-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OiWfsjW3SraItA5depHz/Gi4cwsYOd3HfRopb385sTsBDdsSUYgoDo0lO5h84Ve3 3pGprJ/x2jbmf5yzFsAnVQ== 0000881791-03-000051.txt : 20030806 0000881791-03-000051.hdr.sgml : 20030806 20030806103544 ACCESSION NUMBER: 0000881791-03-000051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030705 FILED AS OF DATE: 20030806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USF CORP CENTRAL INDEX KEY: 0000881791 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 363790696 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19791 FILM NUMBER: 03825265 BUSINESS ADDRESS: STREET 1: 8550 W BRYN MAWR AVE STREET 2: SUITE 700 CITY: CHICAGO STATE: IL ZIP: 60631 BUSINESS PHONE: 773.824-1000 MAIL ADDRESS: STREET 1: 8550 W. BRYN MAWR AVE STREET 2: SUITE 700 CITY: CHICAGO STATE: IL ZIP: 60631 FORMER COMPANY: FORMER CONFORMED NAME: USFREIGHTWAYS CORP DATE OF NAME CHANGE: 19970410 FORMER COMPANY: FORMER CONFORMED NAME: TNT FREIGHTWAYS CORP DATE OF NAME CHANGE: 19930328 10-Q 1 f10q2q2003.txt USF 2 QTR. 10Q 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 -----END PRIVACY-ENHANCED MESSAGE-----