On May 2, 2003, the annual meeting of stockholders of USF Corporation was
held pursuant to notice.
(b) Robert V. Delaney, Paul J. Liska, and Stephen B. Timbers were elected
directors at the meeting. The following directors' term of office continued
after the meeting:
Neil A. Springer John W. Puth
Morley Koffman Anthony J. Paoni
William N. Weaver, Jr.
(c)(1) Election of Directors
Robert V. Delaney FOR: 22,739,092
WITHHOLD: 1,880,575
ABSTENTIONS: 0
BROKER NON VOTES: 0
Paul J. Liska FOR: 23,365,892
WITHHOLD: 1,253,775
ABSTENTIONS: 0
BROKER NON VOTES: 0
Stephen B. Timbers FOR: 22,737,186
WITHHOLD: 1,882,481
ABSTENTIONS: 0
BROKER NON VOTES: 0
(c)(2) Amendment to the Certificate of Incorporation
FOR: 24,468,728
AGAINST: 50,115
ABSTENTIONS: 21,024
NON-VOTES: 79,800
(c)(3) Amendment to the USF Corporation Long-Term Incentive Plan
FOR: 19,515,825
AGAINST: 4,973,550
ABSTENTIONS: 50,490
NON-VOTES: 79,801
(c)(4) Amendment to the Stock Option Plan for Non-Employee Directors
FOR: 21,039,328
AGAINST: 3,457,631
ABSTENTIONS: 42,907
NON-VOTES: 79,801
(d) N/A
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
1. Exhibit 10.1-USF Corporation Stock Option Plan for Non-
Employee Directors, as restated and amended March 14, 2003.
2. Exhibit 10.2-USF Corporation Long-Term Incentive Plan, as
restated and amended May 2, 2003.
3. Exhibit 10.3-USF Corporation By-Laws amended May 2, 2003.
4. Exhibit 10.4-Retirement Agreement and General Release of
Samuel K. Skinner dated April 22, 2003.
5. Exhibit 31.1-Section 302 Certification of Lead Director.
6. Exhibit 31.2-Section 302 Certification of Chief Financial
Officer.
7. Exhibit 32.1-Statement of Lead Director Officer Pursuant to
Section 1350(a) of Title 18, United States Code (furnished not
filed with this Quarterly Report on Form 10-Q)
8. Exhibit 32.2-Statement of Chief Financial Officer Pursuant to
Section 1350(a) of Title 18, United States Code (furnished not
filed with this Quarterly Report on Form 10-Q)
(b) Current Reports on Form 8-K were filed:
1. A Current Report on Form 8-K was filed on April 30, 2003
announcing the Company's First Quarter earnings.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized. Dated August 6, 2003.
USF CORPORATION
By: /s/ Christopher L. Ellis
____________________
Christopher L. Ellis
Senior Vice President, Finance and Chief Financial Officer
By: /s/ James T. Castro
_______________
James T. Castro
Controller and Principal Accounting Officer
EXHIBIT 10.1
USFREIGHTWAYS CORPORATION
STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
RESTATED AND AMENDED AS OF MARCH 14, 2003
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. For purposes of the Plan, an Eligible
Director shall be deemed to include the employer of such Eligible
Director, or any delegatee mandated by his employer, if the
Eligible Director is required, as a condition of his
employment, to provide that any Option granted hereunder be
made to the employer or its delegatee.
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 750,000 Shares (subject to adjustments for stock splits, stock
dividends, and other adjustments described in Article VI hereof).
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 right 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, on the date such director becomes an
Eligible Director, be granted an Option under this Plan to acquire 10,000
Shares. 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:
Options granted to an Eligible Director under the Plan on the date the director
first becomes an Eligible Director shall become exercisable cumulatively in
accordance with the following schedule:
Years Elapsed Since Cumula Dilutive Number of Shares For Which
Date of Grant 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 schedule 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.
Notwithstanding 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 voluntary termination 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 the Company.
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. Restate and amended this 14th day of March 2003 by the Board of
Directors.
EXHIBIT 10.2
USF CORPORATION
LONG-TERM INCENTIVE PLAN
RESTATED AS OF MARCH 8, 2001
AMENDED AS OF MAY 2, 2003
USF CORPORATION
LONG-TERM INCENTIVE PLAN
1. PURPOSE
The USF 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 USF 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 USF 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 4,400,000 Shares (subject to adjustment for stock splits, stock
dividends, and other adjustments described in Section 17 hereof). The 1,050,000
Shares that became available under the Plan by Plan amendment effective May-2,
2003 shall only be available for the grant of Awards in the form of Options or
Restricted Stock, and only up to 300,000 of such Shares shall be specifically
available for grants of 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
Section422 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
(i) Except as otherwise mandated by Code Section 422, and for Options granted
after May 2, 2003, 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 five (5) years 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 as of May 2, 2003 and restated this 8th day of
March, 2001.
EXHIBIT 10.3
BY-LAWS
OF
USF CORPORATION
AS ADOPTED ON MAY 2, 2003
BY-LAWS
of
USF Corporation
Dated October 16, 2002
Amended May 2, 2003
ARTICLE I
Offices
SECTION 1.1 Offices. USF Corporation (the "Corporation") may have offices either
within or without the State of Delaware. The registered office of the
Corporation and the name of the registered agent of the Corporation are as is
set forth in the Restated Certificate of Incorporation of the Corporation, or as
may subsequently be or have been changed by resolution of the Board of Directors
(the "Board").
ARTICLE II
Meetings of Stockholders
SECTION 2.1. Annual Meetings.
An annual meeting of the stockholders of the Corporation for the election of
directors and for the transaction of such other business as may properly come
before the meeting shall be held on such date and at such time as the Board may
from time to time determine, or, if not so designated, then at 10:00 a.m., on
the third Tuesday in April in each year if not a legal holiday, and, if a legal
holiday, at the same hour on the next succeeding work day, and at such place as
shall be designated by the Board in the notice thereof.
At any annual meeting of stockholders, only such business shall be conducted as
shall have been brought before the annual meeting (i) by or at the direction of
the chairman of the meeting or (ii) by any stockholder who complies with the
procedures set forth in this Section 2.1.
For business properly to be brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in proper written form to
the Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 30 days nor more than 60 days prior to the annual
meeting; provided, however, that in the event that less than 40 days' notice or
prior public disclosure of the date of the annual meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. To be in proper written form, a stockholder's notice to the Secretary
shall set forth in writing as to each matter the stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting; (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business; (iii) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder; and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in the By-laws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this Section 2.1.
SECTION 2.2 Special Meetings.
A special meeting of the stockholders for any purpose or purposes may be called
at any time by the Board, or by any committee of the Board which has been duly
designated by the Board and whose powers and authority, as expressly provided in
a resolution of the Board, include the power to call such meetings, and such
meeting shall be held on such date and at such place and hour as shall be
designated in the notice thereof. Only such business as is specified in the
notice of any special meeting of the stockholders shall come before such
meeting.
SECTION 2.3. Notice of Meetings.
Notice of each meeting of the stockholders shall be given not less than 10 nor
more than 60 days before the date of the meeting to each stockholder of record
entitled to notice of, or to vote at, such meeting by delivering a typewritten
or printed notice thereof to such stockholder personally or by depositing such
notice in the United States mail, postage prepaid, directed to such stockholder
at such person's address as it appears on the stock record of the Corporation.
Every such notice shall state the place, date and hour of the meeting and, in
the case of a special meeting is called. Notice of the time, place and purpose
of any meeting of stockholders may be waived in writing, either before or after
such meeting, and will be waived by any stockholder by such person's attendance
thereat, in person or by proxy (unless such stockholder protests, prior to or at
the commencement of the meeting, the lack of proper notice to such stockholder).
Any stockholder waiving notice of a meeting shall be bound by the proceedings of
any such meeting in all respects as if due notice thereof had been given.
SECTION 2.4. Adjournments.
Any meeting of stockholders, annual or special, may adjourn from time to time to
reconvene at the same or some other place, and notice need not be given of any
such adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
SECTION 2.5. Quorum and Manner of Acting.
The presence in person or by proxy of stockholders holding of record a majority
of the shares of stock of the Corporation entitled to be voted shall constitute
a quorum for the transaction of business at any meeting of the stockholders. In
the absence of a quorum at any such meeting or any adjournment or adjournments
thereof, a majority in voting interest of those present in person or by proxy
and entitled to vote, or, in the absence therefrom of all the stockholders, any
officer entitled to preside at, or to act as secretary of, such meeting, may
adjourn such meeting from time to time in the manner provided in Section 2.4
until stockholders holding the amount of stock requisite for a quorum shall be
present in person or by proxy. The absence from any meeting in person or by
proxy of stockholders holding the number of shares of stock of the Corporation
required for action upon any given matter which may properly come before the
meeting if there shall be present there at, in person or by proxy of
stockholders holding the number of shares of stock of the Corporation required
for action upon any given matter shall be present there at, in person or by
proxy, stockholders holding the number of shares of stock of the Corporation
required in respect of such other matter. The stockholders present at a duly
called or convened meeting, at which a quorum is present, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 2.6. Organization of Meetings.
At each meeting of the stockholders, one of the following shall act as chairman
of the meeting and preside there at, in the following order of precedence:
(a) the Chairman of the Board, or, if such person is not present or if no person
holds such office, any officer or director of the Corporation designated by the
Board; or
(b) any officer or director of the Corporation designated by a majority in
voting interest of the stockholders present in person or by proxy and entitled
to vote there at. The person whom the chairman of the meeting shall appoint,
shall act as secretary of the meeting and keep the minutes thereof.
SECTION 2.7. Order of Business.
The order of business at each meeting of the stockholders shall be determined by
the chairman of the meeting, but such order of business may be changed by a
majority in voting interest of those present in person or by proxy at such
meeting and entitled to vote there at. The chairman of the meeting shall have
the right and authority to prescribe such acts and things as are necessary or
desirable for the proper conduct of the meeting, including, without limitation,
the establishment of procedures for the maintenance of order and safety,
limitations on the time allotted to questions or comments on the affairs of the
Corporation, restrictions on entry to such meeting after the time prescribed for
the commencement thereof, and the opening and closing of the voting polls.
The chairman of any meeting shall, if the facts warrant, determine and declare
to such meeting that business was not properly brought before the annual meeting
in accordance with the provisions of Sections 2.1 or 2.2 hereof and, if such
person should so determine, such person shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted.
SECTION 2.8. Voting.
Each stockholder shall, at each meeting of the stockholders, be entitled to one
vote in person or by proxy for each share of stock of the Corporation which has
voting power on the matter in question held by such person and registered in
such person's name on the stock record of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 8.6 of Article VIII
of these By-laws as the record date for the determination of stockholders who
shall be entitled to receive notice of and to vote at such meeting; or
(b) if no record date shall have been so fixed, then at the close of business on
the day next preceding the day on which notice of the meeting shall be given or,
if notice of the meeting shall be waived, at the close of business on the day
next preceding the day on which the meeting shall be held, or, if no record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting shall have been fixed, the day on which the first
written consent is expressed.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the Corporation,
shall neither be entitled to vote nor be counted for quorum purposes. Any vote
of stock of the Corporation may be given at any meeting of the stockholders by
the person entitled to vote the same in person or by proxy (who need not be a
stockholder) appointed by an instrument in writing delivered to secretary of the
meeting; provided, however, that no proxy shall be voted or acted upon after
three years from its date unless such proxy provides for a longer period. The
attendance at any meeting of a stockholder who may theretofore have given a
proxy shall not have the effect of revoking the same unless such person shall in
writing so notify the secretary of the meeting prior to voting of the proxy.
Shares standing in the names of two or more persons shall be voted or
represented in accordance with the determination of the majority of such
persons, or, if only one of such persons is present in person or represented by
proxy, such person shall have the right to vote such shares and such shares
shall be deemed to be represented for the purpose of determining a quorum. At
all meetings of stockholders a plurality of the votes cast shall be necessary to
elect the directors. All other proposals, unless otherwise provided by law, or
the Certificate of Incorporation, must receive a majority of the votes that
could be cast by the holders of all shares of stock that are present in person
or represented by proxy and that are entitled to vote upon such proposals.
Unless otherwise required by law or directed by the chairman of the meeting, the
vote at any meeting of the stockholders on any question need not be by ballot.
On a vote by ballot, each ballot shall be signed by the stockholder voting, or
by such person's proxy if there be such proxy, and shall state the number of
shares voted.
SECTION 2.9. Consent in Lieu of Meeting.
Anything herein to the contrary notwithstanding, any action required to be taken
at any annual or special meeting of stockholders of the Corporation, or any
action which may be taken at any annual or special meeting of such stockholders,
may be taken at any annual or special meeting of such stockholders or may be
taken without a meeting, without prior notice and without a vote if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by stockholders who have not consented in
writing and any certificate filed with respect to such matter shall state that
such written notice has been given.
SECTION 2.10. List of Stockholders.
It shall be the duty of the officer of the Corporation who shall have charge of
the stock ledger of record, either directly or through another officer of the
Corporation or agent thereof, to prepare and make, at least 10 days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote there at, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
10 days prior to the meeting, either at the place where the meeting is to be
held or at such other place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting. Such list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof and may be inspected by any stockholder who is present. The stock
record shall be the only evidence as to who are the stockholders entitled to
examine the stock record, such list or the books of the Corporation or to vote
in person or by proxy at any meeting of the stockholders.
SECTION 2.11. Inspectors.
Either the Board or, in the absence of a designation of inspectors by the Board,
the chairman of the meeting may, in its or such person's discretion, appoint two
or more inspectors, who need not be stockholders, who shall receive and take
charge of ballots and proxies and decide all questions relating to the
qualification of those asserting the right to vote and the validity of ballots
and proxies. In the event of the failure or refusal to serve of any inspector
designated by the Board, the chairman of the meeting shall appoint an inspector
to act in place of each such inspector designated by the Board. In the absence
of a designation of inspectors by the Board and the chairman of the meeting, the
secretary of the meeting shall perform the duties which would otherwise have
been performed by the inspectors.
ARTICLE III
Board of Directors
SECTION 3.1. General Powers.
The property, business, affairs and policies of the Corporation shall be managed
by or under the direction of the Board.
SECTION 3.2. Number and Term of Office.
The Board shall consist of not less than three nor more than twenty-one
directors. The exact number of directors shall be determined from time to time
by a resolution or resolutions adopted by the affirmative vote of a majority of
the total number of directors which the corporation would have if there were no
vacancies (the "entire Board"). The directors shall be divided into three
classes. Each class shall consist, as nearly as may be possible, of one-third of
the total number of directors constituting the entire Board. If the classes of
directors are not equal in number, the Board shall determine which class shall
contain an unequal number of directors.
Upon, or as soon as practicable following, the filing of the Restated
Certificate of Incorporation, the first class of directors shall be elected for
a term to expire at the annual meeting next ensuing, the second class until the
second annual meeting thereafter, and the third class until the third annual
meeting thereafter. At each succeeding annual meeting of stockholders,
successors to the class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of directors is changed in
accordance with the terms of the Certificate of Incorporation and this Section
3.2, any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible and
any additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his or her term expires
and until his or her successor shall be elected and shall qualify, subject,
however, to the director's prior death, resignation, disqualification or removal
from office.
SECTION 3.3 Nomination and Election of Directors.
Nominations of persons for election to the Board may be made at any annual
meeting of stockholders by or at the direction of the Board or by any
stockholder of the Corporation entitled to vote for the election of directors at
the meeting who was a stockholder of record at the time of giving of notice
provided for in this Section 3.3 and who complies with the notice procedures set
forth in this Section 3.3. Any such nomination by a stockholder shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely notice for an annual meeting, a stockholder's notice shall be delivered
to and received by the Secretary of the Corporation not less than 60 days nor
more than 90 days prior to the first anniversary of the preceding year's annual
meeting; provided that, in the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, notice by the stockholder to be timely must be so delivered
and received not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting and the 10th day following the day on which a public announcement
of the date of such meeting is first made. Notwithstanding anything in the
foregoing sentence to the contrary, in the event that the number of directors to
be elected to the Board is increased and there is no public announcement naming
all of the nominees for director or specifying the size of the increased Board
made by the Corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this Section
3.3 shall also be considered timely, but only with respect to nominees for any
new positions created by such increase, if it shall be delivered to the
Secretary of the Corporation at the principal executive office of the
Corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the Corporation.
Nominations of persons for election to the Board may be made at a special
meeting of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (i) by or at the direction of the Board or (ii)
by any stockholder of the Corporation who is a stockholder of record at the time
of giving of notice provided for in this Section 3.3, who shall be entitled to
vote at the meeting and who complies with the notice procedures set forth in
this Section 3.3. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board, any
such stockholder may nominate a person or persons (as the case may be) for
election to such position(s) as specified in the Corporation's notice of
meeting, if the stockholder's notice shall be delivered to and received by the
secretary of the Corporation at the principal executive offices of the
Corporation not earlier than the 90th day prior to such special meeting and not
later than the close of business on the later of the 60th day prior to such
special meeting and the 10th day following the day on which a public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board to be elected at such meeting.
Any stockholder's notice delivered pursuant to this Section 3.3 shall set forth
in writing (i) as to each person whom the stockholder proposes to nominate for
election or re-election as a director (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the number of shares of stock of the Corporation which are
beneficially owned by such person, and (D) any other information relating to
such person that is required to be disclosed in connection with the solicitation
of proxies for election of directors, or as otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the
"Exchange Act") (including, without limitation, such person's written consent to
being named in proxy statement as a nominee and to serving as a director if
elected), and any other applicable laws or rules or regulations of any
governmental authority or of any national securities exchange or similar body
overseeing any trading market on which shares of the Corporation are traded; and
(ii) as to the stockholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination is made (A) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (B) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
At the request of the Board, any person nominated by the Board for election as a
director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 3.3. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by these By-Laws and in that event the defective
nomination shall be disregarded. In addition to the provisions of this Section
3.3, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder, and any other applicable
laws or rules or regulations of an governmental authority or any national
securities exchange or similar body overseeing any trading market on which
shares of the Corporation are traded, with respect to the matters set forth
herein.
At each meeting of the stockholders for the election of directors, provided a
quorum is present, the directors nominated in accordance with this Section 3.3
for election at such meeting shall be elected by a plurality of the votes
validly cast in such election. Directors need not be stockholders of the
Corporation or residents of the State of Delaware.
SECTION 3.4 Meetings.
(a) Regular Meetings.Regular meetings of the Board or any committee thereof
shall be held as the Board or such committee thereof shall from time to time
determine. If any day fixed for a regular meeting shall be a legal holiday at
the place where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be postponed until the next succeeding
business day.
(b) Notice of Meetings. Special meetings of the Board, at which any and all
business may be transacted, shall be held whenever called by the Chief Executive
Officer, the President, the Chairman of the Board or a majority of the Board.
(c) Notice of Meetings. No notice of regular meetings of the Board or of any
committee thereof or of any adjourned meeting thereof need be given. Notice
shall be given to each special meeting of the Board or adjournment thereof,
including the time and place thereof. Notice of each such meeting shall be
mailed to each director, addressed to such person at such person's residence or
usual place of business, at least two days before the day on which such meeting
is to be held, or shall be sent to such person at such place by facsimile,
telegraph, cable, wireless or other form of recorded communication, or be
delivered personally or by telephone not later than the day before the day on
which such meeting is to be held, but notice need not be given to any director
who shall attend meeting. A written waiver of notice, signed by the person
entitled thereto, whether before or after the time of the meeting stated
therein, shall be deemed equivalent to notice. The purposes of a meeting of the
Board or any committee thereof need not be specified in the notice thereof.
(d) Time and Place of Meetings. Regular meetings of the Board or any committee
thereof shall be held at such time or times and place or places as the Board or
such committee may from time to time determine. Each special meeting of the
Board or any committee thereof shall be held at such time and place as the
caller or callers thereof may determine. In the absence of such a determination,
each regular meeting or special meeting of the Board or any committee thereof
shall be held at such time and place as shall be designated in the notices or
waivers of notice thereof.
(e) Quorum and Manner of Acting. A majority of the directors then in office and
a majority of the members of any committee shall be present in person at any
meeting thereof in order to constitute a quorum for the transaction of business
at such meeting and the vote of a majority of the directors present at any such
meeting at which a quorum is present shall be necessary for the passage of any
resolution or for an act to be the act of the Board or such committee. In the
absence of a quorum, a majority of the directors present thereat may adjourn
such meeting from time to time until a quorum shall be present there at. Notice
of any adjourned meeting need not be given.
(f) Organization of Meetings. At each meeting of the Board, the Chairman of the
Board or, if such person is not present or if no person holds such office, any
director chosen by a majority of the directors present there at shall act as
chairman of the meeting and preside thereat. The person whom the chairman of the
meeting shall appoint shall act as secretary of such meeting and keep the
minutes thereof. The order of business at each meeting of the Board shall be
determined by the chairman of such meeting.
(g) Consent in Lieu of Meetings. Anything herein to the contrary
notwithstanding, any action required or permitted to be taken at any meeting of
the Board or any committee thereof may be taken without a meeting if all members
of the Board or such committee, as the case may be, consent thereto in a writing
or writings and such writing or writings are filed with the minutes of the
proceedings of the Board or such committee.
(h) Action by Communications Equipment.The directors may participate in a
meeting of the Board or any committee thereof by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other and such participation shall constitute
presence in person at such meeting.
SECTION 3.5. Compensation.
Each director who is not also a salaried employee of the Company or any of its
affiliates, in consideration of he or she serving as such, shall be entitled to
receive from the Corporation such amount per annum and such fees for attendance
at meetings of the Board or of any committee, or both, as the Board shall from
to time determine. The Board may provide that the Corporation shall reimburse
each director or member of a committee, including any director who is a salaried
employee of the Company or any of its affiliates, for any expenses incurred by
such person on account of such person's attendance at any such meeting.
SECTION 3.6. Resignation, Removal and Vacancies.
Any director may resign at any time by giving written notice of such person's
resignation to the Board. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein, when accepted by the Board. Except as aforesaid, the
acceptance of such resignation shall not be necessary to make it effective.
Any director may be removed at any time for cause by vote of the holders of a
majority in voting interest of shares then entitled to vote at an election of
directors. The vacancy in the Board caused by any such removal may be filled by
the stockholders at such meeting or as provided in the next paragraph of these
By-laws.
In the case of any vacancy on the Board or in the case of any newly created
directorship, a director to fill the vacancy or the newly created directorship
for the unexpired portion of the term being filled may be elected by a majority
of the directors of the Corporation then in office, though less than a quorum,
or by a sole remaining director. The director elected to fill such vacancy shall
hold office for the unexpired term in respect of which such vacancy occurred and
until such person's successor shall be elected and shall qualify or until such
person's earlier death or resignation or removal in the manner herein provided.
ARTICLE IV
Committees
SECTION 4.1. Number, Appointment, Term of Office. etc.
The Board, by resolution or resolutions passed by a majority of the Board, may
designate one or more committees, each committee to consist of one or more
directors then in office. Each member of any such committee shall continue as
such only so long as such person remains a director and may be removed at any
time, with or without cause, by a majority of the Board. Any vacancy on any
committee may be filled at any time by the vote of a majority of the Board.
In the absence or in case of the disqualification of a member or members of any
such committee, the member or members of such committee present and not
disqualified from voting at a meeting of such committee, whether or not such
person or they constitute a quorum, may unanimously appoint another member of
the Board to act at such meeting in place of any absent or disqualified member.
SECTION 4.2. Functions and Powers
Each committee shall have such functions and powers as the Board shall deem
advisable and, subject to any limitations or restrictions which may be
prescribed by resolution of the Board, if an Executive Committee is designated,
it shall have and may exercise all the powers and authority of the Board in the
management of the property, business, affairs and policies of the Corporation,
including the power and authority to declare dividends and to authorize the
issuance of stock of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; provided, however,
that no committee shall have the power of authority to: approve amendments to
the Certificate of Incorporation of the Corporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board as provided in Section 151(a)
of the Delaware General Corporation Law, fix the designations and any of the
preferences or rights of such shares or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series);
adopt agreements of merger or consolidation; recommend to the stockholders the
sale, lease or exchange of all or substantially all the property and assets of
the Corporation; recommend to the stockholders the dissolution of the
Corporation or the revocation of such a dissolution; or amend these By-laws.
SECTION 4.3. Rules.
Subject to the provisions of these By-laws, each committee by resolution adopted
by a majority of all the members thereof shall fix its rules of procedure.
ARTICLE V
Officers
SECTION 5.1. Election and Appointment and Term of Office.
The Corporation shall have such officers with such titles as shall be stated in
a resolution of the Board, and with such duties as shall be given them as
hereinafter provided or as may otherwise be specifically given them by the
Board, but such officers shall include at least (a) a Chairman of the Board or
one or more Vice-Chairmen of the Board or a Chief Executive Officer or a
President, or any or all the foregoing, and (b) a Secretary or one or more
Assistant Secretaries or a Treasurer or one or more Assistant Treasurers, or any
or all of the foregoing. One of such officers shall have the duty to record the
proceedings of the meetings of stockholders and directors in a book to be kept
for that purpose. Any number of offices may be held by the same person except
that at least one person who holds an office referred to in clause (a) of the
second preceding sentence shall not be the same as at least one person who holds
any office referred to in clause (b) of the second preceding sentence.
SECTION 5.2. Resignation, Removal and Vacancies.
Any officer may resign at any time by giving written notice of such person's
resignation to the Board. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified therein when accepted by the Board. Except as aforesaid, the
acceptance of such resignation shall not be necessary to make it effective.
Any officer, agent or employee elected or appointed by the Board may be removed,
with or without cause, at any time by the Board. Any agent or employee appointed
by an officer may be removed, with or without cause, at any time by such
officer.
A vacancy in any office may be filled for the unexpired portion of the term in
the same manner as provided in these By-laws for election or appointment to such
office.
SECTION 5.3. Duties and Functions.
If any of the following offices is created and a person appointed or elected
thereto, and unless the Board otherwise provides, such offices and persons shall
have the following duties and functions:
(a) Chairman. If a Chairman of the Board is appointed or elected, such person
shall be a member of the Board, shall preside at meetings of the Board and of
the stockholders at which such person shall be present, shall perform such
duties as are incident to the office of the Chairman of the Board, and shall
perform such other duties as may from time to time be prescribed by the Board.
(b) Vice-Chairman. If any Vice-Chairman or Vice-Chairmen of the Board are
appointed or elected, they shall be members of the Board, shall perform such
duties as are incident to the office of the Vice-Chairman of the Board, and
shall perform such other duties as may from time to time be prescribed by the
Board.
(c) Chairman of the Executive Committee. If a Chairman of the Executive
Committee is appointed or elected, such person shall be a member of the Board,
shall preside at meetings of the Executive Committee, shall when requested
consult with and advise the other officers of the Corporation, and shall perform
such other duties as may be agreed upon with them or as the Board or the
Executive Committee may from time to time determine.
(d) Chief Executive Officer. If a Chief Executive Officer is appointed or
elected, such person shall, subject to the control of the Board, have general
charge and management of the property, business and affairs of the Corporation
and shall have the direction of, and may assign duties to, all other officers
(other than the Chairman and any Vice-Chairman, if either or both is appointed
or elected), agents and employees.
(e) President. If a President is appointed or elected, such person shall have
such powers and duties as shall be prescribed by the Chief Executive Officer, if
one is appointed or elected, or the Board. The President shall report to the
Chief Executive Officer.
(f) Chief Operating Officer. If any Chief Operating Officer is appointed or
elected, such person shall have such powers and duties as shall be prescribed by
the Chief Executive Officer or the President, if either or both is appointed or
elected, or the Board.
(g) Chief Financial Officer. If any Chief Financial Officer is appointed or
elected, such person shall perform all the powers and duties of the offices of
the chief financial officer and chief accounting officer and in general shall
have overall supervision of the financial operations of the Corporation. The
Chief Financial Officer shall also perform such other duties as the Chief
Executive Officer, the President or the Board may from time to time determine.
(h) Vice Presidents. If any Vice President or Vice Presidents are appointed or
elected, they shall have such powers and duties as shall be prescribed by the
Chief Executive Officer or the President, if either or both is appointed or
elected, or the Board. Vice Presidents for this purpose shall include Senior,
Executive, Assistant and all other categories or types of Vice Presidents.
(i) Secretary. If a Secretary is appointed or elected, such person shall attend
and keep the records of all meetings of the stockholders and the Board in one or
more books kept for that purpose, shall give or cause to be given due notice of
all meetings in accordance with these By-laws and as required by law, shall
notify the several officers of the Corporation of all action taken by the Board
concerning matters relating to their duties, shall transmit to the proper
officers copies of all contracts and resolutions approved by the Board or any
committees of the Board, shall be custodian of the seal of the Corporation and
of all contracts, deeds, documents and other corporate papers, records (except
accounting records) and indicia of title to properties owned by the Corporation
as shall not be committed to the custody of another officer by the Chief
Executive Officer or the President, if either or both is appointed or elected,
or the Board, shall affix or cause to be affixed the seal of the Corporation to
instruments requiring the same when the same have been signed on behalf of the
corporation by a duly authorized officer, shall perform all duties and have all
powers incident to the office of Secretary, and shall perform such other duties
as shall be assigned to such person by the Chief Executive Officer or the
President, if either or both is appointed or elected, or the Board. One or more
Assistant Secretaries may be appointed or elected, who shall perform all the
duties and have all the powers of the Secretary in the absence of or in case of
a failure to appoint or elect or when so delegated by the Secretary, and as the
Chief Executive Officer or the President, if either or both is appointed or
elected, or the Board may direct.
(j) Treasurer. If a Treasurer is appointed or elected, such person shall perform
the duties incident to the office of Treasurer and such other duties as shall be
assigned to such person by the Chief Executive Officer or the President, if
either or both is appointed or elected, or the Board. One or more Assistant
Treasurers may be appointed or elected who shall perform all the duties and have
all the powers of the Treasurer in the absence of, or in the case of a failure
to appoint or elect, or when so delegated by the Treasurer, and as the Chief
Executive Officer or the President, if either or both is appointed or elected,
or the Board may direct.
(k) Controller. If a Controller is appointed or elected, such person shall
perform all the duties incident to the office of Controller and such other
duties as may be assigned to such person by the Chief Executive Officer or the
President, if either or both is appointed or elected., or the Board. One or more
Assistant Controllers may be appointed or elected who shall perform all the
duties and have all the powers of the Controller in the absence of, or in the
case of a failure to appoint or elect, or when so delegated by, the Controller,
and as the Chief Executive Officer or the President, if either of both is
appointed or elected, or the Board may direct.
ARTICLE VI
Waiver of Notices; Place of Meetings
SECTION 6.1. Waiver of Notices.
Anything herein to the contrary notwithstanding, whenever notice is required to
be given to any director or member of a committee or stockholder, a waiver
thereof in writing, signed by the person entitled to such notice shall be deemed
equivalent to notice, whether given before or after the time specified therein
and, in the case of a waiver of notice of a meeting, whether or not such waiver
specifies the purpose of or business to be transacted at such meeting.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except where the person attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, and does so object.
SECTION 6.2. Place of Meetings.
Any meeting of the stockholders, the Board or any committee may be held within
or without the State of Delaware.
ARTICLE VII
Execution and Delivery of Documents; Deposits; Proxies; Books and Records
SECTION 7.1. Execution and Delivery of Documents; Delegation.
The Board shall designate the officers, employees and agents of the Corporation
who shall have power to execute and deliver deeds, contracts, mortgages, bonds,
debentures, checks, drafts and other orders for the payment of money and other
documents for and in the name of the Corporation and may authorize such
officers, employees and agents to delegate such power (including authority to
redelegate) by written instrument to other officers, employees or agents of the
Corporation. Such delegation may be by resolution or otherwise and the authority
granted shall be general or confined to specific matters, all as the Board may
determine. In the absence of such designation referred to in the first sentence
of such designation referred to in the first sentence of this Section, the
officers of the Corporation shall have such power so referred to, to the extent
incident to the normal performance of their duties.
SECTION 7.2. Deposits.
All funds of the Corporation not otherwise employed shall be deposited from time
to time to the credit of the Corporation or otherwise as the Board or any
officer of the Corporation to whom power in that respect shall have been
delegated by the Board shall select.
SECTION 7.3. Proxies in Respect of Stock or Other Securities of Other
Corporations.
Unless otherwise provided by the Board, any officer of the Corporation shall
have the authority from time to time to appoint an agent or agents of the
Corporation to exercise in the name and on behalf of the Corporation the powers
and rights which the Corporation may have as the holder of stock or other
securities in any other corporation, to vote or consent in respect of such stock
or securities and to execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal or otherwise, such written
proxies, powers of attorney or other instruments as such person may deem
necessary or proper in order that the Corporation may exercise such powers and
rights. Such officer may instruct any person or persons appointed as aforesaid
as to the manner of exercising such powers and rights.
SECTION 7.4. Books and Records.
The books and records of the Corporation may be kept at such places within or
without the State of Delaware as the proper officers of the Corporation may from
time to time determine.
ARTICLE VIII
Certificates; Stock Record; Transfer and Registration; New
Certificates; Record Date, etc.
SECTION 8.1. Certificates for Stock.
Every holder of stock of the Corporation shall be entitled to have a certificate
certifying the number of shares owned by such person in the Corporation and
designating the class of stock to which such shares belong, which shall
otherwise be in such form as the Board shall prescribe. Each such certificate
shall be signed by, or in the name of the Corporation by, the Chairman, a
Vice-Chairman, the Chief Executive Officer, the President or a Vice President of
the Corporation and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary of the Corporation. Any of or all such signatures may be
facsimiles. In case any authorized officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer or authorized agent before such certificate is issued, it may
nevertheless be issued by the Corporation with the same effect as if such person
were such officer or authorized agent on the date of issue. Every certificate
surrendered to the Corporation for exchange or transfer shall be canceled and a
new certificate or certificates shall not be issued in exchange for any existing
certificate until such existing certificate shall have been so canceled, except
in cases provided for in Section 8.4 of this Article.
SECTION 8.2. Stock Record.
A stock record in one or more counterparts shall be kept of the name of the
person, firm or corporation owning the stock represented by each certificate for
stock of the Corporation issued, the number of shares represented by each such
certificate, the date of issue thereof and, in the case of cancellation, the
date of cancellation. The person in whose name shares of stock stand on the
stock record of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation.
SECTION 8.3. Transfer and Registration of Stock
(a) Transfer. The transfer of stock and certificates of stock which represent
the stock of the corporation shall be governed by Article 8 of Subtitle I of
Title 6 of the Delaware Code.
(b) Registration. Registration of transfers of shares of the Corporation shall
be made only on the books of the Corporation by the registered holder thereof,
or by such person's attorney thereunto authorized by power of attorney duly
executed and filed with an officer of the Corporation, and on the surrender of
the certificate or certificates for such shares properly endorsed or accompanied
by a stock power duly executed.
SECTION 8.4. New Certificates
(a) Lost, Stolen or Destroyed Certificates. Where a stock certificate has been
lost, apparently destroyed or wrongfully taken, the issuance of a new stock
certificate or the claims based on such certificate shall be governed by Article
8 of Subtitle I of Title 6 of the Delaware Code.
(b) Mutilated Certifica tes. Where the holder of any certificate for stock of
the Corporation notifies the Corporation of the mutilation of such certificate
within a reasonable time after such person has notice of it, the Corporation
will issue a new certificate for stock in exchange for such mutilated
certificate theretofore issued by it.
(c) Bond. The Board may, in its discretion, require the owner of the lost,
stolen, destroyed or mutilated certificate to give the Corporation a bond in
such sum, limited or unlimited, in such form and with such surety or sureties
sufficed to indemnify the Corporation against any claim that may be made against
it on account of the loss, theft, destruction or mutilation of any such
certificate or the issuance of any such new certificate.
SECTION 8.5. Regulations.
The Board may make such rules and regulations as it may deem expedient,
concerning the issue, transfer and registration of certificates for stock of the
Corporation.
SECTION 8.6. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board
may fix, in advance, a record date, which shall not be more than 60 nor less
than 10 days before the date of such meeting, nor more than 60 days prior to any
other action. If no record date is fixed: (1) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held; (2) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board is necessary, shall
be the day on which the first written consent is expressed; (3) the record date
for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board adopts the resolution relating thereto. A
determination of stockholders entitled to notice of or to vote at a meeting of
the stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
ARTICLE IX
Seal
SECTION 9.1. Seal.
The Corporate seal shall consist of a die bearing the full name of the
Corporation in the outer circle and the legend "Corporate Seal 1991 Delaware" in
the inner circle. This seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
ARTICLE X
Fiscal Year
SECTION 10.1 Fiscal Year.
The fiscal year of the Corporation shall end on the Saturday closest to December
31 in each year, or such other date as the Board determines.
ARTICLE XI
Amendments
SECTION 11.1. Amendments.
These By-laws may be amended, altered or repealed by the vote of a majority of
the Board, subject to the power of the holders of 66 2/3 of the outstanding
stock of the Corporation entitled to vote in respect thereof by their vote given
at an annual meeting or at any special meeting, to amend, alter, or repeal any
By-law made by the Board.
ARTICLE XII
Subject to Law
SECTION 12.1. Subject to Law.
All provisions of these By-Laws are subject to requirements of applicable law
and the Certificate of Incorporation of the Corporation.
ARTICLE XIII
Indemnification
SECTION 13.1. Power to Indemnify in Actions, Suits or Proceedings Other Than
Those by or in the Right of the Corporation.
Subject to Section 13.3 of this Article XIII, the Corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law, any person
who is or was a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, or with respect to any
criminal action or proceeding, that such person had reasonable cause to believe
that such person's conduct was unlawful.
SECTION 13.2. Power to Indemnify in Actions, Suits or Proceedings by or in the
Right of the Corporation.
Subject to Section 13.3 of this Article XIII, the Corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law, any person
who is or was a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
produce a judgment in its favor by reason of the fact that he is or was a
director or officer of the Corporation, or is or was a director or officer of
the Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 13.3. Authorization of Indemnification.
Any indemnification under this Article XIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 13.1 or Section 13.2 of this Article XIII, as the
case may be. Such determination shall be made (i) by the Board by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (ii) by a committee of such directors designated by a
majority vote of such directors even though less than a quorum, or (iii) if such
a quorum is not obtainable, or, even if it is obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iv) by the stockholders. To the extent, however, that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
SECTION 13.4. Good Faith Defined.
For purposes of any determination under Section 13.3 of this Article XIII, a
person shall be deemed to have acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe such person's conduct was unlawful, if such
person's action is based on the records or books of account of the Corporation
or another enterprise, or on information supplied to such person by the officers
of the Corporation or another enterprise in the course of their duties, or on
the advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
the expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 13.4 shall
mean any other corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise of which such person is or was serving at the
request of the Corporation as a director, officer, employee or agent. The
provisions of this Section 13.4 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
applicable standard of conduct set forth in Sections 13.1 or 13.2 of this
Article XIII, as the case may be.
SECTION 13.5 Indemnification by a Court.
Notwithstanding any contrary determination in the specific case under Section
13.3 of this Article XIII, and notwithstanding the absence of any determination
thereunder, any director, officer, employee or agent may apply to any court of
competent jurisdiction in the State of Delaware for indemnification to the
extent otherwise permissible under Sections 13.1 and 13.2 of this Article XIII.
The basis of such indemnification by a court shall be a determination by such
court that indemnification of the director, officer, employee or agent is proper
in the circumstances because such person has met the applicable standards of
conduct set forth in Sections 13.1 or 13.2 of this Article XIII, as the case may
be. Neither a contrary determination in the specific case under Section 13.3 of
this Article XIII nor the absence of any determination thereunder shall be a
defense to such application or create a presumption that the director, officer,
employee or agent seeking indemnification has not met any applicable standard of
conduct. Notice of any application for indemnification pursuant to this Section
13.5 shall be given to the Corporation promptly upon the filing of such
application. If successful, in whole or in part, the director, officer, employee
or agent seeking indemnification shall also be entitled to be paid the expenses
of prosecuting such application.
SECTION 13.6. Expenses Payable in Advance.
Expenses incurred by a director or officer in defending or investigating a
threatened or pending action, suit or proceeding may be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director, officer, employee or
agent to repay such amount if it shall ultimately be determined that such person
is not entitled to be indemnified by the Corporation as authorized in this
Article XIII.
SECTION 13.7. Nonexclusivity of Indemnification and Advancement of Expenses. The
indemnification and advancement of expenses provided by or granted pursuant to
this Article XIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in their official capacity and as
to action in another capacity while holding such office, it being the policy of
the Corporation that indemnification of the persons specified in Sections 13.1
and 13.2 of this Article XIII shall be made to the fullest extent permitted by
law. The provisions of this Article XIII shall not be deemed to preclude the
indemnification of any person who is not specified in Section 13.1 or 13.2 of
this Article XIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the Delaware General Corporation Law, or
otherwise.
SECTION 13.8. Insurance.
The Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power or
the obligation to indemnify such person against such liability under the
Delaware General Corporation Law or the provisions of this Article XIII.
SECTION 13.9. Certain Definitions.
For purposes of this Article XIII references to "the Corporation" shall include,
in addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article XIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article XIII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involved services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this Article
XIII.
SECTION 13.10. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article XIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 13.11. Limitation on Indemnification.
Notwithstanding anything contained in this Article XIII to the contrary, except
for proceedings to enforce rights to indemnification (which shall be governed by
Section 13.5 hereof), the Corporation shall not be obligated to indemnify any
director, officer, employee or agent in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the Board.
ARTICLE XIV
Interested Directors
SECTION 14.1. Interested Directors; Quorum.
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (1) the material
facts as to such person's relationship or interest and as to the contract or
transaction are disclosed or are known to the Board or the committee, and the
Board or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the material facts as to
such person's relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board or of a committee
which authorizes the contract or transaction.
EXHIBIT 10.4
RETIREMENT AGREEMENT AND GENERAL RELEASE
THIS RETIREMENT AGREEMENT AND GENERAL RELEASE (the "Agreement") is made and
entered into as of this 22nd day of April 2003 (the "Effective Date"), by and
between USFreightways Corporation, a Delaware corporation (the "Company"), and
Samuel K. Skinner ("Skinner").
RECITALS
A. Skinner has been employed by the Company as its Chairman, President and Chief
Executive Officer.
B. Skinner has decided to retire from the Company and from all positions he has
held with the Company and its subsidiaries and affiliates.
NOW, THEREFORE, in consideration of the above premises and the following mutual
covenants and conditions, the parties agree as follows:
1. Retirement. Except as otherwise set forth herein, effective May 26, 2003,
Skinner and the Company agree that Skinner will retire from the Company and will
retire from all positions he has held with the Company and its subsidiaries and
affiliates. Effective May 2, 2003, Skinner will retire as Chairman of, and as a
member of, the Company's Board of Directors (the "Board"). From April 12, 2003
through May 25, 2003, Skinner will perform only such tasks as may be assigned to
him from time to time in writing by the Board or its representative. Absent such
written direction, Skinner shall have no right, individually, to bind, or act on
behalf of, the Company. Skinner further agrees that he will not hereafter seek
reinstatement, recall or re-employment with the Company. All Company property in
Skinner's possession, including but not limited to his home computer and laptop
computer shall be returned to the Company on or before May 31, 2003.
2. Payments. As a retirement payment, Skinner shall receive the following
amounts and entitlements in connection with this Agreement:
(a) Salary Continuation. The Company shall pay Skinner the sum of $1,791,700,
payable in substantially equal installments over a period of twenty-four (24)
months in accordance with the Company's payroll policy from time to time in
effect, with the first such installment to be paid to Skinner on the first
payroll date on or after June 1, 2003 (or, if later, on the date this Agreement
becomes effective as described in Paragraph 10(c)). Ten Thousand dollars
($10,000) of the salary continuation payment hereunder shall be in consideration
of the release of any claim under the Age Discrimination in Employment Act of
1967, as amended, and as described in Paragraph 3 hereof, and Skinner agrees
that such consideration is in addition to anything of value to which he is
already entitled. The remainder of the amounts and entitlements to be paid under
this Paragraph 2 shall be in consideration of the release of all other claims
described below in Paragraph 3, the Covenant Not to Sue described in
Paragraph 4, and the Protective Agreement described in Paragraph 7.
(b) Vacation/Expenses. Skinner agrees that he has taken all accrued vacation to
which he is entitled. Skinner further agrees that he shall submit for
reimbursement any expenses incurred during the course of his employment within
seven (7) days of the Effective Date and such expenses shall be reimbursed in
accordance with the Company's normal expense reimbursement policies.
(c) Options. Skinner and the Company acknowledge and agree that they have
previously executed option agreements, dated December 10, 1999, June 5, 2000,
December 14, 2000, June 20, 2001 and February 14, 2002, pursuant to which
Skinner has outstanding, vested options to purchase up to 190,000 shares of the
Company's common stock (the "Option Agreements"), and further acknowledge and
agree that such Option Agreements shall continue in effect in accordance with
and subject to the terms of such agreements and the Company's Long-Term
Incentive Plan, including any amendments thereto; provided, however, and
notwithstanding anything herein to the contrary, Skinner shall be entitled to
exercise such vested options through and including November 26, 2003. Except for
the Option Agreements, and the vested options described in this Paragraph 2(c),
Skinner acknowledges and agrees that he is entitled to no additional equity
compensation and he has no additional equity awards outstanding.
(d) Retirement Benefits. Skinner acknowledges and agrees that he shall receive,
for fifteen (15) years, an annual benefit of $192,880, which shall be paid to
him in substantially equal monthly installments, with the first installment to
be made on or about June 1, 2005 and with the remaining installments to be paid
to him or, in the event of his death, to his beneficiary, on or about the first
day of each calendar month thereafter through the duration of the fifteen (15)
year term. Skinner further acknowledges and agrees that he also is entitled to
$643,829.35 under the Company's Non-Qualified Deferred Compensation Plan, which
shall be paid to him in a single sum on or before July 31, 2003. Except as set
forth herein, Skinner agrees that he is not eligible for any long-term or
special performance bonuses or any other retirement, supplemental retirement or
deferred compensation payments.
(e) Automobile. If Skinner so chooses, he may purchase, at its current book
value, the Company-owned automobile that he currently uses and may continue to
use through May 25, 2003, provided, however, that if such automobile is being
leased by the Company, Skinner may pay the cost of the lease himself or have the
Company pay it and deduct the lease amount from the salary continuation payments
being made hereunder. Skinner shall notify the Company of whichever alternative
he so chooses, if any, within ten (10) calendar days of the Effective Date.
(f) Withholding. The Company and Skinner acknowledge and agree that all payments
made pursuant to this Paragraph 2 are "wages" for purposes of FICA, FUTA and
income tax withholding and the Company shall therefore withhold from any
payments hereunder the amounts it determines to be necessary to satisfy all tax
withholding obligations.
(g) Other. Except as expressly provided in this Agreement, no other sums
(contingent or otherwise) shall be paid to Skinner in respect of his employment
by the Company, and any such sums (whether or not owed) are hereby expressly
waived by Skinner. The foregoing notwithstanding, Skinner shall be entitled to
receive his account balance, if any, under the Company's Employees' 401(k)
Retirement Plan in accordance with the terms of such Plan. Skinner shall
continue to be covered by, and subject to indemnification under, the Company's
directors' and officers' insurance for all matters relating to or arising out of
his service to the Company.
3. General Release. As a material inducement to the Company to enter into this
Agreement and in consideration of the payments to be made by the Company to
Skinner in Paragraph 2 above, Skinner, with full understanding of the contents
and legal effect of this Agreement and having the right and opportunity to
consult with his counsel, releases and discharges the Company, its shareholders,
officers, directors, supervisors, members, managers, employees, agents,
representatives, attorneys, parent companies, divisions, subsidiaries and
affiliates, and all related entities of any kind or nature, and its and their
predecessors, successors, heirs, executors, administrators, and assigns
(collectively, the "Released Parties") from any and all claims, actions, causes
of action, grievances, suits, charges, or complaints of any kind or nature
whatsoever, that he ever had or now has, whether fixed or contingent, liquidated
or unliquidated, known or unknown, suspected or unsuspected, and whether arising
in tort, contract, statute, or equity, before any federal, state, local, or
private court, agency, arbitrator, mediator, or other entity, regardless of the
relief or remedy. Without limiting the generality of the foregoing, it being the
intention of the parties to make this release as broad and as general as the law
permits, this release specifically includes any and all subject matter and
claims arising from any alleged violation by the Released Parties under the Age
Discrimination in Employment Act of 1967, as amended; the Fair Labor Standards
Act; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act
of 1866, as amended by the Civil Rights Act of 1991 (42 U.S.C. S 1981); the
Rehabilitation Act of 1973, as amended; the Employee Retirement Income Security
Act of 1974, as amended; the Illinois Wage Payment and Collection Act; the
Illinois Human Rights Act, the Cook County Human Rights Ordinance, the Chicago
Human Rights Ordinance, and other similar state or local laws; the Americans
with Disabilities Act; the Family and Medical Leave Act; the Workers Adjustment
and Retraining Notification Act; the Equal Pay Act; Executive Order 11246;
Executive Order 11141; and any other statutory claim, employment or other
contract or implied contract claim (including, but not limited to, any claims
arising under that certain Employment Agreement made and entered into as of
June 5, 2000, as previously executed between Skinner and the Company (the
"Employment Agreement"), that certain Supplemental Retirement Agreement, and the
USFreightways Corporation Supplemental Executive Retirement Plan dated
December 10, 1999), or common law claim for wrongful discharge, breach of an
implied covenant of good faith and fair dealing, defamation, or invasion of
privacy arising out of or involving his employment with the Company, the
termination of his employment with the Company, or involving any continuing
effects of his employment with the Company or termination of employment with the
Company. Skinner further acknowledges that he is aware that statutes exist that
render null and void releases and discharges of any claims, rights, demands,
liabilities, action and causes of action which are unknown to the releasing or
discharging party at the time of execution of the release and discharge. Skinner
hereby expressly waives, surrenders and agrees to forego any protection to which
he would otherwise be entitled by virtue of the existence of any such statute in
any jurisdiction including, but not limited to, the State of Illinois.
Notwithstanding any other provision of the Agreement to the contrary, the
release under this Paragraph 3 shall not apply to any claim arising from any
breach of this Agreement by the Company or any failure by the Company to comply
with any or all of the provisions of this Agreement or from any rights or claims
that may arise after the date this Agreement is executed by Skinner.
4. Covenant Not to Sue. Skinner, for himself, his heirs, executors,
administrators, successors and assigns agrees not to bring, file, charge, claim,
sue or cause, assist, or permit to be brought, filed, charged or claimed any
action, cause of action, or proceeding regarding or in any way related to any of
the claims described in Paragraph 3 hereof, and further agrees that this
Agreement is, will constitute and may be pleaded as, a bar to any such claim,
action, cause of action or proceeding. If any government agency or court assumes
jurisdiction of any charge, complaint, or cause of action covered by this
Agreement, Skinner will not seek and will not accept any personal equitable or
monetary relief in connection with such investigation, civil action, suit or
legal proceeding.
5. Indemnification.-Skinner will fully indemnify the Company and its
shareholders, members, managers, officers, directors, employees and independent
contractors against and will hold its shareholders, members, managers, officers,
directors, employees and independent contractors harmless from any and all
claims, costs, damages, demands, expenses (including without limitation
attorneys' fees), judgments, losses or other liabilities of any kind or nature
whatsoever arising from or directly or indirectly related to any or all of this
Agreement and the conduct of Skinner hereunder, including without limitation any
material breach or failure to comply with any or all of the provisions of this
Agreement.
6. No Disparaging, Untrue Or Misleading Statements. From and after March 28,
2003, Skinner represents that he has not made, and agrees that he will not make,
to any third party any disparaging, untrue, or misleading written or oral
statements about or relating to the Company or its products or services (or
about or relating to any officer, director, agent, employee, or other person
acting on the Company's behalf). Skinner acknowledges that his continuing
entitlement to payments and benefits under Paragraph 2 of the Agreement shall be
conditioned upon his continuing compliance with Paragraphs 6, 7, 10(a) and 13 of
the Agreement and any violation of Paragraphs 6, 7, 10(a) or 13 by Skinner shall
terminate the Company's obligation to continue to make payments and provide
benefits under Paragraph 2.
7. Protective Agreement. Skinner acknowledge and agrees that he will continue to
be bound by the terms of the protective covenants set forth in Paragraph 8 of
the Employment Agreement, which is attached hereto. For purposes of
clarification, the limitations set forth in Paragraph 8D of the Employment
Agreement shall apply through May 25, 2006.
8. Severability. If any provision of this Agreement shall be found by a court to
be invalid or unenforceable, in whole or in part, then such provision shall be
construed and/or modified or restricted to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement, as the case may require, and this Agreement shall be
construed and enforced to the maximum extent permitted by law, as if such
provision had been originally incorporated herein as so modified or restricted,
or as if such provision had not been originally incorporated herein, as the case
may be. The parties further agree to seek a lawful substitute for any provision
found to be unlawful; provided, that, if the parties are unable to agree upon a
lawful substitute, the parties desire and request that a court or other
authority called upon to decide the enforceability of this Agreement modify the
Agreement so that, once modified, the Agreement will be enforceable to the
maximum extent permitted by the law in existence at the time of the requested
enforcement.
9. Waiver. A waiver by either party to this Agreement of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver or estoppel of any subsequent breach by such other party. No waiver
shall be valid unless in writing and signed by Skinner, if a Company breach, or
by an authorized officer of the Company, if a Skinner breach.
10. Miscellaneous Provisions.
(a) Non-Disclosure. Skinner agrees that, except as required by law, he will keep
the terms and amounts set forth in this Agreement completely confidential and
will not disclose any information concerning this Agreement's terms and amounts
to any person other than his attorney, accountant, tax advisor, or immediate
family prior to the public disclosure of the terms hereof by the Company.
Skinner agrees and acknowledges that he will make no announcement about his
retirement or about the affairs of the Company, which is in any manner
inconsistent with the terms of this Agreement, and further agrees and
acknowledges that any press or other written, oral or electronic public
releases, or statements concerning his retirement or about the affairs of the
Company shall be issued by the Company only.
(b) Representation. Skinner represents and certifies that he has carefully read
and fully understands all of the provisions and effects of this Agreement, has
knowingly and voluntarily entered into this Agreement freely and without
coercion, and acknowledges that on April 2, 2003, the Company advised him to
consult with an attorney prior to executing this Agreement and further advised
him that he had twenty-one (21) days (until April 23, 2003) within which to
consider this Agreement. Skinner is voluntarily entering into this Agreement and
neither the Company nor its agents, representatives, or attorneys made any
representations concerning the terms or effects of this Agreement other than
those contained in the Agreement itself.
(c) Revocation. Skinner acknowledges that he has seven (7) days from the date
this Agreement is executed in which to revoke his acceptance of the ADEA portion
of this Agreement, and such portion of this Agreement will not be effective or
enforceable until such seven (7)-day period has expired. If Skinner revokes his
acceptance of the ADEA portion of the Agreement, the remainder of the Agreement
shall remain in full force and effect as to all of its terms except for the
release of claims under the ADEA, and the Company will have three (3) business
days to rescind the entire Agreement by so notifying Skinner.
11. Complete Agreement. This Agreement sets forth the entire agreement between
the parties, and fully supersedes any and all prior agreements or understandings
between the parties pertaining to actual or potential claims arising from
Skinner's employment with the Company or the termination of Skinner's employment
with the Company; provided, however, that all obligations of Skinner arising
under Paragraph 8 of the Employment Agreement, which is incorporated herein by
reference, shall not be released, shall be unaffected hereby, and shall remain
in full force and effect.
12. Reimbursement. If Skinner or his heirs, executors, administrators,
successors or assigns (a) breaches Paragraphs 6, 7, 10(a) or 13 of this
Agreement, or (b) attempts to challenge the enforceability of this Agreement, or
(c) files a charge of discrimination, a lawsuit, or a claim of any kind for any
matter released herein, all further payments and benefits owed under Paragraph 2
of the Agreement shall terminate and Skinner or his heirs, executors,
administrators, successors or assigns shall be obligated to tender back to the
Company all payments made to him or them under Paragraph 2 of this Agreement
(except for $10,000, which represents the consideration received by Skinner in
exchange for the release and waiver of rights or claims under the Age
Discrimination in Employment Act of 1967, as amended), and to indemnify and hold
harmless the Company from and against all liability, costs and expenses,
including attorneys' fees, arising out of said breach, challenge or action by
Skinner, his heirs, executors, administrators, successors or assigns.
13. Future Cooperation. In connection with any and all claims, disputes,
negotiations, governmental or internal investigations, lawsuits or
administrative proceedings (the "Legal Matters") involving the Company, or any
of its current or former officers, employees or Board members (collectively, the
"Disputing Parties" or, individually, a "Disputing Party"), Skinner agrees to
make himself available, upon reasonable notice from the Company and without the
necessity of subpoena, to provide information or documents, provide declarations
or statements regarding a Disputing Party, meet with attorneys or other
representatives of a Disputing Party, prepare for and give depositions or
testimony, and/or otherwise cooperate in the investigation, defense or
prosecution of any or all such Legal Matters, as may, in the sole judgment of
the Company, be reasonably requested. The Company agrees to make reasonable
efforts to accommodate Skinner's schedule in requesting his services under this
Paragraph 13. The Company further agrees to reimburse Skinner's reasonable out
of pocket expenses incurred in complying with the terms of this Paragraph 13.
14. Amendment. This Agreement may not be altered, amended, or modified except in
writing signed by both Skinner and the Company.
15. Joint Participation. The parties hereto participated jointly in the
negotiation and preparation of this Agreement, and each party has had the
opportunity to obtain the advice of legal counsel and to review and comment upon
the Agreement. Accordingly, it is agreed that no rule of construction shall
apply against any party or in favor of any party. This Agreement shall be
construed as if the parties jointly prepared this Agreement, and any uncertainty
or ambiguity shall not be interpreted against one party and in favor of the
other.
16. Notice. All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) three (3) business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, (ii) when receipt is electronically confirmed, if sent by fax
(provided that a hard copy shall be promptly sent by first class mail), or (iii)
one (1) business day following deposit with a recognized national overnight
courier service for next day delivery, charges prepaid, and, in each case,
addressed to the intended recipient, as set forth below:
To the Company: USFreightways Corporation
8550 West Bryn Mawr Avenue
Suite 700
Chicago, Illinois 60631
Attn: Richard C. Pagano
Senior Vice President, General Counsel and
Secretary
With a copy to: William N. Weaver, Jr., Esq.
Sachnoff & Weaver, Ltd.
30 South Wacker Drive
Suite 2900
Chicago, Illinois 60606
To the Employee: Samuel K. Skinner
11 Indian Hill Road
Winnetka, Illinois 60093
With a copy to: Herbert W. Krueger, Esq.
Mayer Brown Rowe & Maw
190 South LaSalle Street
Chicago, Illinois 60603
Either party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is delivered to the individual
for whom it is intended. Either party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set forth.
17. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without reference to its
conflict of law provisions. Furthermore, Skinner agrees and consents to submit
to personal jurisdiction in the state of Illinois in any state or federal court
of competent subject matter jurisdiction situated in Cook County, Illinois.
Skinner further agrees that the sole and exclusive venue for any suit arising
out of, or seeking to enforce, the terms of this Agreement shall be in a state
or federal court of competent subject matter jurisdiction situated in Cook
County, Illinois. In addition, Skinner waives any right to challenge in another
court any judgment entered by such Cook County court or to assert that any
action instituted by the Company in any such court is in the improper venue or
should be transferred to a more convenient forum.
18. Headings. The headings in this Agreement are inserted for convenience only
and are not to be considered a construction of the provisions hereof.
19. Execution of Agreement. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but which when
taken together, shall constitute one Agreement.
PLEASE READ THIS AGREEMENT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE
SIGNING IT. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS,
INCLUDING THOSE UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT, AND
OTHER FEDERAL, STATE AND LOCAL LAWS PROHIBITING DISCRIMINATION IN EMPLOYMENT.
IN WITNESS WHEREOF, Skinner and the Company have voluntarily signed this
Retirement Agreement and General Release consisting of seven (7) pages on the
date set forth above.
USFreightways Corporation
By: /s/ John W. Puth
____________
John W. Puth
Its: Chairman of the Compensation Committee /s/ Samuel K. Skinner
__________________
Samuel K. Skinner
ATTACHMENT
8. Protective Covenants. The Executive acknowledges and agrees that solely by
virtue of his employment by, and relationship with, the Employer, he has
acquired and will acquire "Confidential Information", as hereinafter defined, as
well as special knowledge of the Employer's relationships with its customers and
suppliers, and that, but for his association with the Employer, the Executive
would not or will not have had access to said Confidential Information or
knowledge of said relationships. The Executive further acknowledges and agrees
(i) that the Employer has long term, near-permanent relationships with its
customers and suppliers, and that those relationships were developed at great
expense and difficulty to the Employer over several years of close and
continuing involvement; and (ii) that the Employer's relationships with its
customers and suppliers are and will continue to be valuable, special and unique
assets of the Employer and that the identity of its customers and suppliers is
kept under tight security with the Employer and cannot be readily ascertained
from publicly available materials or from materials available to the Employer's
competitors. In return for the consideration described in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and as a condition precedent to the Employer entering into
this Agreement, and as an inducement to the Employer to do so, the Executive
hereby represents, warrants, and covenants as follows:
A. The Executive has executed and delivered this Agreement as his free and
voluntary act, after having determined that the provisions contained herein are
of a material benefit to him, and that the duties and obligations imposed on him
hereunder are fair and reasonable and will not prevent him from earning a
comparable livelihood following the termination of his employment with the
Employer.
B. The Executive has read and fully understands the terms and conditions set
forth herein, has had time to reflect on and consider the benefits and
consequences of entering into this Agreement, and has had the opportunity to
review the terms hereof with an attorney or other representative, if he so
chooses.
C. The execution and delivery of this Agreement by the Executive does not
conflict with, or result in a breach of or constitute a default under, any
agreement or contract, whether oral or written, to which the Executive is a
party or by which the Executive may be bound.
D. The Executive agrees that, during the time of his employment with the
Employer and for a period of one (1) year following the later of (i) the
termination of the Executive's employment hereunder pursuant to Paragraph 6B or
6E, or (ii) one year following the date of the last payment provided for under
Paragraph 7B, the Executive will not, except on behalf of the Employer, anywhere
in North America, or in any other place or venue where the Employer or any
affiliate, subsidiary, or division thereof now conducts or operates, or may
conduct or operate, its business prior to the date of the Executive's
termination of employment:
(1) directly or indirectly, contact, solicit or direct any person, firm,
corporation, association or other entity to contact or solicit, any of the
Employer's customers, prospective customers, or suppliers (as hereinafter
defined) for the purpose of providing any products and/or services that are the
same as or similar to the products and services provided by the Employer to its
customers during the term hereof. In addition, the Executive will not disclose
the identity of any such customers, prospective customers, or suppliers, or any
part thereof, to any person, firm, corporation, association, or other entity for
any reason or purpose whatsoever; or
(2) solicit or accept if offered to him, with or without solicitation, on his
own behalf or on behalf of any other person, the services of any person who is a
current employee of the Employer (or was an employee of the Employer during the
year preceding such solicitation), nor solicit any of the Employer's current
employees (or an individual who was an employee of the Employer during the year
preceding such solicitation) to terminate employment with the Employer, nor
agree to hire any current employee (or an individual who was an employee of the
Employer during the year preceding such hire) of the Employer into employment
with himself or any company, individual or other entity (provided, however, and
notwithstanding the foregoing, the Executive shall not be precluded from hiring
any current employee (or an individual who was an employee of the Employer
during the year preceding such hire) of the Employer into any position of public
service with a federal, state, or local governmental entity or agency so long as
the Executive does not solicit the services of such employee or former
employee); or
(3) directly or indirectly, whether as an investor (excluding investments
representing less than one percent (1%) of the common stock of a public
company), lender, owner, stockholder, officer, director, consultant, employee,
agent, salesperson or in any other capacity, whether part-time or full-time,
become associated with any business involved in a business similar to, or
comparable to, the business of the Employer or any affiliate of the Employer; or
(4) act as a consultant, advisor, officer, manager, agent, director, partner,
independent contractor, owner, or employee for or on behalf of any of the
Employer's customers, prospective customers, or suppliers (as hereinafter
defined), with respect to or in any way with regard to any aspect of the
Employer's business and/or any other business activities in which the Employer
engages during the term hereof.
E. The Executive acknowledges and agrees that the scope described above is
necessary and reasonable in order to protect the Employer in the conduct of its
business and that, if the Executive becomes employed by another employer, he
shall be required to disclose the existence of this Paragraph 8 to such employer
and the Executive hereby consents to and the Employer is hereby given permission
to disclose the existence of this Paragraph 8 to such employer.
F. For purposes of this Paragraph 8, "customer" shall be defined as any person,
firm, corporation, association, or entity that purchased any type of product
and/or service from the Employer or is or was doing business with the Employer
or the Executive within the twelve (12) month period immediately preceding
termination of the Executive's employment. For purposes of this Paragraph 8,
"prospective customer" shall be defined as any person, firm, corporation,
association, or entity contacted or solicited by the Employer or the Executive
(whether directly or indirectly) or who contacted the Employer or the Executive
(whether directly or indirectly) within the twelve (12) month period immediately
preceding termination of the Executive's employment for the purpose of having
such persons, firms, corporations, associations, or entities become a customer
of the Employer. For purposes of this Paragraph 8, "supplier" shall be defined
as any person, firm, corporation, association, or entity who is or was doing
business with the Employer or the Executive or who was contacted or solicited by
the Employer or the Executive (whether directly or indirectly) or who contacted
or solicited the Employer or the Executive (whether directly or indirectly)
within the twelve (12) month period immediately preceding termination of the
Executive's employment.
G. The Executive agrees that both during his employment and thereafter the
Executive will not, for any reason whatsoever, use for himself or disclose to
any person not employed by the Employer any "Confidential Information" of the
Employer acquired by the Executive during his relationship with the Employer,
both prior to and during the term of this Agreement. The Executive further
agrees to use Confidential Information solely for the purpose of performing
duties with, or for, the Employer and further agrees not to use Confidential
Information for his own private use or commercial purposes or in any way
detrimental to the Employer. The Executive agrees that "Confidential
Information" includes but is not limited to: (1) any financial, engineering,
business, planning, operations, services, potential services, products,
potential products, technical information and/or know-how, organization charts,
formulas, business plans, production, purchasing, marketing, pricing, sales,
profit, personnel, customer, broker, supplier, or other lists or information of
the Employer; (2) any papers, data, records, processes, methods, techniques,
systems, models, samples, devices, equipment, compilations, invoices, customer
lists, or documents of the Employer; (3) any confidential information or trade
secrets of any third party provided to the Employer in confidence or subject to
other use or disclosure restrictions or limitations; and (4) any other
information, written, oral, or electronic, whether existing now or at some time
in the future, whether pertaining to current or future developments, and whether
previously accessed during the Executive's tenure with the Employer or to be
accessed during his future employment with the Employer, which pertains to the
Employer's affairs or interests or with whom or how the Employer does business.
The Employer acknowledges and agrees that Confidential Information does not
include (a) information properly in the public domain, (b) information in the
Executive's possession prior to the date of his original association with the
Employer, or (c) information which is required to be disclosed by law or legal
process provided that the Executive notifies the Employer prior to or, if such
advance notification is not possible, promptly after such disclosure and
cooperates with the Employer in obtaining any protective order regarding or
other confidential treatment of such information.
H. In the event that the Executive intends to communicate information to any
individual(s), entity or entities (other than the Employer), to permit access by
any individual(s), entity or entities (other than the Employer), or to use
information for the Executive's own account or for the account of any
individual(s), entity or entities (other than the Employer) and such information
would be Confidential Information hereunder but for the exceptions set out at
(a) and (b) of Paragraph G of this Agreement, the Executive shall notify the
Employer of such intent in writing, including a description of such information,
no less than fifteen (15) days prior to such communication, access or use.
I. During and after the term of employment hereunder, the Executive will not
remove from the Employer's premises any documents, records, files, notebooks,
correspondence, reports, video or audio recordings, computer printouts, computer
programs, computer software, price lists, microfilm, drawings or other similar
documents containing Confidential Information, including copies thereof, whether
prepared by him or others, except as his duty shall require, and in such cases,
will promptly return such items to the Employer. Upon termination of his
employment with the Employer, all such items including summaries or copies
thereof, then in the Executive's possession, shall be returned to the Employer
immediately.
J. The Executive recognizes and agrees that all ideas, inventions, patents,
copyrights, copyright designs, trade secrets, trademarks, processes,
discoveries, enhancements, software, source code, catalogues, prints, business
applications, plans, writings, and other developments or improvements and all
other intellectual property and proprietary rights and any derivative work based
thereon (the "Inventions") conceived by the Executive, alone or with others,
during the term of his employment, whether or not during working hours, that are
within the scope of the Employer's business operations or that relate to any of
the Employer's work or projects (including any and all inventions based wholly
or in part upon ideas conceived during the Executive's employment with the
Employer), are the sole and exclusive property of the Employer. The Executive
further agrees that (1) he will promptly disclose all Inventions to the Employer
and hereby assigns to the Employer all present and future rights he has or may
have in those Inventions, including without limitation those relating to patent,
copyright, trademark or trade secrets; and (2) all of the Inventions eligible
under the copyright laws are "work made for hire." At the request of the
Employer, the Executive will do all things deemed by the Employer to be
reasonably necessary to perfect title to the Inventions in the Employer and to
assist in obtaining for the Employer such patents, copyrights or other
protection as may be provided under law and desired by the Employer, including
but not limited to executing and signing any and all relevant applications,
assignments or other instruments. Notwithstanding the foregoing, pursuant to the
Employee Patent Act, Illinois Public Act 83-493, the Employer hereby notifies
the Executive that the provisions of this Paragraph 8 shall not apply to any
Inventions for which no equipment, supplies, facility or trade secret
information of the Employer was used and which were developed entirely on the
Executive's own time, unless (1) the Invention relates (i) to the business of
the Employer, or (ii) to actual or demonstrably anticipated research or
development of the Employer, or (2) the Invention results from any work
performed by the Executive for the Employer.
K. The Executive acknowledges and agrees that all customer lists, supplier
lists, and customer and supplier information, including, without limitation,
addresses and telephone numbers, are and shall remain the exclusive property of
the Employer, regardless of whether such information was developed, purchased,
acquired, or otherwise obtained by the Employer or the Executive. The Executive
also agrees to furnish to the Employer on demand at any time during the term of
this Agreement, and upon the termination of this Agreement, any other records,
notes, computer printouts, computer programs, computer software, price lists,
microfilm, or any other documents related to the Employer's business, including
originals and copies thereof.
L. The Executive acknowledges that he may become aware of "material" nonpublic
information relating to customers whose stock is publicly traded. The Executive
acknowledges that he is prohibited by law as well as by Employer policy from
trading in the shares of such customers while in possession of such information
or directly or indirectly disclosing such information to any other persons so
that they may trade in these shares. For purposes of this Paragraph L,
"material" information may include any information, positive or negative, which
might be of significance to an investor in determining whether to purchase, sell
or hold the stock of publicly traded customers. Information may be significant
for this purpose even if it would not alone determine the investor's decision.
Examples include a potential business acquisition, internal financial
information that departs in any way from what the market would expect, the
acquisition or loss of a major contract, or an important financing transaction.
M. It is agreed that any breach or anticipated or threatened breach of any of
the Executive's covenants contained in this Paragraph 8 will result in
irreparable harm and continuing damages to the Employer and its business and
that the Employer's remedy at law for any such breach or anticipated or
threatened breach will be inadequate and, accordingly, in addition to any and
all other remedies that may be available to the Employer at law or in equity in
such event, any court of competent jurisdiction may issue a decree of specific
performance or issue a temporary and permanent injunction, without the necessity
of the Employer posting bond or furnishing other security and without proving
special damages or irreparable injury, enjoining and restricting the breach, or
threatened breach, of any such covenant, including, but not limited to, any
injunction restraining the Executive from disclosing, in whole or part, any
Confidential Information. The Executive acknowledges the truthfulness of all
factual statements in this Agreement and agrees that he is estopped from and
will not make any factual statement in any proceeding that is contrary to this
Agreement or any part thereof.
EXHIBIT 31.1
CERTIFICATION
I, Neil A. Springer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of USF Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record process, summarize
and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: August 6, 2003
/s/ Neil A. Springer
________________
Neil A. Springer
Lead Director
EXHIBIT 31.2
CERTIFICATION
I, Christopher L. Ellis, certify that:
1. I have reviewed this quarterly report on Form 10-Q of USF Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record process, summarize
and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: August 6, 2003
/s/ Christopher L. Ellis
____________________
Christopher L. Ellis
Senior Vice President, Finance, Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF LEAD DIRECTOR
PURSUANT TO 18 U.S.C. SECTION 1350(a)
In connection with the accompanying Quarterly Report on Form 10-Q of USF
Corporation for the quarter ended July 5, 2003, I, Neil A. Springer, Lead
Director of USF Corporation, hereby certify pursuant to 18 U.S.C. Section
1350(a), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
to the best of my knowledge and belief, that:
(1) such Quarterly Report on Form l0-Q for the quarter ended July 5, 2003, fully
complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) the information contained in such Quarterly Report on Form 10-Q for the
quarter ended July 5, 2003, fairly presents, in all material respects, the
financial condition and results of operations of USF Corporation.
A signed original of this written statement required by Section 906 has been
provided to USF Corporation and will be retained by USF Corporation and
furnished to the Securities and Exchange Commission or its staff upon request.
/s/Neil A. Springer
________________
Neil A. Springer
Lead Director
Date: August 6, 2003
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350(a)
In connection with the accompanying Quarterly Report on Form 10-Q of USF
Corporation for the quarter ended July 5, 2003, I, Christopher L. Ellis, Senior
Vice President, Finance and Chief Financial Officer of USF Corporation, hereby
certify pursuant to 18 U.S.C. Section 1350(a), as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief,
that:
(1) such Quarterly Report on Form l0-Q for the quarter ended July 5, 2003, fully
complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) the information contained in such Quarterly Report on Form 10-Q for the
quarter ended July 5, 2003, fairly presents, in all material respects, the
financial condition and results of operations of USF Corporation.
A signed original of this written statement required by Section 906 has been
provided to USF Corporation and will be retained by USF Corporation and
furnished to the Securities and Exchange Commission or its staff upon request.
/s/ Christopher L. Ellis
____________________
Christopher L. Ellis
Senior Vice President, Finance and Chief Financial Officer
Date: August 6, 2003