Exhibit 10.19.5
OLD DOMINION FREIGHT LINE,
INC.
CHANGE OF CONTROL SEVERANCE
PLAN
FOR KEY EXECUTIVES
ARTICLE 1.
PURPOSE. The Company
is engaged in the business of transporting general commodities such
as consumer goods and textiles in less-than-truckload shipments.
The Company’s key executives are experienced in, and
knowledgeable concerning, all aspects of the business of the
Company. The Board recognizes that the possibility of a Change of
Control exists and that a threat or the occurrence of a Change of
Control can result in significant distractions of the
Company’s key executives because of the uncertainties
inherent in such a situation. In addition, the Board has determined
that it is essential and in the best interest of the Company and
its shareholders to secure the continued services, and to ensure
the continued and undivided dedication and objectivity, of the
Company’s key executives in the event of any threat or
occurrence of, or negotiation or other action that could lead to,
or create the possibility of, a Change of Control. The Compensation
Committee of the Board has recommended to the Board that the
Company adopt a change of control severance plan for its key
executives. To that end, the Company does hereby adopt and
establish, effective as of the Effective Date, the Old Dominion
Freight Line, Inc. Change of Control Severance Plan for Key
Executives. The Plan is intended to qualify as a
“top-hat” plan under ERISA, in that it is intended to
be an “employee pension benefit plan” (as defined in
Section 3(2) of ERISA) which is unfunded and provides benefits
only to a select group of management or highly compensated
employees of the Company. This is an amendment and restatement of
the Plan originally adopted effective May 16, 2005.
ARTICLE 2.
DEFINITIONS. Wherever
used in this Plan, including ARTICLE 1 and this ARTICLE 2, the
following terms shall have the meanings set forth below (unless
otherwise indicated by the context):
2.1. “Base
Salary” means, with
respect to a Participant, the amount a Participant is entitled to
receive from the Company as base wages or base salary on an
annualized basis as in effect immediately prior to a Change of
Control or, if greater, at any time thereafter, in each case
without reduction for any amounts contributed by the Participant to
an employee benefit plan of the Company pursuant to a salary
reduction agreement which are not includible in the
Participant’s gross income. Base Salary does not include
bonuses, commissions, overtime pay, shift pay, premium pay, cost of
living allowances or income from stock options, stock grants,
phantom stock awards or other similar types of incentive
compensation.
2.2.
“Board” means
the Board of Directors of the Company.
2.3. “Bonus
Amount” means, with
respect to a Participant, the average of the cash bonuses earned by
the Participant during the three (3) full calendar years
immediately preceding his Termination Date.
2.4. “Change of
Control” means and
will be deemed to have occurred on the earliest of the following
dates which occurs after January 1, 2009:
(a) the date any person or group of
persons (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934) together with its affiliates,
excluding employee benefit plans of the Company, is or becomes (or
publicly discloses that such person or group is or has become),
directly or indirectly, the “beneficial owner” (as
defined in Rule 13d-3 promulgated under the Securities Exchange Act
of 1934) of securities of the Company representing thirty-five
percent (35%) or more of the combined voting power of the
Company’s then outstanding voting securities; provided,
however, that the event described in this subparagraph
(a) shall not be deemed to be a Change of Control by virtue of
the beneficial ownership, or the acquisition of beneficial
ownership, of voting securities by (i) any employee benefit
plan sponsored or maintained by the Company or by a person
controlled by the Company; (ii) any underwriter (as such term
is defined in Section 2(a)(11) of the Securities Act of 1933)
that beneficially owns voting securities temporarily in connection
with an offering of such securities; or (iii) any member of
the family of Earl E. Congdon or John R. Congdon unless David S.
Congdon, acting in good faith, provides written notice to the
Company that David S. Congdon believes, and within twenty
(20) business days after the Company receipt of David S.
Congdon’s notice a majority of the independent members of the
Board of Directors determines, that the beneficial ownership of
voting securities by such family member creates a substantial
threat to corporate policy and effectiveness. For the purpose of
clause (iii) above, “family” means any lineal
descendent, including adoptive relationships, of Earl E. Congdon or
John R. Congdon, any spouse of the foregoing and any trust
established by or for the benefit of any of the foregoing, and
“independent” shall have the meaning set forth in the
corporate governance rules of the principal exchange on which the
Company’s common stock is listed; or
(b) the date when, as a result of a
tender offer or exchange offer for the purchase of securities of
the Company (other than such an offer by the Company for its own
securities), or as a result of a proxy contest, merger, share
exchange, consolidation or sale of assets, or as a result of any
combination of the foregoing, individuals who at the beginning of
any two (2) year period during the Term constitute the Board,
plus new directors whose election or nomination for election by the
Company’s shareholders is approved by a vote of at least
two-thirds (2/3) of the directors still in office who were
directors at the beginning of such two-year period
(“Continuing Directors”), cease for any reason during
such two-year period to constitute at least two-thirds
(2/3) of the members the Board; or
(c) the effective date of a merger,
share exchange or consolidation of the Company with any other
corporation or entity regardless of which entity is the survivor,
other than a merger, share exchange or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or being converted into voting securities of
the surviving or acquiring entity) at least sixty percent
(60%) of the combined voting power of the voting securities of
the Company or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; or
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(d) the effective date of the sale
or disposition by the Company of all or substantially all of the
Company’s assets.
2.5.
“Code” means
the Internal Revenue Code of 1986, as amended, and rules and
regulations issued thereunder.
2.6.
“Company” means Old Dominion Freight Line, Inc., a
Virginia corporation with its principal offices at Thomasville,
North Carolina.
2.7. “Company Welfare
Benefit Plans” means the group medical, dental, vision and
life insurance plans or programs (whether insured or self insured,
or any combination thereof) provided by the Company for the benefit
of its active employees or former employees and their dependents
immediately prior to the Change of Control, or if thereafter
improved or enhanced, as of the Participant’s Termination
Date. Each such individual plan or program shall be referred to
sometimes herein as a “Company Welfare Benefit
Plan.” The group medical, dental, and vision plan is also
referred to herein as the Company Health Care Plan, and the group
life insurance plan is also referred to herein as the Company Life
Insurance Plan
2.8.
“Committee” means the Compensation Committee of the
Board.
2.9. “Compensation
Continuance Period” means twelve (12) calendar months plus
three (3) additional calendar months for each Year of Service
the Participant has completed as of his Termination Date in excess
of ten (10) Years of Service; provided, however, in no event
shall the Compensation Continuance Period exceed thirty-six
(36) calendar months. The Compensation Continuance Period
shall commence on the first day of the calendar month next
following the calendar month in which the Termination Date
occurs.
2.10. “Compensation
Continuance Termination Event” means the termination of a Participant’s
employment by the Company for any reason other than For Cause,
death or Total Disability, or by the Participant for Good
Reason.
2.11. “Confidential
Information” means
all information concerning the business of the Company and its
affiliates that is confidential, proprietary or otherwise not
generally available to the public. By way of example, Confidential
Information includes, without limitation, all
competitively-sensitive information, all trade secrets, processes,
specifications, data, files, computer programs and related codes,
software, improvements, inventions, techniques, business plans,
marketing plans, strategies, acquisition prospects, forecasts,
methods, manner of operations, information relating to past,
present and prospective customers and clients, pricing and cost
information, other financial information, employee lists, personnel
policies, contracts, digital intellectual property, information
with respect to internal affairs, and all information covered by
the Trade Secrets Protection Act, N.C. Gen. Stat., Chapter 66
§§152-162. The parties
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expressly agree that Confidential
Information does not exist in written form only. Notwithstanding
the foregoing, “Confidential Information” does not
include information that (i) is or becomes generally available
to the public other than as a result of a disclosure by the
Participant in violation of the provisions of the Plan, or
(ii) is received by the Participant from another party that
did not receive such information directly or indirectly from the
Company or any of its affiliates under an obligation of
confidentiality.
2.12. “Effective
Date” means
May 16, 2005, the date this Plan was approved by the Board.
The Effective Date of this Amendment and Restatement is
January 1, 2009.
2.13. “Eligible Key
Executive” means
each employee of the Company who is designated on the books and
records of the Company as either a Senior Vice President or a Vice
President and who is determined by the Committee to be a management
or highly compensated employee of the Company. An individual will
be treated as an employee of the Company if there exists between
the individual and the Company the legal and bonafide relationship
of employer and employee.
2.14.
“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended,
and rules and regulations issued thereunder.
2.15. “Excise
Tax” means the
excise tax on excess parachute payments under Section 4999 of
the Code (or any successor or similar provision thereof), including
any interest or penalties with respect to such excise
tax.
2.16. “Extended Coverage
Period” means the
period commencing on the Participant’s Termination Date and
ending on the earlier of the date of the Participant’s death
or the last day of the calendar month in which he receives his
final payment of Termination Compensation.
2.17. “For
Cause” means one or
more of the following, in each case as determined by the Company in
its sole discretion: (i) the Participant’s conviction by
a court of competent jurisdiction of, or pleading
“guilty” or “no contest” to, theft, fraud
or embezzlement from the Company; (ii) the Participant’s
conviction by a court of competent jurisdiction of, or pleading
“guilty” or “no contest” to, a felony which
constitutes a crime involving moral turpitude and results in
material harm to the Company; (iii) willful and continued
failure by the Participant to substantially perform his duties on
behalf of the Company (other than any such failure resulting from
the Participant’s Total Disability or any such actual or
anticipated failure after the issuance of a Notice of Termination
for Good Reason by the Participant) for a period of at least thirty
(30) consecutive days after a written demand for substantial
performance has been delivered to the Participant by the
Responsible Person (as defined below) which specifically identifies
the manner in which the Responsible Person believes that the
Participant has not substantially performed the Participant’s
duties; (iv) willful misconduct or gross negligence by the
Participant which is injurious to the Company; or (v) any
diversion by the Participant for his personal gain of any clearly
viable and significant business opportunity from the Company (other
than with the prior written consent of the Board). For purposes of
this Section 2.17, an act, or failure to act, on
the
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Participant’s part shall not
be deemed “willful” if done, or omitted to be done, by
the Participant in good faith and with reasonable belief that the
Participant’s act, or failure to act, was in the best
interest of the Company, and “Responsible Person” shall
mean, with respect to a Participant who is a Senior Vice President,
the Chief Executive Officer of the Company, and with respect to a
Participant who is a Vice President, the executive officer of the
Company who is the direct or indirect supervisor of the
Participant. The unwillingness of a Participant to accept any
condition or event which would otherwise constitute Good Reason may
not be considered by the Responsible Person to be a failure by the
Participant to substantially perform his duties on behalf of the
Company.
2.18. “Good
Reason” means,
without the Participant’s express written consent, any of the
following:
(a) a material breach by the Company
of any provision of this Agreement;
(b) a material reduction by the
Company in the Participant’s Base Salary as in effect as of
the date of this Agreement or as the same shall be increased from
time to time, or a reduction in the level of the
Participant’s opportunity to earn bonuses under the bonus and
incentive plans and programs of the Company (including a reduction
in the percentage of net profits before taxes assigned to the
Participant under the Company’s Performance Incentive Plan
(“PIP”);
(c) the liquidation, dissolution,
consolidation or merger of the Company or transfer of all or a
significant portion of the Company’s assets unless a
successor or successors (by merger, consolidation or otherwise) to
which all or a significant portion of the assets have been
transferred assumes all duties and obligations of the Company under
this Agreement;
(d) the assignment to the
Participant of duties inconsistent with the position and status of
the offices and positions of the Company held by the Participant as
of the date of this Agreement;
(e) the exclusion of the Participant
from participation in the Company’s employee benefit plans
(other than as a result of the termination of the plan or any other
action of the Company that affects substantially all employees
participating in the plan) in effect as of the date of this
Agreement, as the same may be improved or enhanced from time to
time;
(f) the transfer of the
Participant’s primary work location to a location that is
more than thirty (30) miles from the Participant’s
primary work location immediately prior to the date of this
Agreement or the requirement that the Participant relocate his
principal residence more than thirty (30) miles from the
Participant’s primary work location as of the date of this
Agreement; or
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(g) the requirement by the Company
that the Participant travel on Company business to a substantially
greater extent than required immediately prior to the date of this
Agreement;
Notwithstanding the foregoing, the
occurrence of an event that would otherwise constitute Good Reason
under this Section 2.18 shall cease to be an event
constituting Good Reason if the Participant fails to provide the
Company with notice of the occurrence of any of the foregoing
within the thirty (30) day period immediately following the
date on which the Participant first becomes aware (or reasonably
should have become aware) of the occurrence of such
event.
2.19.
“Participant” means each Eligible Key Executive who has been
selected to participate in the Plan pursuant to ARTICLE
3.
2.20.
“Person” means any individual, partnership, joint
venture, corporation, company, firm, group or other
entity.
2.21.
“Plan” means
the Old Dominion Freight Line, Inc. Change of Control Severance
Plan for Key Executives as herein set out, or as duly
amended.
2.22. “Severance
Benefits” means the
severance benefits, including Termination Compensation, described
in
ARTICLE 4.
2.23. “Specified
Employee” shall
mean a Participant who is a key employee as described in Code
§ 416(i)(1)(A), disregarding Paragraph 5 thereof and using
compensation as defined under Treas. Reg. 1.415(C)(2)(a). A
Participant is not a Specified Employee unless any stock of the
Employer is publicly traded on an established securities market or
otherwise and the Participant is a Specified Employee on the date
of his or her Separation from Service.
2.24. “Termination
Compensation” means
an annual amount equal to the sum of the Participant’s Base
Salary and Bonus Amount. If the Executive’s termination of
employment occurs within twelve (12) months of a Change of
Control, his Severance Benefits, if any, shall be based on 100% of
his Termination Compensation. If his termination of employment
occurs within thirteen (13) to twenty-four (24) months of
a Change of Control, his Severance Benefits, if any, shall be based
on 2/3 of his Termination Compensation, and if his termination of
employment occurs within twenty-five (25) to thirty-six
(36) months of a Change of Control, his Severance Benefits, if
any, shall be based on 1/3 of his Termination Compensation.
“Monthly Termination Compensation” means the
Participant’s Termination Compensation as determined pursuant
to this Section 2.24 divided by twelve (12).
2.25. “Termination
Date” means the
date the Participant’s employment with the Company is
terminated for any reason.
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2.26. “Total
Disability” means a
condition for which the Participant is determined to be disabled
under the Company’s long-term disability plan as in effect as
of the Effective Date or as the same may be amended from time to
time.
2.27. “Years of
Service” means,
with respect to a Participant, each consecutive 365-day period
within the period of Continuous Service (as defined below),
measured from the most recent beginning date of employment of the
Participant as a full-time employee of the Company.
“Continuous Service” means the period of
continuous, unbroken full-time employment of the Participant
(including for this purpose, vacation leave, sick leave, approved
leaves of absence, leaves of absence due to disability, leaves of
absence due to workers compensation related injuries, family and
medical leave, and any other days off in accordance with the
Company’s benefit programs and policies) commencing with his
most recent beginning date of employment and ending on his
Termination Date. Only whole Years of Service are taken into
account for purposes of the Plan. Partial Years of Service shall be
ignored.
ARTICLE 3.
ELIGIBILITY AND
PARTICIPATION.
3.1. Commencement of
Participation. An
individual shall be eligible to participate in the Plan if he is an
Eligible Key Executive and is selected by the Committee to
participate in the Plan. Each Participant’s participation in
the Plan shall become effective as of the date he is selected to
participate in accordance with the provisions of this ARTICLE
3.
3.2. Duration of
Participation. A
Participant shall cease to be a Participant in the Plan
(i) if, prior to a Change of Control (but subject to the
provisions ARTICLES 4 and 22) he ceases to be an Eligible Key
Executive and has received written notice of his change of status
from the Company, or (ii) his employment is terminated under
circumstances that do not entitle him to receive Severance Benefits
under the Plan. A Participant who becomes entitled to receive
Severance Benefits under the Plan shall remain a Participant in the
Plan until the full amount of such Severance Benefits has been paid
to him in accordance with the terms of the Plan.
ARTICLE 4.
SEVERANCE
BENEFITS.
4.1. Entitlement; Amount of
Severance Benefits. Subject to Sections 4.2, 4.3 and 4.4, in the
event the Participant’s employment is terminated as a result
of a Compensation Continuance Termination Event and
such Compensation Continuance Termination Event occurs within
thirty-six (36) months following a Change of Control, the
Participant shall be entitled to receive the following Severance
Benefits:
(i) The Participant shall continue
to receive his Base Salary through the last day of the month in
which his Termination Date occurs.
(ii) The Participant shall receive
each month during the Compensation Continuance Period a monthly
benefit equal to his Monthly Termination Compensation. The
Participant’s Monthly Termination Compensation shall be paid
in accordance with the payroll schedule for salaried personnel of
the Company.
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(iii)
Notwithstanding anything to the contrary in the Plan or in a
Participant or Company payment election, the Plan may not make
payment based on Separation from Service to a Participant who, on
the date of Separation from Service is a Specified Employee,
earlier than 6 months following Separation from Service (or if
earlier, upon the Specified Employee’s death), except as
permitted under this provision. This limitation applies regardless
of the Participant’s status as a Specified Employee or
otherwise on any other date including the next Specified Employee
effective date had the Participant continued to render services
through such date. Furthermore, the first six (6) months of
any such payments of deferred compensation that are required to be
paid in installments shall be paid at the beginning of the seventh
(7 th ) month following the
Participant’s separation from Service. All remaining
installment payments shall be made as would ordinarily have been
made under the provisions of the Plan. This section does not apply
to payments made on account of a domestic relations order, payments
made because of a conflict of interest, or payment of employment
taxes, all as described in Treas. Reg.
§1.409A-3(i)(2)(i)
In no event shall any Severance
Benefits be paid to the Participant in the event the
Participant’s employment is terminated by the Company For
Cause, on account of the Participant’s death or Total
Disability, or by the Participant for any reason other than Good
Reason, or as a result of a Compensation Continuance Termination
Event that occurs more than thirty-six (36) months following a
Change of Control.
4.2. Release of
Claims. No Severance
Benefits shall be provided to a Participant unless the Participant
has properly executed and delivered to the Company a release of
claims and that release of claims has become irrevocable as
provided therein. Such release of claims shall not be accepted by
the Company unless it is executed on or after the
Participant’s Termination Date and received by the Company
within forty-five (45) days after the Participant’s
Termination Date. The initial release of claims is attached to this
Plan as Exhibit A. Prior to the occurrence of a Change of Control,
but subject to Section 22.2, the release of claims may be
revised by the Company. The Company may in any event modify the
release of claims to conform it to the laws of the local
jurisdiction applicable to a Participant so long as such
modification does not increase the obligations of the Participant
thereunder.
4.3. Anticipated Change of
Control. Notwithstanding
the provisions of Section 4.1, if (i) the
Participant’s employment is terminated prior to a Change of
Control as a result of a Compensation Continuance Termination Event
and the Participant would have been entitled to receive Severance
Benefits had the Compensation Continuance Termination Event
occurred within thirty-six (36) months following a Change of
Control, and (ii) the Participant reasonably demonstrates that
such termination was at the request or suggestion of the
Company’s then existing senior management team, the Board or
a third party and such termination occurred after any steps
reasonably calculated to effect a
8
Change of Control have been taken,
then for purposes of the Plan, such Compensation Continuance
Termination Event shall be deemed to have occurred immediately
after such Change of Control, so long as such Change of Control
actually occurs.
4.4. Exclusive
Payments. The Severance
Benefits are intended to constitute the exclusive payments in the
nature of severance or termination compensation that shall be due a
Participant upon termination of employment due to the occurrence
of
