exv10w2






Exhibit 10.2




Express-1 Expedited Solutions, Inc.

3399 South Lakeshore Drive, Suite 225

Saint Joseph, Michigan 49085



July 18, 2011




John Welch

3399 South Lakeshore Drive, Suite 225

Saint Joseph, Michigan 49085



Re: Amendment of Employment Agreement



Dear Mr. Welch,




     As you know, Jacobs Private Equity LLC, a Delaware limited liability company (the “Investor
Representative”), certain other investors (such investors, together with the Investor
Representative, the “Investors”), and Express-1 Expedited Solutions, Inc., a Delaware corporation
(“Parent”), have entered into an investment agreement, dated June 13, 2011 (the “Signing Date”), as
amended, modified or supplemented from time to time (the “Investment Agreement”), that will,
subject to the satisfaction of the terms and conditions of the Investment Agreement, result in the
Investors making an investment in Parent as contemplated by the Investment Agreement (the
“Investment”).



     In connection with the Investment, the Investors have requested that Parent amend the
Executive Employment Agreement, dated March 21, 2011, between you and Parent (the “Employment
Agreement”). Therefore, you and Parent hereby agree to amend the Employment Agreement as set forth
in this letter amendment. You acknowledge and agree that a material aspect of the Investors’
decision to enter into the Investment Agreement is your agreement to abide by the restrictive
covenants set forth in this letter amendment and in the Employment Agreement and that such
covenants represent a material element of the Investors’ valuation of Parent, including its
goodwill.



     This letter amendment will become effective immediately upon its execution by all parties
hereto; provided, however, that this letter amendment will be null and void ab
initio and of no further force or effect if the Investment Agreement is terminated prior to the
closing of the Investment (the “Closing”) (it being understood that, except to the extent provided
with respect to the New Options (as defined below), neither Parent nor any of its subsidiaries will
have any liabilities hereunder unless and until the Closing occurs). All capitalized terms used in
this letter amendment but not otherwise defined herein will have the same meaning as defined in the
Employment Agreement.



     In consideration for entering into this letter amendment, Parent has agreed (i) that all of
your stock options granted by Parent to you prior to the Signing Date (the “Legacy Options”) that
are outstanding and unvested immediately prior to the Closing, shall



 









 




become fully vested and exercisable upon the Closing and (ii) to grant to you options (the
“New Options”) to purchase 175,000 shares of Parent’s common stock, par value $0.001 per share
(“Shares”), on July 22, 2011 (the “Grant Date”), with an exercise price equal to the closing price
per Share as reported by the NYSE Amex LLC on the Grant Date; provided, however,
that the New Options shall be forfeited and you shall have no further rights with respect thereto
if the Investment Agreement is terminated prior to Closing. The New Options will be granted under,
and generally subject to the terms and conditions of, Parent’s Amended and Restated 2001 Stock
Option Plan (the “2001 Plan”); provided, however, that, notwithstanding anything to
the contrary in the 2001 Plan or any other agreement between you and Parent or any of its
subsidiaries, the New Options will not vest as a result of the Investment, the Closing or any of
the transactions contemplated by the Investment Agreement. The New Options will vest, subject to
your continued employment with Parent or its subsidiaries, in three equal installments on each of
the first three anniversaries of the date of the Closing (the “Closing Date”). Notwithstanding
Section 6(f) of the Employment Agreement or any other agreement between you and Parent or any of
its subsidiaries to the contrary, in the event that your employment with Parent and its
subsidiaries terminates for any reason prior to the date that any New Options have become vested,
any New Options that are unvested as of the date of termination of your employment shall be
immediately forfeited. In addition, the New Options will be subject to the terms and conditions of
an award agreement, substantially in the form attached hereto as Exhibit A, evidencing the grant
thereof.




     Notwithstanding anything to the contrary set forth in the Employment Agreement or any other
plan, policy, arrangement or agreement of or with Parent, any of its subsidiaries or any of their
respective affiliates:




	1.	 	Duties and Responsibilities. You hereby agree that Section 3(a) of the Employment
Agreement is hereby deleted in its entirety and replaced with the following:





     “a. Duties and Responsibilities. During the term of this Agreement, the Executive
shall have the duties and responsibilities as may be assigned to the Executive by the Company’s
Chief Executive Officer from time to time.”




	2.	 	Term. You hereby agree that Section 4 of the Employment Agreement is hereby deleted
in its entirety and replaced with the following:





     “4. Term. The Term of employment hereunder will commence on the Effective Date and
will terminate on the third anniversary of the date of the closing of the Investment (as
hereinafter defined) (the “Closing Date”), unless earlier terminated pursuant to the terms of this
Agreement (the “Term”).”




	3.	 	Salary. You hereby agree that Section 5(a) of the Employment Agreement is hereby
deleted in its entirety and replaced with the following:





     “a. Salary. The Executive shall be paid a base salary at an annual rate of $180,000.
The Base Salary shall be reviewed annually throughout the Term by the



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Company’s Compensation Committee and may be raised in its sole discretion (such base salary as it
may be increased from time to time, the “Base Salary”).”





	4.	 	Treatment of Options upon Change in Control. You hereby agree that the following
Section 6(f)(8)(C) shall be added as the last subsection to Section 6(f)(8) of the Employment
Agreement:





     “(C) Notwithstanding anything to the contrary set forth in this Agreement or any other plan,
policy, arrangement or agreement between the Company and the Executive, in the event of a Change in
Control, the Board of Directors of the Company (or a committee thereof) (the “Administrator”), is
hereby authorized, if deemed appropriate or desirable by the Administrator, in its sole and plenary
discretion, to make adjustments in the terms and conditions of, and the criteria included in, any
Options granted prior to the Signing Date, (i) by providing for a cash payment to the Executive in
consideration for the cancelation of such Option in an amount equal to the excess, if any, of the
fair market value (as of a date specified by the Administrator) of a share of Common Stock subject
to such Option over the aggregate exercise price of such Option and (ii) by canceling and
terminating any such Option having a per share exercise price equal to, or in excess of, the fair
market value of a share of Common Stock subject to such Option without any payment or consideration
therefor; provided that, such adjustments will only be made to the same extent as adjustments made
to any Options granted prior to the Signing Date held by other employees of the Company.”




	5.	 	Good Reason Rights. You hereby agree that the following language is hereby added as
the final two sentences of Section 6(f)(10)(C) of the Employment Agreement.





     “For the avoidance of doubt, Good Reason shall exist if the Company replaces the Executive as
Chief Financial Officer of the Company. Notwithstanding the foregoing, a termination shall not be
considered to be for Good Reason unless the Executive notifies the Company of the existence of the
condition constituting Good Reason within 45 days following the initial existence thereof, the
Company fails to remedy the condition within 30 days following receipt of such notice, and the
Executive terminates employment within the earlier of 90 days following the initial existence of
such condition and 15 days following notice from the Company that it will not remedy such
condition.”




	6.	 	Definitions. You hereby agree that the following Sections 6(f)(10)(E) and (F) are
hereby added immediately following Section 6(f)(10)(D) of the Employment Agreement:





     “(E) “Investment” shall mean the investment in the Company as contemplated by the
Investment Agreement.



     (F) “Investment Agreement” shall mean the investment agreement, dated June 13, 2011
(the “Signing Date”), among Jacobs Private Equity LLC, certain other investors and the Company, as
amended, modified or supplemented from time to time.”



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	7.	 	Covenant Not to Compete, Not to Solicit and Not to Disparage. You hereby agree that
Section 7(a) of the Employment Agreement is hereby deleted in its entirety and replaced with
the following:





     “a. Covenant Not to Compete, Not to Solicit and Not to Disparage. The Executive
acknowledges and recognizes the highly competitive nature of the Company’s business and that the
goodwill, continued patronage, business reputation and specifically the names and addresses of the
Company’s Clients (as hereinafter defined) constitute a substantial asset of the Company having
been acquired through considerable time, money and effort. Accordingly, in consideration of the
execution of this Agreement, the acceleration of your outstanding unvested Options granted by the
Company prior to the Signing Date, the grant of 175,000 Options, extension of the Term until the
third anniversary of the Closing Date, increasing the Base Salary and the commitment with respect
to a 2011 Bonus , the Executive agrees to the following:


The Executive will not, individually or in conjunction with others, directly or indirectly, as an
owner, partner, joint venturer, stockholder, officer, director, employee, independent contractor,
agent, licensee or franchisee, for any person, firm, partnership, corporation or other entity:




     (1) during the Restricted Period (as hereinafter defined) and within the Restricted Area (as
hereinafter defined), engage in any Business Activities (as hereinafter defined); provided that
Executive’s acquisition or holding of less than 1% of the outstanding capital stock of a publicly
traded corporation will not be a violation of this Section 7(a)(1);



     (2) during the Restricted Period, solicit, encourage, advise or influence any of the
Company’s Clients that have a business relationship with the Company during the Restricted Period
to discontinue or reduce the extent of such relationship with the Company or to obtain or seek
products or services the same as or similar to the Company’s from any other source not affiliated
with the Company;



     (3) during the Nonsolicit Period, solicit, recruit, hire or employ any employee, agent or
independent contractor of the Company or persons who, during the 12-month period preceding such
solicitation, recruitment, hiring or employment, have worked for, or provided services to, the
Company or solicit or cause any person or entity to solicit or encourage, either directly or
indirectly, any employee, agent or independent contractor of the Company to terminate his
relationship with the Company or intentionally interfere with the relationship of the Company with
any such employee, agent or independent contractor;



     (4) during the Restricted Period, persuade or encourage another person or entity to modify,
terminate, cancel, reduce the extent of or revoke any business agreement or relationship with the
Company; or



     (5) during the Nonsolicit Period and thereafter, defame or disparage the Company or any of
its current or former affiliates, directors, officers, employees,



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members, partners, agents or representatives (collectively, the “Protected Parties”), or make (or
cause to be made) any comment or statement, whether in writing or orally, including without
limitation in the media or to the press or to any individual or entity, that could reasonably be
expected to adversely affect the reputation of any of the Protected Parties or the conduct of their
respective businesses.”





	8.	 	Non-Disclosure of Information. You hereby agree that the following sentence is
hereby added as the last sentence of Section 7(b) of the Employment Agreement:





     “For the avoidance of doubt, the parties hereby agree that all information, observations and
data concerning potential acquisitions by the Company shall be deemed to be Proprietary
Information.”




	9.	 	Restricted Period. You hereby agree that the Section 7(d) of the Employment
Agreement is hereby deleted in its entirety and replaced with the following:





     “d. Restricted Period and Nonsolicit Period.



     (1) The “Restricted Period” shall be deemed to commence on the date of this Agreement and end
on the third anniversary of termination of the Executive’s employment with the Company for any
reason; provided that, the Restricted Period shall be extended by any periods of time during which
the Executive is in violation of any covenant set forth in Section 7(a)(1), (2) or (4).”;



     (2) The “Nonsolicit Period” shall be deemed to commence on the date of this Agreement and end
on the fifth anniversary of termination of the Executive’s employment with the Company for any
reason; provided that, the Nonsolicit Period shall be extended by any periods of time during which
the Executive is in violation of any covenant set forth in Section 7(a)(3) or (5).”




	10.	 	Competitive Business Activities. You hereby agree that Section 7(e) of the
Employment Agreement is hereby deleted in its entirety and replaced with the following:





     “e. Competitive Business Activities. The term “Business Activities” as used herein
shall be deemed to mean (1) selling, distributing, marketing, providing or otherwise disseminating
products or services substantially similar to the type sold, distributed, marketed, provided or
otherwise disseminated by the Company, or which the Company is actively considering selling,
distributing, marketing, providing or otherwise disseminating, in each case, at any time during the
period of the Executive’s employment with the Company or (2) engaging in any acquisition
activities, including researching, analyzing and evaluating companies that, at any time during the
period of the Executive’s employment with the Company, the Company has previously evaluated for
possible investment in or acquisition by or on behalf of the Company, with the intent to acquire,
make an investment in and/or dispose of such companies or assets thereof, in each case, other than
as directed by the Company.”



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	11.	 	Restricted Area. You hereby agree that Section 7(f) of the Employment Agreement is
hereby deleted in its entirety and replaced with the following:





     “f. Restricted Area. The term “Restricted Area” shall be deemed to mean Canada,
Mexico, any State of the United States and any other country in which the Company does business or
where any of the Company’s Clients are located during the period of the Executive’s employment with
the Company.”




	12.	 	Forfeiture of Unexercised Options. You hereby agree that the following Section 7(k)
is hereby added as the last subsection in Section 7 of the Employment Agreement:





     “k. Forfeiture of Unexercised Options. Notwithstanding anything to the contrary set
forth in this Agreement or any award agreement or notice evidencing any Options, in the event of
(1) a breach of any of the provisions of Section 7, (2) the termination of Executive’s employment
by the Company for Cause or (3) any financial restatements or material loss to the Company to which
the Executive has materially contributed due to the Executive’s fraud or willful misconduct, any
unexercised Options (whether vested or unvested) that were granted on or after the Signing Date and
that Executive holds at the time of such breach, termination or misconduct, as applicable, shall be
forfeited immediately and the Executive shall have no further rights with respect thereto.”




	13.	 	Bonus Opportunity. For the 2011 fiscal year, you shall be eligible to receive,
subject to achievement of the performance goals set forth on Exhibit B attached hereto, an
annual bonus with a targeted amount of $68,000 (the “Bonus Opportunity”). The Company
shall attempt to pay the earned portion of such bonus opportunity to you by March 15, 2012.
An amount ranging from 50% to 200% of such targeted amount may be earned by you solely based
on satisfaction of goals that are determined based 50% on Parent’s 2011 Operating Income and
50% on Parent’s 2011 Revenue (each, as defined below), provided that, except as
specifically set forth in the final sentence of Section 6(d) of the Employment Agreement, you
are employed by the Company on the date such bonus is paid. Your entitlement to payment with
respect to the 2011 fiscal year bonus shall be determined based on achievement of the
performance targets set forth on Exhibit B attached hereto. For purposes of this section, (a)
“Parent’s 2011 Operating Income” means Parent’s operating income from continuing operations
for fiscal year 2011 as reported in Parent’s consolidated financial statements for such fiscal
year less all amounts accrued with respect to bonuses of executives of Parent and its
subsidiaries with respect to such fiscal year and (b) “Parent’s 2011 Revenue” means Parent’s
revenue for fiscal year 2011 as reported in Parent’s consolidated financial statements for
such fiscal year.






	 	 	The Compensation Committee is hereby authorized, in its sole and plenary discretion, to
adjust or modify the performance targets relating to Parent’s 2011 Operating Income and
Parent’s 2011 Revenue, each as set forth on Exhibit B with respect to the Bonus Opportunity
(i) in the event of, or in anticipation of, any




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	 	 	unusual or extraordinary corporate item, transaction, event or development affecting Parent
or any of its subsidiaries, divisions or operating units (to the extent applicable to such
performance targets) or (ii) in recognition of, or anticipation of, any other unusual or
nonrecurring events affecting Parent or any of its subsidiaries, divisions or operating
units (to the extent applicable to such performance targets), or the financial statements
of Parent or any of its subsidiaries, divisions or operating units (to the extent
applicable to such performance targets) or of changes in applicable rules, rulings,
regulations or other requirements of any governmental body or securities exchange,
accounting principles or law.






	14.	 	You hereby agree that you will not, without the prior written consent of the Investor
Representative, during the period ending on the first anniversary of the Closing Date, (a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any Shares issued or issuable upon exercise of
any Legacy Options (“Locked-up Shares”), or any securities convertible into or exercisable or
exchangeable for any Locked-up Shares, or publicly disclose the intention to make any such
offer, sale, pledge or disposition, (b) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of any Locked-up Shares or
such other securities, whether any such transaction described in clause (a) or (b) above is to
be settled by delivery of Shares or such other securities, in cash or otherwise, or (c) make
any demand for or exercise any right with respect to the registration of any Locked-up Shares
or any security convertible into or exercisable or exchangeable for any Locked-up Shares, in
each case, other than (i) transfers of any Locked-up Shares as a result of testate or
intestate succession and (ii) sales, exchanges, swaps or other transfers or dispositions of
any Locked-up Shares to the Company in an amount necessary to cover the exercise price in
connection with the exercise of Legacy Options or to satisfy the applicable tax withholding in
connection with the exercise thereof; provided, however, that, (x) the number
of Shares subject to clauses (a), (b) or (c) above shall not exceed 5,000 (the “Locked-up
Amount”) and (y) notwithstanding the exception in clause (ii), the number of Shares subject to
clauses (a), (b) or (c) above shall not be reduced to less than the Locked-up Amount as a
result of the payment of the aggregate exercises prices and the satisfaction of the applicable
tax withholding in connection with the exercise of the Legacy Options. For the avoidance of
doubt, the restrictions described in clauses (a), (b) and (c) above shall not apply to Shares
that are not Locked-up Shares or Shares in excess of the Locked-up Amount.






	15.	 	You hereby agree that the following Section 24 shall be added as the last subsection of the
Employment Agreement:
	 
	 	 	“24. Section 409A.




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     a. It is intended that the provisions of this Agreement comply with Section 409A of
the Code and the Treasury Regulations thereunder as in effect from time to time (“Section
409A”), and all provisions of this Agreement shall be construed and interpreted in a manner
consistent with the requirements for avoiding taxes or penalties under Section 409A.




     b. If and to the extent required to comply with Section 409A, a Change in Control for
purposes of this Agreement shall qualify as a change in the ownership or effective control
of the Company, or in the ownership of a substantial portion of the assets of the Company,
in each case, within the meaning of Section 409A.




     c. Neither the Executive nor any of his creditors or beneficiaries shall have the
right to subject any deferred compensation (within the meaning of Section 409A) payable
under this Agreement or under any other plan, policy, arrangement or agreement of or with
the Company or any of its affiliates (this Agreement and such other plans, policies,
arrangements and agreements, the “Company Plans”) to any anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted
under Section 409A, any deferred compensation (within the meaning of Section 409A) payable
to the Executive or for the Executive’s benefit under any Company Plan may not be reduced
by, or offset against, any amount owing by the Executive to the Company or any of it
affiliates.




     d. If, at the time of the Executive’s separation from service (within the meaning of
Section 409A), (i) the Executive shall be a specified employee (within the meaning of
Section 409A and using the identification methodology selected by the Company from time to
time) and (ii) the Company shall make a good faith determination that an amount payable
under a Company Plan constitutes deferred compensation (within the meaning of Section 409A)
the payment of which is required to be delayed pursuant to the six-month delay rule set
forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the
Company (or its affiliate, as applicable) shall not pay such amount on the otherwise
scheduled payment date but shall instead accumulate such amount and pay it on the first
business day after such six-month period.




     e. Notwithstanding any provision of this Agreement or any Company Plan to the
contrary, in light of the uncertainty with respect to the proper application of Section
409A, the Company reserves the right to make amendments to any Company Plan as the Company
deems necessary or desirable to avoid the imposition of taxes or penalties under Section
409A, provided, however, that no such amendment shall materially and adversely impair any
of the Executive’s vested rights or benefits without the Executive’s prior consent. In any
case, the Executive is solely responsible and liable for the satisfaction of all taxes and
penalties that may be imposed on the Executive in connection with any Company Plan
(including any taxes and penalties under Section 409A), and neither the Company nor any
affiliate shall have any obligation to indemnify or otherwise hold the Executive harmless
from any or all of such taxes or penalties.



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	 	 	     f. For purposes of Section 409A, each payment hereunder will be deemed to be a
separate payment as permitted under Treasury Regulation Section 1.409A-2(b)(2)(iii).
	 
	 	 	     g. Except as specifically permitted by Section 409A, any benefits and reimbursements
provided to the Executive under this Agreement during any calendar year shall not affect
any benefits and reimbursements to be provided to the Executive under this Agreement in any
other calendar year, and the right to such benefits and reimbursements cannot be liquidated
or exchanged for any other benefit. Furthermore, reimbursement payments shall be made to
the Executive as soon as practicable following the date that the applicable expense is
incurred, but in no event later than the last day of the calendar year following the
calendar year in the underlying expense is incurred.”
	 
	16.	 	Headings. You hereby agree that Section 7 of the Employment Agreement is hereby
renamed “Restrictive Covenants”. The headings of the sections of this letter
amendment and the Employment Agreement are for convenience only and shall not control or
affect the meaning or construction or limit the scope or intent of any of the provision of
this letter amendment or the Employment Agreement.
	 
	17.	 	Full Force and Effect. Except as specifically set forth herein, this letter
amendment shall not, by implication or otherwise, alter, amend or modify in any way any terms
of the Employment Agreement, all of which shall continue in full force and effect. Without
limiting the generality of the foregoing, you hereby expressly acknowledge and agree that all
provisions set forth in Sections 7(g), 7(h), 7(i), and 7(j) are applicable to the terms of
this letter amendment.
	 
	18.	 	Governing Law/Venue. The parties agree that this letter amendment shall be deemed
made and entered into in the State of Michigan and shall be governed by and construed under
and in accordance with the laws of the State of Michigan. The parties further acknowledge and
agree that Berrien County, Michigan, shall be the venue and exclusive proper forum in which to
adjudicate any case or controversy arising either, directly or indirectly, under or in
connection with this letter amendment and the parties further agree that, in the event of
litigation arising out of or in connection with this letter amendment in these courts, they
will not contest or challenge the jurisdiction or venue of these courts.
	 
	19.	 	Entire Agreement. This letter amendment, together with the Employment Agreement,
contains the entire agreement between you and Parent and its subsidiaries concerning the
subject matter hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between you and any Investor, Parent
or its subsidiaries with respect hereto.





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     Please acknowledge your agreement with and acceptance to these terms by signing a copy of this
letter amendment and returning it to us as soon as possible.



	 	 	 	 	 
	July 18, 2011 	EXPRESS-1 EXPEDITED SOLUTIONS, INC.

 	 
	 	by  	/s/ Michael Welch
 	 
	 	 	Name:  	MICHAEL WELCH 	 
	 	 	Title:  	CEO 	 
	 



	 	 	 	 	 
	 	 	 
	July 18, 2011 	/s/ John Welch
 	 
	 	JOHN WELCH 	 
	 	 	 
	 





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EXHIBIT A




Express-1 Expedited Solutions, Inc.

3399 South Lakeshore Drive, Suite 225

Saint Joseph, Michigan 49085



July 22, 2011




[NAME]

[ADDRESS]



Re: Grant of Stock Option under the 2001 Stock Option Plan



Dear Mr. [l],





     As you know, Jacobs Private Equity LLC, a Delaware limited liability company (the
“Investor Representative”), certain other investors (such investors, together with the
Investor Representative, the “Investors”), and Express-1 Expedited Solutions, Inc. (the
“Company”), have entered into an investment agreement, dated June 13, 2011, as amended,
modified or supplemented from time to time (the “Investment Agreement”), that will, subject
to the satisfaction of the terms and conditions of the Investment Agreement, result in the
Investors making an investment in the Company as contemplated by the Investment Agreement (the
“Investment”). In connection with the Investment, the Company and you have agreed to amend
your employment agreement with [l], dated [l] (the “Employment Agreement”),
which amendment contemplates, among other things, the grant of certain options to purchase shares
of the Company’s common stock, $0.01 par value per share (the “Stock”). Accordingly, the
Board of Directors of the Company is pleased to award you an option (the “Option”) pursuant
to the provisions of the Company’s 2001 Stock Option Plan (the “Plan”). The Option was
approved and granted on the date of this letter as set forth above (the “Grant Date”);
provided, however, that the Option shall be forfeited and you shall have no further
rights with respect thereto if the Investment Agreement is terminated prior to the closing of the
Investment (the “Closing”). This letter will describe the Option granted to you. Attached
to this letter is a copy of the Plan. The terms of the Plan also set forth provisions governing
the Option granted to you. Therefore, in addition to reading this letter, you should also read the
Plan. Your signature on this letter is an acknowledgment to us that you have read and understand
the Plan and that you agree to abide by its terms. All terms not defined in this letter shall have
the same meaning set forth in the Plan. To the extent the terms in this letter differ from the
terms of the Plan or any other agreement between you and us, the terms in this letter shall govern.



     1. Type of Option. You are granted a nonqualified stock option.



     2. Rights and Privileges. Subject to the conditions hereinafter set forth, we grant
you the right to purchase [l] shares of Stock at an exercise price of $ [l] per share
(the “Exercise Price”), the closing market price of a share of Stock on the Grant Date.



 









 





     3. Vesting Schedule. The Option vests, subject to your continued employment with us
or any of our Subsidiaries, in three equal installments on each first three anniversaries of the
date of the Closing. Any portion of the Option that has vested may be exercised, from time to
time, until this Option terminates pursuant to Section 5 of this letter. Notwithstanding any
provision of this letter or any other agreement between you and us, the Option shall automatically
terminate on the tenth anniversary of the Grant Date.



     4. Method of Exercise. The Option shall be exercised by written notice to the
Company, complying with the applicable procedures established by the Committee or the Company. The
notice shall set forth the shares of Stock to be acquired and shall contain full payment, in
accordance with Section 6.6 of the Plan, of the aggregate Exercise Price for the shares of Stock to
be acquired.



     5. Termination of Option. To the extent not exercised, and notwithstanding any other
provision in this letter, unless the Committee determines otherwise, all vested Options shall
automatically terminate upon the first to occur of the following events:



         (a) termination of your employment for Cause (as such term is defined in the Employment
Agreement); or




         (b) the expiration of three (3) months following the date of termination of your employment with
the Company and its Subsidiaries for any reason other than Cause; or




         (c) breach of any restrictive covenant (which, for the avoidance of doubt, includes any
non-compete, non-solicit, non-disparagement or confidentiality provision) to which you are subject;
or




         (d) your engaging in fraud or willful misconduct that contributes materially to any financial
restatement or material loss to the Company or any of its Subsidiaries.




     Notwithstanding Section 6(f) of the Employment Agreement or any other agreement between you
and the Company or any of its Subsidiaries, any part of an Option that has not vested as of the
date of termination for any reason shall be voided and therefore unexercisable as of said date of
termination. For purposes of this Section 5, “termination of employment” shall include the
termination of an employee’s employment with the Company and its Subsidiaries, the termination of a
director’s service on the Company’s Board of Directors, and the termination of services being
provided to the Company or its Subsidiaries by a consultant, as applicable.



     6. Binding Effect. The rights and obligations described in this letter shall inure to
the benefit of and be binding upon both of us, and our respective heirs, personal representatives,
successors and assigns.



     7. Change of Control.



A-2









 





          (a) Notwithstanding any provision in the Plan or your Employment Agreement to the contrary, upon
the occurrence of a Change of Control (as defined in your Employment Agreement, if applicable),
unless provision is made in connection with the Change of Control for (i) assumption of any
outstanding portion of the Option granted pursuant to this letter or (ii) substitution for such
Option of new awards covering stock of a successor corporation or its “parent corporation” (as
defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of
the Code), with appropriate adjustments as to the number and kinds of shares and the exercise
prices, such Option shall automatically vest and be deemed exercisable as of immediately prior to
such Change of Control. For the avoidance of doubt, notwithstanding any provision in the Plan or
your Employment Agreement to the contrary, none of the Investment, the Closing or any of the
transactions contemplated by the Investment Agreement shall constitute a Change of Control or
otherwise accelerate the vesting of any portion of the Option.




          (b) Notwithstanding any provision in the Plan or your Employment Agreement to the contrary, upon
the occurrence of a Change of Control (as defined in your Employment Agreement, if applicable), the
Committee, is hereby authorized, if deemed appropriate or desirable by the Committee, in its sole
and plenary discretion, to make adjustments in the terms and conditions of, and the criteria
included in, the Options, (i) by providing for a cash payment to you in consideration for the
cancelation of such Option in an amount equal to the excess, if any, of the Fair Market Value (as
of a date specified by the Committee) of a share of Stock subject to such Option over the aggregate
exercise price of such Option and (ii) by canceling and terminating any Option having a per share
exercise price equal to, or in excess of, the Fair Market Value of a share of Stock subject to such
Option without any payment or consideration therefor.




     8. Tax Withholding. The issuance of shares of Stock upon exercise and full payment of
the Exercise Price for the shares of Stock to be acquired is conditioned on satisfaction of any
applicable withholding taxes in accordance with Article 10 of the Plan. You may satisfy, in whole
in part, any withholding tax liability that may arise in connection with the exercise of the Option
by having us withhold from the shares of Stock you would be entitled to receive upon exercise of
the Option a number of shares of Stock having a Fair Market Value equal to such withholding tax
liability.



A-3









 




EXCEPT AS SPECIFICALLY STATED IN THIS LETTER, THIS LETTER AMENDS AND RESTATES ANY LETTER OR OTHER
AGREEMENT OR DOCUMENT PREVIOUSLY ISSUED TO YOU BY EXPRESS-1 EXPEDITED SOLUTIONS, INC. WITH RESPECT
TO THE STOCK OPTION GRANT DESCRIBED HEREIN, AND, AS SUCH, THIS LETTER, TOGETHER WITH THE ATTACHED
PLAN, EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING OF THE PARTIES WITH RESPECT TO THIS GRANT, AND
SUPERSEDE ALL OTHER PRIOR COMMITMENTS, ARRANGEMENTS, OR UNDERSTANDINGS, BOTH ORAL AND WRITTEN,
BETWEEN THE PARTIES WITH RESPECT THERETO.




	 	 	 	 	 
	 	Very truly yours,





EXPRESS-1 EXPEDITED SOLUTIONS, INC.,

 	 
	 	by  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



AGREED AND ACCEPTED




	 	 	 

	 

[NAME]

	 	 







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EXHIBIT B




Fiscal Year 2011 Bonus Formula



Bonus Thresholds




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Base Line	 	 	Budget	 	 	Maximum	 
	Parent’s 2011 Operating Income
	 	$	11,623,000	 	 	$	12,914,000	 	 	$	19,371,000	 
	Parent’s 2011 Revenue
	 	$	168,443,000	 	 	$	187,159,000	 	 	$	280,739,000	 





No amount will be paid for a component if fiscal year 2011 performance for such component
falls below the Base Line. For each component, the bonus will be payable at (1) 50% of the
targeted amount based on achievement of Base Line, (2) 100% of the targeted amount based on
achievement of Budget and (3) 200% of the targeted amount based on achievement of Maximum. In the
event that a component is achieved at a level that falls between Base Line, Budget or Maximum, the
percentage of the targeted amount payable with respect to such component will be determined using
linear interpolation up to the next bonus threshold.





B-1