Exhibit
10.1
SEPARATION AGREEMENT AND COMPLETE
RELEASE
This Separation Agreement and
Complete Release this (“Agreement”) is made this 11th
day of January, 2007, by James L. Welch (“Employee”)
and YRC Worldwide Inc. and Yellow Transportation, Inc.
(collectively, the “Company”).
In consideration of the mutual
agreements described below, the payments to Employee and other good
and valuable consideration, the receipt and sufficiency of which
the parties acknowledge, Employee and the Company agree as
follows:
Employee’s employment with the
Company will cease as of January 31, 2007 (the
“Separation Date”). Employee shall continue to receive
the compensation and benefits that Employee received immediately
prior to the Separation Date until the Separation Date.
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A.
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The Company
shall pay Employee separation pay in the gross amount of $19,833.33
in bi-monthly installments from the Separation Date through
June 2, 2009 (the “Separation Pay Period”).
The Company shall also pay Employee separation pay in the gross
amount of $2,083.32 in monthly installments during the Separation
Pay Period. The Company will make these separation payments on the
Company’s regular pay cycle commencing on the next regular
pay day following the eighth day after this Agreement has been
signed and returned to the Company. To the extent any payments are
missed while this Agreement is being considered and prior to the
expiration of the revocation period, the missed payments will all
be made on the first regular pay day following the eighth day after
execution of this Agreement.
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B.
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Employee will
be eligible for Employee’s 2006 pay-for-performance
(“PFP”), annual incentive bonus, which the Company
shall pay Employee at the same time that the Company pays other
similarly situated Employees (which the Company expects to occur in
the first quarter of 2007). For the purposes of the payment of this
bonus, the Company shall provide in the calculation that Employee
has met Employee’s individual goals and will get 100% of the
50% of the payment that is based on these goals. The Company
acknowledges that Employee’s target incentive percentage for
the purposes of this bonus is 55% of base salary. Employee
acknowledges that
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1.
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actual payout
of the bonus could be greater or lower than this target incentive
percentage based on Company performance in accordance with the
Company’s 2006 PFP targets and plan and approval by the
Compensation Committee (the “Compensation Committee”)
of the Board of Directors of the Company (the “Board”);
and
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2.
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the
Compensation Committee may reduce the amount of Employee’s
bonus so long as other similarly situated executives receive the
same proportionate reduction.
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C.
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Employee will
receive no further wages, bonuses or other similar payments from
the Company, other than salary and perquisites through the
Separation Date and those other items that this Agreement
provides.
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D.
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Employee
acknowledges that he has no unexercised, outstanding Company stock
options.
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Separation Agreement and Complete
Release
Page 2 of 10
Separation Agreement and Complete
Release
Page 2 of 10
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E.
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Employee
acknowledges that the only outstanding Company share units that the
Company has granted to Employee are as follows:
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Grant
Date
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Number of Share Units
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Vesting Date
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4/18/2003
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2,222
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4/18/2006
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4/18/2003
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2,223
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4/18/2009
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2/27/2004
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4,747
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2/27/2007
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2/27/2004
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4,747
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2/27/2010
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7/14/2004
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1,477
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7/14/2007
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7/14/2004
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1,477
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7/14/2010
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2/25/2005
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6,528
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2/25/2008
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2/25/2005
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6,529
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2/25/2011
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7/14/2005
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1,330
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7/14/2008
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7/14/2005
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1,330
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7/14/2011
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2/24/2006
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4,502
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2/24/2009
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2/24/2006
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4,502
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2/24/2012
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7/19/2006
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1,834
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7/19/09
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7/19/2006
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1,835
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7/19/2012
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These units shall be governed by the
applicable Share Unit Agreement and the 2004 Long-Term Incentive
and Equity Award Plan, as amended through the date of this
Agreement. For the purposes of these units and any units that the
Company subsequently grants to Employee under Section 2(F),
the Company acknowledges that Employees termination of employment
shall constitute “retirement”.
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F.
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Pursuant to the
Company’s 2004 Long Term Incentive Plan, as amended through
the date of this Agreement (the “LTIP”), the Company
shall pay Employee cash and share units:
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1.
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on a full basis
in 2007 for the 2004-06 performance cycle at the same time as other
similarly situated executives but in no event earlier than
August 1, 2007;
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2.
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on a 2/3
prorated basis in 2008 for the 2005-07 performance cycle at the
same time as other similarly situated executives; and
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3.
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on a 1/3
prorated basis in 2009 for the 2006-08 performance cycle at the
same time as other similarly situated executives.
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Employee acknowledges that pursuant
to the LTIP, the Compensation Committee or the Board may reduce any
of Employee’s LTIP payments below the formula that the LTIP
provides so long as any such reduction is applicable to other
similarly situated LTIP participants. Employee also
acknowledges
Separation Agreement and Complete
Release
Page 3 of 10
that any future share awards
described in this Section 2(F) shall be on the terms and
conditions provided in the Company’s standard share unit
agreement as it exists from time to time and is applicable to
Employee and other similarly situated executives. Employee has
previously entered into an Executive Severance Agreement dated
August 9, 2006, with the Company (the “Change of Control
Agreement”). If a “Change of Control” (as defined
in the Change of Control Agreement) occurs, Employee shall receive
the LTIP payouts for the 2004-06, 2005-07 and 2006-08 performance
cycles on the same basis as other similarly situated LTIP
participants but in no event on a basis that is less than
Section 5 of the Change of Control Agreement provides. In lieu
of prorating a payment in 2010 for the 2007-09 LTIP performance
cycle, Employee shall receive a cash payment of $4,576.92 upon the
effective date of this Agreement; and Employee hereby waives any
right to any additional payments for that performance
cycle.
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G.
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Other than the
share units described in Section 2(E) and the rights to
receive cash and share units in Section 2(F), Employee
acknowledges that Employee does not have any other rights to
Company equity or long term incentive payments that the Company has
granted or may in the future grant to Employee.
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H.
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Employee
understands that the Company will deduct federal and state
withholding taxes and other deductions the Company is required by
law to make from payments (including cash and equity) to Employee
or which Employee has authorized from any payments made pursuant to
this Agreement. The Company shall defer payment to Employee for six
months of any amount that could be considered deferred compensation
to which excess withholding taxes are applicable under
Section 409A of the Internal Revenue Code, as amended,
including equity payments.
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A.
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Medical,
Dental, Vision benefits
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The Company shall continue your
medical, dental and vision benefits (provided you were enrolled in
the applicable plans providing those benefits on your Separation
Date) as provided in this Section 3(A). Employee shall pay the
active employee premium for these benefits. These medical, dental
and vision benefits will continue until the end of the Separation
Pay Period or when other coverage becomes available, whichever
comes first. Employee is required to notify the Company of
the availability of other coverage.
Other benefits to which Employee was
covered prior to the Separation Date (including pension, 401(k) and
perquisite benefits) will be discontinued pursuant to eligibility
requirements under the specific plan document for that benefit.
Benefits that have Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), continuation or conversion privileges will
be provided to Employee for continuation at his cost pursuant to
plan covenants. In all cases, the official plan document shall
govern over any other verbal or written statement in regards to
COBRA, continuation or conversion privileges. Employee acknowledges
that Employee’s age plus years of service as of the
Separation Date equals 80 solely for the purposes of determining
delivery of accrued and vested benefits and related payouts under
the Company’s retirement and pension plans.
Any unused vacation pay as of the
Separation Date will be paid to Employee in accordance with the
Company’s vacation policy.
Eligibility for holiday pay will
cease on the Separation Date.
Separation Agreement and Complete
Release
Page 4 of 10
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E.
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Supplemental
Executive Pension Plan
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On August 1, 2007, pursuant to
the Company’s Supplemental Executive Pension Plan, Employee
shall be entitled to receive a lump sum payment of
$821,838.
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4.
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Covenant Not
to Compete Payment
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A.
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So long as
Employee has complied with the obligations under this
Section 4 and Section 8, on the last day of the
Separation Pay Period, the Company shall pay Employee $1,664,165.55
in cash.
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B.
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During the
Separation Pay Period, Employee shall not solicit any employee who
is a president, vice president, treasurer, controller, director,
manager, sales representative or attorney or any independent
contractor of the Company or any of its subsidiaries to terminate
his or her employment or other contractual relationship with the
Company or any of its subsidiaries and accept employment or enter
into a contractual relationship with Employee, any affiliate of
Employee or any employer of Employee.
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C.
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In
consideration for the payment in Section 4(A), during the
Separation Pay Period, Employee shall not, for Employee’s own
account or the account of any other person or entity, and whether
as an owner, principal, shareholder, member, partner, manager,
director, officer, trustee, employee, agent or in any other
capacity, directly or indirectly compete in the trucking,
freight forwarding or logistics businesses in the United States,
its territories or protectorates, or countries where the Company or
any of its subsidiaries conduct their operations or raise capital,
or assist institutional investors for such purpose; provided
, that Employee may invest in publicly traded companies that
compete with the Company or any of its subsidiaries so long as
Employee does not own 5% or more of the outstanding equity
interests in any of those publicly traded companies.
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D.
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Employee
acknowledges and agrees that the limitations that Sections 4(B) and
4(C) impose as to time, geographical area and scope of activity are
reasonable and do not impose a greater restraint than necessary to
protect the goodwill, confidential information or other business
interests of the Company and its subsidiaries. Employee further
acknowledges and agrees that if Employee violates this
Section 4, as liquidated damages, Employee shall forfeit his
rights to the payment that Section 4(A) provides.
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E.
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Employee
acknowledges that if Employee breaches this Section 4, the
liquidated damages that Section 4(D) provides alone would be
an inadequate remedy to the Company and its subsidiaries.
Therefore, Employee agrees that the Company may seek injunctive
relief against the Employee in any court of competent jurisdiction
for any such breach or a threatened breach of Section 4
without the necessity of posting bond or other security.
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F.
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Employee
acknowledges that
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