UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 30, 2008
YRC Worldwide Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 0-12255 | 48-0948788 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
10990 Roe Avenue, Overland Park, Kansas 66211
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (913) 696-6100
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02. | Departure of Directors of Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On December 30, 2008, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of YRC Worldwide Inc. (the “Company”) approved the amendment and restatement of the Executive Severance Agreement for the following executive officers:
| William D. Zollars | Chairman of the Board, President & Chief Executive Officer | |
| Daniel J. Churay | Executive Vice President, General Counsel & Secretary | |
| James G. Kissinger | Executive Vice President – Human Resources | |
| Michael J. Smid | President, YRC North American Transportation | |
| Timothy A. Wicks | Executive Vice President & Chief Financial Officer | |
| Paul F. Liljegren | Vice President, Controller and Chief Accounting Officer |
Under the Executive Severance Agreement, the executive is eligible (among other things) for an annual bonus payment if he is terminated from employment without “Cause” or he resigns for “good reason” within two years following a “Change of Control”, in each case as defined or described in the Executive Severance Agreement. The Executive Severance Agreement was amended and restated to provide for the payment to the executive (at the time the bonus is paid to all other similarly situated executives) of an annual bonus on the basis of actual achievement of predetermined performance criteria. Under the prior Executive Severance Agreement, the payment of the annual bonus was at the executive’s target level irrespective of actual performance. This change was intended to address recent Internal Revenue Service guidance regarding the deductibility of performance based compensation permitted outside of the $1 million compensation deduction cap that Section 162(m) of the Internal Revenue Code imposes. In addition, certain additional changes were made to the Executive Severance agreement to address recent regulations under Section 409A of the Internal Revenue Code and guidance with respect to Section 409A. The other terms of the Executive Severance Agreement have remained unchanged, and this Executive Severance Agreement will replace the prior version for each executive.
A copy of the form of amended and restated Executive Severance Agreement is filed herewith as Exhibit 10.1, and is incorporated herein by this reference.
In addition, the Compensation Committee approved an Amendment to the Employment Agreement of Mr. Zollars. Under Mr. Zollars’ Employment Agreement, Mr. Zollars is eligible (among other things) for an annual bonus payment if he is terminated from employment without “Cause” or he resigns for “Good Reason” or is terminated from employment in connection with a “Change of Control”, in each case as defined or described in the Employment Agreement. The Employment Agreement was amended to provide for the payment to Mr. Zollars (at the time the bonus is paid to all other similarly situated executives) of an annual bonus on the basis of actual achievement of predetermined performance criteria. Under the prior Employment Agreement, the payment of the annual bonus was at the Mr. Zollars’ target level irrespective of actual performance. This change was similarly intended to address recent Internal Revenue Service guidance regarding the deductibility of performance based compensation permitted outside of the $1 million compensation deduction cap that Section 162(m) of the Internal Revenue Code imposes.
A copy of the Amendment is filed herewith as Exhibit 10.2, and is incorporated herein by this reference.
| Item 8.01. | Other Events. |
Pursuant to a Current Report on Form 8-K that the Company filed with the Securities and Exchange Commission on December 10, 2008, the Company disclosed the Company’s implementation of wage and benefit reductions for its non-union employees during 2009. In that filing, the Company also stated that it expected to create an equity or profit sharing plan for those non-union employees, consistent with the Company’s plans to provide a similar benefit to its union represented employees. The Company’s union employees are considering whether to ratify wage reductions.
Consistent with these expectations, on December 30, 2008, the Compensation Committee adopted both a Non-Union Employee Option Plan (the “Stock Option Plan”) and a Non-Union Employee Stock Appreciation Right Plan (the “SAR Plan”). Copies of the Stock Option Plan and the SAR Plan are filed herewith as Exhibits 10.3 and 10.4, respectively, and are incorporated herein by this reference.
2
Pursuant to the Stock Option Plan, on January 2, 2009, the Company granted to its non-union employees options to purchase up to an aggregate of 5,269,577 shares of the Company’s common stock at an exercise price equal to $3.34 per share, which was the closing price per share of the Company’s common stock on the NASDAQ Stock Market on that date. The directors and executive officers (other than Mr. Liljegren) of the Company, as well as certain other senior executives of the Company, who participate in the Company’s Long Term Incentive Plan, will not participate in the Stock Option Plan. The options will vest at the rate of 25% per year upon each January 2nd, commencing on January 2, 2010, and will be exercisable for 10 years following the date of grant, subject to the terms of the Stock Option Plan. The options were granted subject to shareholder approval and will not be effective until the Stock Option Plan is approved by the shareholders of the Company. The Company expects to submit the Stock Option Plan to a vote by its shareholders at a meeting of the shareholders in 2009, most likely its annual meeting of shareholders, which is usually held in May of each year. If the shareholders of the Company do not approve the Stock Option Plan, the options granted under the Stock Option Plan will automatically terminate.
In addition to the Stock Option Plan, the Compensation Committee adopted the SAR Plan. Pursuant to the SAR Plan, on January 2, 2009, the Company granted to its non-union employees stock appreciation rights (“SARs”) with respect to up to 5,269,577 shares of the Company’s common stock at an exercise price equal to $3.34 per share, which was the closing price per share of the Company’s common stock on the NASDAQ Stock Market on that date. Each eligible employee received one SAR under the SAR Plan for each option that the employee received under the Stock Option Plan. Each SAR provides the employee the right to receive a cash payment from the Company equal to the closing price of the Company’s common stock on the date of exercise less the exercise price of the SAR. The SARs will vest at the rate of 25% per year upon each January 2nd, commencing on January 2, 2010, and will be exercisable for 10 years following the date of grant, subject to the terms of the SAR Plan. If the shareholders of the Company approve the Stock Option Plan, the SARs granted under the SAR Plan will automatically terminate.
Based on the January 2, 2009 closing price of the Company’s common stock of $3.34 per share, the aggregate fair value of the non-union equity grants is approximately $10.0 million and would be recognized ratably as compensation expense over the four-year vesting period. The aggregate fair value of the non-union equity grants would be re-measured at the end of each quarter using the closing share price of the Company’s common stock at that time. If the shareholders of the Company approve the Stock Option Plan, the aggregate fair value of the non-union equity grants would be fixed using the closing share price of the Company’s common stock on the date of shareholder approval.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| 10.1 | Form of Executive Severance Agreement between YRC Worldwide Inc. and each of the following executive officers: William D. Zollars, Daniel J. Churay, James G. Kissinger, Michael J. Smid, Timothy A. Wicks and Paul F. Liljegren. | |
| 10.2 | Amendment to Employment Agreement, dated as of January 25, 2006, by and between YRC Worldwide Inc. and William D. Zollars. | |
| 10.3 | YRC Worldwide Inc. Non-Union Employee Option Plan. | |
| 10.4 | YRC Worldwide Inc. Non-Union Employee Stock Appreciation Right Plan. | |
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| YRC WORLDWIDE INC. | ||||
|
Date: January 6, 2009 |
By: |
/s/ Daniel J. Churay |
||
| Daniel J. Churay | ||||
| Executive Vice President, General Counsel and Secretary | ||||
4
EXHIBIT INDEX
|
Exhibit Number |
Description |
|
| 10.1 | Form of Executive Severance Agreement between YRC Worldwide Inc. and each of the following executive officers: William D. Zollars, Daniel J. Churay, James G. Kissinger, Michael J. Smid, Timothy A. Wicks and Paul F. Liljegren. | |
| 10.2 | Amendment to Employment Agreement, dated as of January 25, 2006, by and between YRC Worldwide Inc. and William D. Zollars. | |
| 10.3 | YRC Worldwide Inc. Non-Union Employee Option Plan. | |
| 10.4 | YRC Worldwide Inc. Non-Union Employee Stock Appreciation Right Plan. | |
5
Exhibit 10.1
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this “ Agreement ”) between YRC Worldwide Inc., a Delaware corporation (“ YRC ”) and [name of executive] (the “ Executive ”),
WITNESSETH :
WHEREAS , the duly authorized Compensation Committee (the “ Committee ”) of the Board of Directors (the “ Board ”) of YRC or the Board, has approved YRC entering into revised severance agreements with key executives of YRC and its Subsidiaries (collectively, the “ Corporation ”);
WHEREAS , the duly authorized Committee or the Board has selected the Executive as a key executive of the Corporation; and
WHEREAS , should YRC receive any proposal from a third person concerning a possible Business Combination (defined below) with, or acquisition of equity securities of, YRC, the Board believes it important that the Corporation and the Board be able to rely upon the Executive to continue in his position, and that YRC have the benefit of the Executive performing his duties without his being distracted by the personal uncertainties and risks created by such a proposal;
NOW, THEREFORE , the parties agree as follows:
1. Definitions . As used in this Agreement, the following capitalized terms shall have the meanings given the terms in this Section 1.
| (a) | “ Applicable Period ” means two years from the date of the Executive’s Termination. |
| (b) | “ Business Combination ” means any transaction that is referred to as such in the Certificate of Incorporation of YRC, as amended. |
| (c) | “ Cause ” means |
| (i) | a conviction of a felony involving moral turpitude by a court of competent jurisdiction that is no longer subject to direct appeal, |
| (ii) | conduct that is materially and demonstrably injurious to YRC, or |
| (iii) | the Executive’s willful engagement in one or more acts of dishonesty resulting in material personal gain to the Executive at the expense of YRC. |
| (d) | “ Change of Control ,” for the purposes of this Agreement, shall be deemed to have taken place if: |
| (i) | a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), purchases or otherwise acquires shares of YRC after the date of this Agreement that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of YRC; |
| (ii) | a third person, including a “group” as defined in Section 13(d)(3) of the Exchange Act purchases or otherwise acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) shares of YRC after the date of this Agreement and as a result thereof becomes the beneficial owner of shares of YRC having 35% or more of the total number of votes that may be cast for election of directors of YRC; or |
| (iii) | as the result of, or in connection with any cash tender or exchange offer, merger or other Business Combination, or contested election, or any combination of the foregoing transactions, the Continuing Directors shall cease to constitute a majority of the Board of Directors of YRC or any successor to YRC during any 12-month period. |
| (e) | “ Continuing Director ” means a director of YRC who meets the definition of Continuing Director contained in the Certificate of Incorporation of YRC, as amended. |
| (f) | “ Normal Retirement Age ” means the last day of the calendar month in which the Executive’s 65th birthday occurs. |
| (g) | “ Permanent Disability ” means, as determined in the reasonable discretion of the Board or the duly authorized Committee, Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Executive’s employer. |
| (h) | “ Subsidiary ” means any domestic or foreign entity, of which YRC or its Subsidiaries directly or indirectly owns a majority of the entity’s shares or other equity interests normally entitled to vote in electing directors or selecting management. |
| (i) | “ Target Separation Amount” means an amount equal to (A) Executive’s target annual bonus percentage in effect for the year in which the Termination occurs (or if no such percentage has been established, %, or such percentage as the Compensation Committee determines in its sole discretion), times (B) the Executive’s then-current base salary. |
| (j) |
Construction & Interpretation. As used in this Agreement, unless the context expressly requires the contrary, references to Sections shall mean the sections and subsections of this Agreement; references to “including” shall mean “including (without |
-2-
|
limitation)”; references to a “person” shall mean both legal entities and natural persons; references to the singular shall include the plural and vice versa ; and references to the masculine shall include the feminine and neutral, and vice versa . |
2. Services During Certain Events . If a third person begins a tender or exchange offer for the shares of the Corporation, circulates a proxy to shareholders of the Corporation, or takes other steps seeking to effect a Change of Control, the Executive agrees that the Executive will not voluntarily leave the employ of the Corporation without the consent of the Corporation and will render the services contemplated in the recitals to this Agreement, until the third person has abandoned or terminated the third person’s efforts to effect a Change of Control or until 90 days after a Change of Control has occurred. If the Executive fails to comply with the provisions of this Section 2, the Corporation will suffer damages that are difficult, if not impossible, to ascertain. Accordingly, should the Executive fail to comply with the provisions of this Section 2, the Corporation shall retain the amounts that would otherwise be payable to the Executive (other than accrued salary under Section 4(a) and normal health, welfare and retirement benefits until the date of the Executive’s termination) under this Agreement as fixed, agreed and liquidated damages but shall have no other recourse against the Executive.
3. Termination After or in Connection With a Change of Control . For purposes of this Agreement, the term “ Termination ” shall include the following in this Section 3:
| (a) | the Corporation’s termination of the Executive’s employment with the Corporation within two years after a Change of Control for any reason other than death, Permanent Disability, retirement at or after his Normal Retirement Age or Cause; |
| (b) | the Corporation’s termination of the employment of the Executive with the Corporation, for any reason other than death, Permanent Disability, retirement at or after his Normal Retirement Age or Cause, if the termination occurs at any time between: |
| (i) | the date the Corporation enters into a definitive agreement or files a proxy statement, or the date a third person begins a tender or exchange offer, in each case, in connection with a transaction that would constitute a Change of Control, or the date the Corporation takes other steps seeking to effect a Change of Control, and |
| (ii) | the date the Change of Control transaction is either consummated, abandoned or terminated (for this purpose, the Board shall have the sole and absolute discretion to determine that a proposed transaction has been abandoned), or |
| (c) | the resignation of the Executive after the occurrence of any of the following events within two years after a Change of Control: |
| (i) | an adverse change of the Executive’s title or a reduction or adverse change in the nature or scope of the Executive’s authority or duties from those the Executive exercised and performed immediately prior to the Change of Control; |
-3-
| (ii) | a transfer of the Executive to a location that is more than 35 miles away from the location where the Executive was employed immediately prior to the Change of Control; |
| (iii) | a substantial increase occurs in the amount of time the Executive is required to spend traveling (for this purpose, a “substantial increase” will be deemed to occur if the Executive is required to travel in an amount greater than 30% more in any calendar year, measured in number of days, as compared to the average number of days the Executive was required to travel during the three preceding calendar years); |
| (iv) | any reduction in the rate of the Executive’s annual salary below his rate of annual salary immediately prior to the Change of Control; or |
| (v) | any reduction in the level of the Executive’s fringe benefits or bonus below a level consistent with the Corporation’s practice prior to the Change of Control, other than changes applicable to all similarly situated executives of the Corporation. |
4. Termination Payments . In the event of a Termination, YRC shall provide to the Executive the following benefits:
| (a) | YRC shall pay to the Executive, in accordance with its normal payroll policies, the compensation and benefits that the Executive accrued through the date of Termination. In addition, YRC shall pay to the Executive the Executive’s annual bonus for the year in which the date of Termination occurs, if any, earned by the achievement of performance goals set under the Corporation’s annual incentive plan and paid at the same time the Corporation pays bonuses to similarly situated employees under such plan. |
| (b) | YRC shall pay to the Executive, on the “ Termination Payment Commencement Date ” (defined below), as additional compensation for services rendered to the Corporation, a lump sum cash amount (subject to the minimum applicable federal, state or local lump sum withholding requirements, if any, unless the Executive requests that a greater amount be withheld) equal to two times the sum of: |
| (i) | the Executive’s current base salary, and |
| (ii) | the Executive’s Target Separation Amount. |
With respect to a payment to the Executive pursuant to this Agreement, the “ Termination Payment Commencement Date ” shall mean (x) if the Board (or its delegate) determines in its sole discretion that as of the date of the Executive’s Termination the Executive is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “ Code ”), and Department of Treasury regulations and other interpretive guidance issued thereunder) as of the date of the Executive’s Termination and that Section 409A of the Code applies with respect to such payment, the first business day following the six-month anniversary of the date of the Executive’s Termination; or (y) if the Board (or its
-4-
delegate) determines in its sole discretion that the Executive is not such a “specified employee” as of the date of the Executive’s Termination (or that Section 409A of the Code does not apply with respect to such payment), the date of the Executive’s Termination. The period commencing on the Executive’s date of Termination and ending on the six-month anniversary of such date is referred to herein as the “ Six-Month Delay Period ”)
| (c) | During the “ Applicable Period ” , the Corporation shall arrange to provide the Executive with substantially similar benefits to the benefits the Executive would have received if the Executive had remained an employee of the Corporation, including the applicable medical, dental, life insurance, short-term disability, long-term disability and perquisite plans and programs covering key executives of the Corporation; provided that the Executive shall not be entitled to accrue any benefits after Termination under any 401(k) plan or defined benefit or contribution pension plan of the Corporation. Any benefits accrued under any such 401(k) or defined benefit or contribution pension plan shall be governed by those plans. |
If the Board (or its delegate) determines in its sole discretion that Section 409A of the Code applies with respect to any amount payable to or on behalf of the Executive under a perquisite plan or other similar program of the Corporation, then such amount payable to or on behalf of the Executive under such perquisite plan or other similar program of the Corporation for each calendar month during the Applicable Period, including any amounts payable to or on behalf of the Executive following the initial 18-month coverage period of any medical, dental or other benefit exempt under Section 409A of the Code, shall be paid in accordance with the then existing payroll practices of the Corporation; provided however , that if the Board (or its delegate) determines in its sole discretion that the Executive is a “specified employee” as of the date of the Executive’s Termination, any such amount(s) that are subject to Section 409A of the Code and are payable during the Six-Month Delay Period shall be paid in a lump sum on the Termination Payment Commencement Date, or, if earlier the Executive’s death, and for each calendar month during the Applicable Period thereafter shall be paid in accordance with the then existing payroll practices of the Corporation.
| (d) | The Executive shall be entitled to the Gross-Up Payment, if any, described in Section 6. |
5. Change of Control—Equity Grants and Awards . In the event of a Change of Control, all options to acquire shares of YRC, all shares of restricted YRC stock, all performance or share units and all other equity or phantom equity incentives that the Corporation granted the Executive under any agreement between Executive and Corporation or any plan of the Corporation, including YRC’s 1999 Stock Option Plan, YRC’s 2002 Stock Option and Share Award Plan, YRC’s Executive Performance Plan, as amended, YRC’s 2004 Long-Term Incentive and Equity Award Plan, and the Long-Term Incentive Plan, as amended from time to time, shall become immediately vested, exercisable and non-forfeitable and all conditions of any grant or award (including any required holding periods) shall be deemed to have been satisfied. If the Executive is a participant in YRC’s Long-Term Incentive Plan or any similar or successor plan,
-5-
| (a) | for any incomplete performance period under the plan, the Corporation shall pay the Executive any cash or equity component upon the Change of Control that the plan provides only if the plan so provides, assuming that the Corporation would meet estimated actual performance for each period as the Committee (as it exists prior to the Change of Control) determines (but in no event less than Target performance); |
| (b) | for any completed performance period under the plan, to the extent the Executive has not received the grant for the period assuming that the Corporation would meet estimated actual performance for each period as the Committee (as it exists prior to the Change of Control) determines (but in no event less than Target performance); provided that if the Executive had previously received a partial grant and that grant exceeded a grant for Target performance, the Executive shall not be required to return the prior grant; |
and, in each case, any equity component shall be treated in accordance with the first sentence of this Section 5.
[For William D. Zollars only: In addition to the foregoing, in the event of a Change of Control, YRC shall pay the Executive the Supplemental Retirement Benefit provided for under Section 4(h) of the Employment Agreement by and between YRC and Executive dated January 25, 2006 in one lump sum payment within 30 days following such Change of Control; provided that such benefit shall be determined by taking into account the reduction for early payment as described in Section 4(h)(i) and applying the Moody’s Corporate Bond Rate in existence at the time of the lump sum payment as the “Discount Rate.”]
6. Additional Payments by YRC .
| (a) | Gross-Up Payment. If it shall be determined that the Corporation’s payment or provision of any payment or benefit of any type to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (determined without regard to any additional payments required under this Section 6) (the “ Total Payments ”) would be subject to the excise tax imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed) or any interest or penalties with respect to the excise tax (the excise tax, together with any interest and penalties, are collectively referred to as the “ Excise Tax ”), then YRC shall pay the Executive an additional payment (a “ Gross-Up Payment ”) in an amount such that after the Executive’s payment of all taxes (including all federal, state or local taxes and any interest or penalties imposed with respect to those taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. YRC shall pay the Gross-Up Payment promptly following the Accounting Firm’s (defined below) determination described in Section 6(b) or in accordance with Sections 6(c) or 6(e). |
| (b) |
Accounting Firm Determination. An independent accounting firm that YRC retains (the “ Accounting Firm ”) shall make all determinations that this Section 6 requires, including whether a Gross-Up Payment is required and the amount of the Gross-Up Payment. YRC shall cause the Accounting Firm to provide detailed supporting calculations both to YRC and the Executive within 15 business days of the date of |
-6-
|
Termination, if applicable, or such earlier time that YRC requests. If the Accounting Firm determines that the Executive is not required to pay an Excise Tax, the Accounting Firm shall furnish the Executive with an opinion that the Executive has substantial authority not to report any Excise Tax on his federal income tax return. The Accounting Firm’s determination shall be binding upon YRC and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Accounting Firm’s initial determination, it is possible that Gross-Up Payments that YRC will not have been made should have been made (“ Underpayment ”) consistent with the calculations that this Agreement requires. If YRC exhausts its remedies pursuant to Section 6(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and YRC shall pay the Underpayment promptly to or for the benefit of the Executive. YRC shall promptly pay all expenses of the Accounting Firm. |
| (c) | Notification Required. The Executive shall notify YRC in writing of any Internal Revenue Service claim that, if successful, would require YRC’s payment of the Gross-Up Payment. The Executive shall give YRC the notification as soon as practicable but no later than ten business days after the Executive knows of the claim and shall apprise YRC of the nature of such claim and the date on which such claim is requested to be paid; provided that the Executive’s failure to give the notice within the 10-day period shall only prejudice the Executive’s rights pursuant to Section 6 to the extent that YRC’s ability to reduce the amount of the Gross-Up Payment have been prejudiced. The Executive shall not pay the claim prior to the expiration of the 30-day period following the date on which the Executive gives notice to YRC (or such shorter period ending on the date that any payment of taxes with respect to the claim is due). If YRC notifies the Executive in writing prior to the expiration of the period that it desires to contest the claim, the Executive shall: |
| (i) | give YRC any information that YRC reasonably requests relating to the claim, |
| (ii) | take such action in connection with contesting the claim as YRC shall reasonably request in writing from time to time, including, accepting legal representation with respect to the claim by an attorney that YRC reasonably selects, |
| (iii) | cooperate with YRC in good faith to effectively contest the claim, |
| (iv) | permit YRC to participate in any proceedings relating to the claim; provided , that YRC shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with the contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties, imposed as a result of the representation and payment of costs and expenses. |
Without limitation on the foregoing provisions of this Section 6(c), YRC shall control all proceedings taken in connection with the contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of a claim and may, at its sole option, either direct the
-7-
Executive to pay the tax claimed and sue for a refund, or contest the claim in any permissible manner. The Executive agrees to prosecute the contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as YRC shall determine; provided , that if YRC directs the Executive to pay the claim and sue for a refund, YRC shall advance the amount of the payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties, imposed with respect to the advance or with respect to any imputed income with respect to the advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which the contested amount is claimed to be due is limited solely to the contested amount. YRC’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable under this Agreement and the Executive shall be entitled to settle or contest, as the case may be, any other issue that the Internal Revenue Service or any other taxing authority raises.
| (d) | Repayment. If, after the Executive’s receipt of an amount that YRC paid or advanced pursuant to this Section 6, the Executive becomes entitled to receive a refund with respect to the claim, the Executive shall (subject to YRC’s complying with the requirements of this Section 6), promptly pay to YRC the amount of the refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the Executive’s receipt of an amount that YRC paid or advanced pursuant to this Section 6, a determination is made that the Executive shall not be entitled to any refund with respect to the claim and YRC does not notify the Executive in writing of its intent to contest the denial of refund prior to the expiration of 30 days after the determination, then the payment or advance shall be forgiven and shall not be required to be repaid and the amount of the payment or advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. |
| (e) | Section 409A . Any Gross-Up Payment required pursuant to this Section 6 that is subject to Section 409A shall be made promptly by the Company, but no later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes to the taxing authority. The purpose of any specified period of time for any Gross-Up Payment under this Section 6(e) is intended only to satisfy the written document requirements under Section 409A of the Code and is not intended to affect the requirement that any Gross-Up Payment required pursuant to this Section 6 shall be made promptly. |
7. General .
| (a) | Confidentiality. The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all data, reports and other information relating to the business of the Corporation that comes into the possession of the Executive during the Executive’s employment with the Corporation (collectively, “ Confidential Information ”). During the Executive’s employment with the Corporation and after termination of the Executive’s employment, the Executive agrees: |
| (i) | to take all such precautions as may be reasonably necessary to prevent the disclosure to any third person of any of the Confidential Information; |
-8-
| (ii) | not to use for the Executive’s own benefit any of the Confidential Information; and |
| (iii) | not to aid any other person in the use of the Confidential Information in competition with the Corporation; provided that nothing in this Agreement shall prohibit the Executive from disclosing or using any Confidential Information: |
| (A) | in the performance of the Executive’s duties as an employee of the Corporation, |
| (B) | as required by applicable law, |
| (C) | in connection with the enforcement of the Executive’s rights under this Agreement or any other agreement with the Corporation, |
| (D) | in connection with the defense or settlement of any claim, suit or action brought or threatened against the Executive by or in the right of the Corporation, or |
| (E) | with the prior written consent of the Board. |
Notwithstanding any provision contained herein to the contrary, the term “ Confidential Information ” shall not be deemed to include any general knowledge, skills or experience acquired by the Executive or any knowledge or information known or available to the public in general. The Executive further agrees that, within 90 days after termination of the Executive’s employment for any reason, the Executive will surrender to the Corporation all Confidential Information, and any copies of Confidential Information, in his possession and agrees that all the materials and copies, are at all times the property of the Corporation. Notwithstanding the foregoing, the Executive shall be permitted to retain copies of, or have access to, all Confidential Information relating to any disagreement, dispute or litigation (pending or threatened) involving the Executive.
| (b) | Remedies. In the event of a breach or threatened breach by the Executive of the provisions of Section 7(a), the Corporation shall be entitled to an injunction restraining the Executive from violating Section 7(a) without the necessity of posting a bond. Nothing herein shall be construed as prohibiting the Corporation from pursuing any other remedies available to it at law or in equity. The parties agree that the provisions of this Section 7(a) shall survive the termination of the Executive’s employment with the Corporation, as the continuation of this covenant is necessary for the protection of the Corporation. |
| (c) |
Payment Obligations Absolute. YRC’s obligation to pay the Executive the compensation and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstance, including any setoff, counterclaim, recoupment, defense or other right that the Corporation may have against |
-9-
|
the Executive or anyone else. Notwithstanding the foregoing, the Company shall have the right to withhold all applicable federal, state or local taxes on any amount paid or payable under this Agreement. All amounts that YRC owes under this Agreement shall be paid without notice or demand. Each and every payment that YRC makes under this Agreement shall be final, and YRC will not seek to recover all or any part of the payment from the Executive or from whosoever may be entitled to the payment, for any reason whatsoever. The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event affect any reduction of YRC’s obligations to make the payments that this Agreement requires. |
| (d) | Obligations to Pay Costs. If the Corporation terminates the Executive, and if the Executive successfully asserts a claim, action or proceeding against the Corporation for benefits under this Agreement or any other agreement between the Executive and the Corporation, the Corporation shall pay or reimburse the Executive for all costs and expenses, including court costs and attorneys’ fees, that the Executive incurs in connection with the claim, action or proceeding. For purposes of this Section 7(d), the Executive will be deemed to have successfully asserted a claim, action or proceeding against the Corporation if, as a result of the claim, action or proceeding, the Corporation pays to the Executive, under this Agreement or any other agreement between the Executive and the Corporation, any amounts in addition to the amounts the Executive would be entitled to receive upon a termination for Cause. Such payments under this Section 7(d) shall be made promptly but no later than thirty (30) business days after the delivery of the Executive’s written request for the payment accompanied by such evidence of fees and expenses incurred as the Company may reasonably require. In any event the Company shall pay the Executive such fees and expenses by the last day of the Executive’s taxable year following the taxable year in which the Executive incurred such fees and expenses. The purpose of any specified period of time for payment of fees and expenses pursuant to this Section 7(d) is intended only to satisfy the written document requirements under Section 409A of the Code and is not intended to affect the requirement that fees and expenses payable pursuant to this Section 7(d) shall be made promptly. |
| (e) | Successors. This Agreement shall be binding upon and insure to the benefit of the Executive and his estate and the Corporation and any successor of the Corporation, but the Executive may neither assign nor pledge this Agreement or any rights arising under this Agreement. |
| (f) | Severability. Any provision in this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to the jurisdiction, be ineffective only to the extent of the prohibition or unenforceability without invalidating or affecting the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable the provision in any other jurisdiction. |
| (g) | Controlling Law. The laws of the State of Delaware, without reference to its law on conflicts of law, shall govern this Agreement shall in all respects. |
-10-
| (h) | Termination. Except in the event of a Termination, this Agreement shall automatically terminate upon the Executive’s separation of employment with the Corporation. A majority of the Continuing Directors may terminate this Agreement upon notifying the Executive; except that a termination shall not be made, and if made shall have no effect, |
| (i) | within two years after the Change of Control in question, or |
| (ii) | during any period of time when YRC has knowledge that any third person has taken steps reasonably calculated to effect a Change of Control until, in the opinion of a majority of the Continuing Directors the third person has abandoned or terminated his efforts to effect a Change of Control. Any decision by a majority of the Continuing Directors that the third person has abandoned or terminated his efforts to effect a Change of Control shall be conclusive and binding on the Executive. |
| (i) | This Agreement amends, restates, replaces and supercedes those Executive Severance Agreements dated as of between the Corporation and the Executive in their entirety. |
| (j) | Deferred Compensation. This Agreement is intended to meet the requirements of Section 409A of the Code and shall be administered, construed and interpreted in accordance with such intent. To the extent that an award or payment, or the settlement or deferral thereof, is subject to Section 409A of the Code, except as the Committee otherwise determines in writing, the payment or deferral will be made in a manner that will not subject the compensation to any additional taxation applicable under Section 409A of the Code. Any payments made under the Agreement due to the Executive’s Termination as defined in Section 3 hereof are intended to be payments made upon a “separation from service” as described in Section 409A of the Code. |
IN WITNESS WHEREOF , the parties have executed this Agreement as of the day of , 20 .
| EXECUTIVE: | YRC WORLDWIDE INC. | |||
|
|
By: |
|
||
| [Executive name] | [name] | |||
| [title] | ||||
-11-
Exhibit 10.2
AMENDMENT TO
EMPLOYMENT AGREEMENT BY AND BETWEEN
YRC WORLDWIDE INC. AND WILLIAM D. ZOLLARS
THIS AGREEMENT by and between William D. Zollars (“ Executive ”) and YRC Worldwide Inc., a Delaware corporation (the “ Company ”).
WHEREAS , Executive previously entered into an Employment Agreement dated as of January 25, 2006 with the Company (the “ Employment Agreement ”); and
WHEREAS , the Executive and the Company desire to amend the Employment Agreement;
NOW, THEREFORE , the Employment Agreement is hereby amended, effective December 30, 2008, as follows:
| 1. | Section 8(a)(iii) of the Employment Agreement is hereby amended and restated as follows: |
| (iii) | In the event of a termination of Executive’s employment pursuant to Sections 6(a) or (b), the Executive’s Annual Bonus for the year in which the Date of Termination occurs, if any, earned by the achievement of performance goals set under the Company’s Annual Incentive Plan and paid at the same time the Company pays bonuses to similarly situated employees under such plan; and |
| 2. | Section 8(e) of the Employment Agreement is hereby amended and restated as follows: |
(e) By the Company Without Cause or by Executive for Good Reason . If during the Term the Company terminates Executive’s employment other than for Cause, death or Disability or if Executive terminates his employment for Good Reason, then:
| (i) | The Company shall pay Executive the Accrued Obligation within 30 days following the six month anniversary of the Date of Termination; |
| (ii) | The Executive’s Annual Bonus for the year in which the Date of Termination occurs, if any, earned by the achievement of performance goals set under the Company’s Annual Incentive Plan and paid at the same time the Company pays bonuses to similarly situated employees under such plan; |
| (iii) |
The Company shall pay to Executive, within 30 days following the six month anniversary of the Date of Termination, a lump sum cash amount (subject to the minimum applicable federal, state or local lump sum withholding requirements, if any) equal to two times (except in the case of a termination of Executive’s employment after |
- 1 -
|
or in connection with a Change of Control (as defined in the Severance Agreement), in which case the lump sum cash amount shall equal three times) the sum of: |
| 1. | Executive’s Base Salary (as in effect as of the Date of Termination); and |
| 2. | an amount equal to Executive’s target annual bonus percentage then in effect multiplied by the Executive’s Base Salary. |
| (iv) | All equity-based awards then held by Executive shall immediately become fully vested, other than those awards generated under the LTIP; provided that, for purposes of the LTIP (and any awards granted under that plan) Executive’s age plus years of service shall be deemed to equal 75, and the termination shall be treated as if Executive retired under the LTIP and any share unit agreements that the Company granted under the LTIP. Executive shall have the right to exercise any options until the expiration date of the option; and |
| (v) | For 24 months following the Date of Termination, Executive (and, if applicable under the applicable benefit plan, his spouse and family) shall remain covered by the employee benefit plans (such as medical, dental, pharmaceutical and vision plans) that covered him (or them) immediately prior to the Date of Termination as if he had remained in employment during the 24-month period; provided, that there shall be excluded for this purpose any plan that provides for payment for time not worked (such as vacation, pension, 401(k), perquisite and long-and short-term disability plans). If Executive’s participation in any plan is barred, the Company shall arrange to provide Executive with substantially similar benefits. Any medical, dental, pharmaceutical or vision coverage for such 24-month period shall become secondary for Executive (or his spouse) upon the earlier of the date on which Executive (or his spouse) begins to be covered by a comparable coverage that a new employer provides or the earliest date on which Executive (or his spouse) is enrolled in Medicare or a comparable government program. |
The Company agrees that, if Executive’s employment with the Company terminates for any reason during the Term, Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to Executive pursuant to this Section 8. Except with respect to the benefits pursuant to Section 8(e)(v), the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation Executive earns as the result of another employer employing Executive or by retirement benefits. Payments to Executive under this Section 8 (other than Accrued Obligations) are contingent upon Executive’s execution of a release substantially in the form of Exhibit A .
- 2 -
IN WITNESS WHEREOF , the parties have executed this Agreement on the date first above written.
| ATTEST: | YRC WORLDWIDE INC. | |||||||
| By: |
|
By: |
|
|||||
| Name: | Name: | |||||||
| Title: | Title: | |||||||
| EXECUTIVE: | ||||||||
|
|
||||||||
| WILLIAM D. ZOLLARS | ||||||||
- 3 -
Exhibit 10.3
NON-UNION EMPLOYEE OPTION PLAN
December 30, 2008
The following describes the Non-Union Employee Option Plan (the “Plan”) of YRC Worldwide Inc. (the “Company”):
| 1. | The Company will grant options to purchase the Company’s common stock (“options”) to all U.S. and Canadian non-union employees of the Company and its subsidiaries who are classified as full-time (the “Qualifying Employees”, but excluding employees who participate in the Company’s LTIP). |
| 2. | The maximum number of options will be options to purchase 5,269,577 shares of the Company’s common stock. The options shall be granted as of the Effective Date. |
| 3. | “Effective Date” means January 2, 2009. |
| 4. | The number of options granted on the Effective Date to each Qualifying Employee in a grade level shall be the number set forth beside each grade level in Exhibit A . Each Qualifying Employee shall be notified and furnished appropriate documentation as quickly as reasonably possible after the Effective Date of the Qualifying Employee’s specific grant. The number of options in all grade levels may not exceed the maximum number of options defined in Section 2. The unallocated portion of the maximum options may be withheld from allocation to specific employees to cure any administrative errors in distributing the grants. If these options are not distributed, they shall be forfeited. Only whole numbers of options may be granted. |
| 5. | Each option will have an exercise price equal to the closing price of the Company’s common stock trading on The NASDAQ Stock Market on the Effective Date, or if the Effective Date is not on a trading day, on the first trading day following the Effective Date. |
|
6. |
The options shall vest at the rate of 25% per year upon each January 2 nd , commencing on January 2, 2010. Once vested, the options shall become exercisable and remain exercisable for 10 years following the Effective Date (the “Exercise Period”). |
| 7. | The options shall include a cashless exercise provision and shall provide for a net exercise for paying each Qualifying Employee’s withholding taxes at the applicable statutory rate. |
| 8. | Except as described in Sections 9-12 below, if a Qualifying Employee terminates employment (other than because of death, disability or retirement), all unvested options will terminate. All vested options shall remain the property of the Qualifying Employee, but the Qualifying Employee shall only have 90 days after termination of employment to exercise the vested options, subject to the Exercise Period. |
- 1 -
| 9. | If a Qualifying Employee retires on or after the date the Company’s shareholders approve the Plan, any unvested options shall continue to vest according to their terms, all vested options shall remain the property of the Qualifying Employee and all vested options shall be exercisable during the Exercise Period. For this purpose, “retirement” is deemed to occur when a Qualifying Employee terminates employment (other than by death) when his or her age is 65 or greater or age plus years of service equals or exceeds 75, in each case, at the time of termination. |
| 10. | If a Qualifying Employee dies or becomes permanently and totally disabled on or after the date the shareholders of the Company have approved the Plan, the Qualifying Employee or the Qualifying Employee’s estate shall retain all vested options, any options that would have otherwise vested following the date of his or her death or disability shall also vest and vested options shall be exercisable for one year following the date of death or disability, subject to the Exercise Period. A Qualifying Employee shall be considered “permanently and totally disabled” if the Qualifying Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Qualifying Employee’s employer. The existence of a permanent and total disability shall be evidenced by such medical certification as the Secretary of the Company shall require and as the Compensation Committee (the “Committee”) of the Board of Directors of the Company approves. |
| 11. | If the Company terminates a Qualifying Employee due to a lay off, reduction in force or elimination of the Qualifying Employee’s position on or after the date the Company’s shareholders shall have approved the Plan, the Qualifying Employee will retain his or her vested options; and, in addition, pursuant to a severance benefit program or arrangement, the Company may, in its sole discretion which need not be reasonably exercised, permit the Qualifying Employee to retain any unvested options that shall vest during a period following separation that the Company shall determine and may permit the Qualifying Employee to exercise the options at anytime during the Exercise Period. After any such vesting period, all other unvested options shall terminate. |
| 12. | If a “Change of Control” of the parent company, YRC Worldwide Inc., occurs while the Qualifying Employee is in the employ of the Company or a subsidiary of the Company prior to the time the options vest but on or after the date the shareholders of the Company shall have approved the Plan, the options shall accelerate and become fully vested and become an option to receive, upon exercise and payment of the exercise price, the same consideration that other shareholders of the Company would receive as result of the Change of Control. For the purposes of this Section, a “Change of Control” shall be deemed to have taken place if: |
| (a) |
a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), purchases or otherwise |
- 2 -
|
acquires shares of the Company after the date of grant that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; |
| (b) | a third person, including a “group” as defined in Section 13(d)(3) of the Exchange Act, purchases or otherwise acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) shares of the Company after the date of grant and as a result thereof becomes the beneficial owner of shares of the Company having 35% or more of the total number of votes that may be cast for election of directors of the Company; or |
| (c) | as the result of, or in connection with any cash tender or exchange offer, merger or other Business Combination, or contested election, or any combination of the foregoing transactions, the Continuing Directors shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company during any 12-month period. |
For the purposes of this Section 12, “Business Combination” means any transaction that is referred to in any one or more of clauses (a) through (e) of Section 1 of Subparagraph A of Article Seventh of the Certificate of Incorporation of the Company; and “Continuing Director” means a director of the Company who meets the definition of Continuing Director contained in Section 7 of Subparagraph C of Article Seventh of the Certificate of Incorporation of the Company.
| 13. | Transfers of employment between the Company and a subsidiary, or between subsidiaries, shall not constitute a termination of employment for purposes of the options. |
| 14. | Authorized leaves of absence from the Company shall not constitute a termination of employment for purposes of the options. For purposes of the options, an authorized leave of absence shall be an absence while the Qualifying Employee is on military leave, sick leave, or other bona fide leave of absence so long as the Qualifying Employee’s right to employment with the Company is guaranteed by statute, a contract or Company policy. |
| 15. | To the extent Qualifying Employees have taxable income in connection with the grant, vesting or exercise of the options or the delivery of shares of Company common stock, the Company is authorized to withhold from any compensation payable to Qualifying Employees, including shares of common stock that the Company is to deliver to the Qualifying Employees, any taxes required to be withheld by foreign, federal, state, provincial or local law. |
| 16. | No rights under the options shall be transferable otherwise than by will, the laws of descent and distribution or pursuant to a qualifying domestic relations order (“QDRO”), and, except to the extent otherwise provided herein, the rights and the benefits of the options may be exercised and received, respectively, during the lifetime of the Qualifying Employee only by the Qualifying Employee or by the Qualifying Employee’s guardian or legal representative or by an “alternate payee” pursuant to a QDRO. |
- 3 -
| 17. | The options shall not be effective until the Company’s shareholders approve the issuance of options and the common stock issuable upon exercise of the options, in each case, pursuant to the Plan. If after presentation to the Company’s shareholders for a vote, the Company’s shareholders do not approve the issuance of options and the common stock issuable upon exercise of the options, in each case, pursuant to the Plan, the options shall automatically terminate. |
| 18. | Under no circumstances will the Company be liable for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan or the Company’s role as Plan sponsor. |
| 19. | Notwithstanding anything else in the Plan, the shares received upon exercise of the options may not be sold, pledged or hypothecated until such time as the Company complies with all regulatory requirements regarding registration of the shares to be issued under the terms of the Plan. |
| 20. | Any shares subject to options that are forfeited or terminated under the Plan shall no longer be reserved for issuance under the Plan. |
| 21. | The Plan has been designed so that the grant, vesting, exercise and payments of awards hereunder are not subject to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that an award or payment, or the settlement or deferral thereof, is or becomes subject to Section 409A of the Code, except as the Committee otherwise determines in writing, the award shall be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, including regulations or other guidance issued with respect thereto, such that the grant, payment, settlement or deferral shall not be subject to any additional taxation applicable under Section 409A of the Code. |
| 22. | The Plan shall be governed, construed and administered in accordance with the laws of the State of Delaware without giving effect to the conflict of laws principles. |
| 23. | The Plan described above represents the plan of the Company regarding the non-union options. The Committee is authorized to amend and modify the Plan for the purposes of administration to address additional details such as (without limitation) the impact of stock splits and administrative matters. Any such amendments or modifications shall be final and binding on the Qualifying Employees. The Committee shall administer and interpret the Plan, and its decisions shall be final and binding with respect to administration and interpretation. |
- 4 -
Exhibit 10.4
NON-UNION EMPLOYEE STOCK APPRECIATION RIGHT PLAN
December 30, 2008
The following describes the Non-Union Employee Stock Appreciation Right Plan (the “Plan”) of YRC Worldwide Inc. (the “Company”):
| 1. | The Company will grant stock appreciation rights with respect to the Company’s common stock (“SARs”) to all U.S. and Canadian non-union employees of the Company and its subsidiaries who are classified as full-time (the “Qualifying Employees”, but excluding employees who participate in the Company’s LTIP). Each SAR shall give a Qualifying Employee the right to receive a cash payment from the Company equal to the difference of the closing price of the Company’s common stock on the date of exercise less the exercise price of the SAR on the date of grant. |
| 2. | The maximum number of SARs will be SARs with respect to 5,269,577 shares of the Company’s common stock. The SARs shall be granted as of the Effective Date. |
| 3. | “Effective Date” means January 2, 2009. |
| 4. | The number of SARs granted on the Effective Date to each Qualifying Employee in a grade level shall be the number set forth beside each grade level in Exhibit A . Each Qualifying Employee shall be notified and furnished appropriate documentation as quickly as reasonably possible after the Effective Date of the Qualifying Employee’s specific grant. The number of SARs in all grade levels may not exceed the maximum number of SARs defined in Section 2. The unallocated portion of the maximum SARs may be withheld from allocation to specific employees to cure any administrative errors in distributing the grants. If these SARs are not distributed, they shall be forfeited. Only whole numbers of SARs may be granted. |
| 5. | Each SAR will have an exercise price equal to the closing price of the Company’s common stock trading on The NASDAQ Stock Market on the Effective Date, or if the Effective Date is not on a trading day, on the first trading day following the Effective Date . |
|
6. |
The SARs shall vest at the rate of 25% per year upon each January 2 nd , commencing on January 2, 2010. Once vested, the SARs shall become exercisable and remain exercisable for 10 years following the Effective Date (the “Exercise Period”). |
| 7. | The SARs shall include a net exercise for paying each Qualifying Employee’s withholding taxes at the applicable statutory rate. |
| 8. | Except as described in Sections 9-12 below, if a Qualifying Employee terminates employment (other than because of death, disability or retirement), all unvested SARs will terminate. All vested SARs shall remain the property of the Qualifying Employee, but the Qualifying Employee shall only have 90 days after termination of employment to exercise the vested SARs, subject to the Exercise Period. |
- 1 -
| 9. | If a Qualifying Employee retires on or after the date the Company’s shareholders have rejected the Company’s Non Union Stock Option Plan adopted on the same date as the Plan (the “Stock Option Plan”), any unvested SARs shall continue to vest according to their terms, all vested SARs shall remain the property of the Qualifying Employee and all vested SARs shall be exercisable during the Exercise Period. For this purpose, “retirement” is deemed to occur when a Qualifying Employee terminates employment (other than by death) when his or her age is 65 or greater or age plus years of service equals or exceeds 75, in each case, at the time of termination. |
| 10. | If a Qualifying Employee dies or becomes permanently and totally disabled on or after the date the shareholders of the Company have rejected the Stock Option Plan, the Qualifying Employee or the Qualifying Employee’s estate shall retain all vested SARs, any SARs that would have otherwise vested following the date of his or her death or disability shall also vest and vested SARs shall be exercisable for one year following the date of death or disability, subject to the Exercise Period. A Qualifying Employee shall be considered “permanently and totally disabled” if the Qualifying Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Qualifying Employee’s employer. The existence of a permanent and total disability shall be evidenced by such medical certification as the Secretary of the Company shall require and as the Compensation Committee (the “Committee”) of the Board of Directors of the Company approves. |
| 11. | If the Company terminates a Qualifying Employee due to a lay off, reduction in force or elimination of the Qualifying Employee’s position on or after the date the Company’s shareholders shall have rejected the Stock Option Plan, the Qualifying Employee will retain his or her vested SARs; and, in addition, pursuant to a severance benefit program or arrangement, the Company may, in its sole discretion which need not be reasonably exercised, permit the Qualifying Employee to retain any unvested SARs that shall vest during a period following separation that the Company shall determine and may permit the Qualifying Employee to exercise the SARs at anytime during the Exercise Period. After any such vesting period, all other unvested SARs shall terminate. |
| 12. | If a “Change of Control” of the parent company, YRC Worldwide Inc., occurs while the Qualifying Employee is in the employ of the Company or a subsidiary of the Company prior to the time the SARs vest but on or after the date the shareholders of the Company shall have rejected the Stock Option Plan, the SARs shall accelerate and become fully vested and become the right to receive in cash the value (as determined in good faith by the Committee) of the consideration per share that shareholders of the Company would receive as result of the Change of Control less the exercise price per share of the SARs. |
- 2 -
For the purposes of this Section, a “Change of Control” shall be deemed to have taken place if:
| (a) | a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), purchases or otherwise acquires shares of the Company after the date of grant that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company; |
| (b) | a third person, including a “group” as defined in Section 13(d)(3) of the Exchange Act, purchases or otherwise acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) shares of the Company after the date of grant and as a result thereof becomes the beneficial owner of shares of the Company having 35% or more of the total number of votes that may be cast for election of directors of the Company; or |
| (c) | as the result of, or in connection with any cash tender or exchange offer, merger or other Business Combination, or contested election, or any combination of the foregoing transactions, the Continuing Directors shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company during any 12-month period. |
For the purposes of this Section 12, “Business Combination” means any transaction that is referred to in any one or more of clauses (a) through (e) of Section 1 of Subparagraph A of Article Seventh of the Certificate of Incorporation of the Company; and “Continuing Director” means a director of the Company who meets the definition of Continuing Director contained in Section 7 of Subparagraph C of Article Seventh of the Certificate of Incorporation of the Company.
| 13. | Transfers of employment between the Company and a subsidiary, or between subsidiaries, shall not constitute a termination of employment for purposes of the SARs. |
| 14. | Authorized leaves of absence from the Company shall not constitute a termination of employment for purposes of the SARs. For purposes of the SARs, an authorized leave of absence shall be an absence while the Qualifying Employee is on military leave, sick leave, or other bona fide leave of absence so long as the Qualifying Employee’s right to employment with the Company is guaranteed by statute, a contract or Company policy. |
| 15. | To the extent Qualifying Employees have taxable income in connection with the grant, vesting or exercise of the SARs, the Company is authorized to withhold from any compensation payable to Qualifying Employees any taxes required to be withheld by foreign, federal, state, provincial or local law. |
| 16. | No rights under the SARs shall be transferable otherwise than by will, the laws of descent and distribution or pursuant to a qualifying domestic relations order (“QDRO”), and, except to the extent otherwise provided herein, the rights and the benefits of the SARs may be exercised and received, respectively, during the lifetime of the Qualifying Employee only by the Qualifying Employee or by the Qualifying Employee’s guardian or legal representative or by an “alternate payee” pursuant to a QDRO. |
- 3 -
| 17. | If, after presentation of the Stock Option Plan to the Company’s shareholders for a vote, the Company’s shareholders approve the issuance of options and the common stock issuable upon exercise of the those options, in each case, pursuant to the Stock Option Plan, the SARs shall automatically terminate. |
| 18. | Under no circumstances will the Company be liable for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan or the Company’s role as Plan sponsor. |
| 19. | Any SARs that are forfeited or terminated under the Plan shall no longer be reserved for issuance under the Plan. |
| 20. | The Plan has been designed so that the grant, vesting, exercise and payments of awards hereunder are not subject to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that an award or payment, or the settlement or deferral thereof, is or becomes subject to Section 409A of the Code, except as the Committee otherwise determines in writing, the award shall be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, including regulations or other guidance issued with respect thereto, such that the grant, payment, settlement or deferral shall not be subject to any additional taxation applicable under Section 409A of the Code. |
| 21. | The Plan shall be governed, construed and administered in accordance with the laws of the State of Delaware without giving effect to the conflict of laws principles. |
| 22. | The Plan described above represents the plan of the Company regarding the non-union SARs. The Committee is authorized to amend and modify the Plan for the purposes of administration to address additional details such as (without limitation) the impact of stock splits and administrative matters. Any such amendments or modifications shall be final and binding on the Qualifying Employees. The Committee shall administer and interpret the Plan, and its decisions shall be final and binding with respect to administration and interpretation. |
- 4 -