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Exhibit
10.10
EXECUTIVE SEVERANCE
AGREEMENT
THIS EXECUTIVE SEVERANCE
AGREEMENT (this “ Agreement ”) between YRC
Worldwide Inc., a Delaware corporation (“ YRC ”)
and [name of executive] (the “ Executive
”),
W I T N E S S E T
H:
WHEREAS , the duly
authorized Compensation Committee (the “ Committee
”) of the Board of Directors (the “ Board
”) of YRC or the Board, has approved YRC entering into
revised severance agreements with key executives of YRC and its
Subsidiaries (collectively, the “ Corporation
”);
WHEREAS , the duly
authorized Committee or the Board has selected the Executive as a
key executive of the Corporation; and
WHEREAS , should YRC
receive any proposal from a third person concerning a possible
Business Combination (defined below) with, or acquisition of equity
securities of, YRC, the Board believes it important that the
Corporation and the Board be able to rely upon the Executive to
continue in his position, and that YRC have the benefit of the
Executive performing his duties without his being distracted by the
personal uncertainties and risks created by such a
proposal;
NOW, THEREFORE , the
parties agree as follows:
1. Definitions . As
used in this Agreement, the following capitalized terms shall have
the meanings given the terms in this Section 1.
| (a) |
“ Applicable Period ” means two years from
the date of the Executive’s Termination. |
| (b) |
“ Business Combination ” means any
transaction that is referred to as such in the Certificate of
Incorporation of YRC, as amended. |
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(i) |
a conviction of a felony involving moral turpitude by a court
of competent jurisdiction that is no longer subject to direct
appeal, |
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(ii) |
conduct that is materially and demonstrably injurious to YRC,
or |
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(iii) |
the Executive’s willful engagement in one or more acts of
dishonesty resulting in material personal gain to the Executive at
the expense of YRC. |
| (d) |
“ Change of Control ,” for the purposes of
this Agreement, shall be deemed to have taken place if: |
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(i) |
a third person, including a “group” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), purchases or
otherwise acquires shares of YRC after the date of this Agreement
that, together with stock held by such person or group, constitutes
more than 50% of the total fair market value or total voting power
of the stock of YRC; |
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(ii) |
a third person, including a “group” as defined in
Section 13(d)(3) of the Exchange Act purchases or otherwise
acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or group) shares
of YRC after the date of this Agreement and as a result thereof
becomes the beneficial owner of shares of YRC having 35% or more of
the total number of votes that may be cast for election of
directors of YRC; or |
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(iii) |
as the result of, or in connection with any cash tender or
exchange offer, merger or other Business Combination, or contested
election, or any combination of the foregoing transactions, the
Continuing Directors shall cease to constitute a majority of the
Board of Directors of YRC or any successor to YRC during any
12-month period. |
| (e) |
“ Continuing Director ” means a director of
YRC who meets the definition of Continuing Director contained in
the Certificate of Incorporation of YRC, as amended. |
| (f) |
“ Normal Retirement Age ” means the last day
of the calendar month in which the Executive’s 65th birthday
occurs. |
| (g) |
“ Permanent Disability ” means, as
determined in the reasonable discretion of the Board or the duly
authorized Committee, Executive is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months or is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an
accident and health plan covering employees of the
Executive’s employer. |
| (h) |
“ Subsidiary ” means any domestic or foreign
entity, of which YRC or its Subsidiaries directly or indirectly
owns a majority of the entity’s shares or other equity
interests normally entitled to vote in electing directors or
selecting management. |
| (i) |
“ Target Bonus ” means the incentive
compensation that the Board or the duly authorized Committee set or
approved, that the Corporation has targeted to pay the Executive if
the Executive, the Corporation or a Subsidiary achieves certain
specified objectives that the Board or the duly authorized
Committee has outlined or approved. The term “ Target
Bonus ” for the year of a Termination means the Target
Bonus of the Executive calculated as if the Executive were entitled
to receive the entire Target Bonus for the relevant period without
regard to whether the specified objectives are actually
achieved. |
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| (j) |
Construction & Interpretation. As used in this
Agreement, unless the context expressly requires the contrary,
references to Sections shall mean the sections and subsections of
this Agreement; references to “including” shall mean
“including (without limitation)”; references to a
“person” shall mean both legal entities and natural
persons; references to the singular shall include the plural and
vice versa ; and references to the masculine shall include
the feminine and neutral, and vice versa . |
2. Services During Certain
Events . If a third person begins a tender or exchange offer
for the shares of the Corporation, circulates a proxy to
shareholders of the Corporation, or takes other steps seeking to
effect a Change of Control, the Executive agrees that the Executive
will not voluntarily leave the employ of the Corporation without
the consent of the Corporation and will render the services
contemplated in the recitals to this Agreement, until the third
person has abandoned or terminated the third person’s efforts
to effect a Change of Control or until 90 days after a Change
of Control has occurred. If the Executive fails to comply with the
provisions of this Section 2, the Corporation will suffer
damages that are difficult, if not impossible, to ascertain.
Accordingly, should the Executive fail to comply with the
provisions of this Section 2, the Corporation shall retain the
amounts that would otherwise be payable to the Executive (other
than accrued salary under Section 4(a) and normal health,
welfare and retirement benefits until the date of the
Executive’s termination) under this Agreement as fixed,
agreed and liquidated damages but shall have no other recourse
against the Executive.
3. Termination After or in
Connection With a Change of Control . For purposes of this
Agreement, the term “ Termination ” shall
include the following in this Section 3:
| (a) |
the Corporation’s termination of the Executive’s
employment with the Corporation within two years after a Change of
Control for any reason other than death, Permanent Disability,
retirement at or after his Normal Retirement Age or
Cause; |
| (b) |
the Corporation’s termination of the employment of the
Executive with the Corporation, for any reason other than death,
Permanent Disability, retirement at or after his Normal Retirement
Age or Cause, if the termination occurs at any time
between: |
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(i) |
the date the Corporation enters into a definitive agreement or
files a proxy statement, or the date a third person begins a tender
or exchange offer, in each case, in connection with a transaction
that would constitute a Change of Control, or the date the
Corporation takes other steps seeking to effect a Change of
Control, and |
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(ii) |
the date the Change of Control transaction is either
consummated, abandoned or terminated (for this purpose, the Board
shall have the sole and absolute discretion to determine that a
proposed transaction has been abandoned), or |
| (c) |
the resignation of the Executive after the occurrence of any of
the following events within two years after a Change of
Control: |
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(i) |
an adverse change of the Executive’s title or a reduction
or adverse change in the nature or scope of the Executive’s
authority or duties from those the Executive exercised and
performed immediately prior to the Change of Control; |
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(ii) |
a transfer of the Executive to a location that is more than 35
miles away from the location where the Executive was employed
immediately prior to the Change of Control; |
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(iii) |
a substantial increase occurs in the amount of time the
Executive is required to spend traveling (for this purpose, a
“substantial increase” will be deemed to occur if the
Executive is required to travel in an amount greater than 30% more
in any calendar year, measured in number of days, as compared to
the average number of days the Executive was required to travel
during the three preceding calendar years). |
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(iv) |
any reduction in the rate of the Executive’s annual
salary below his rate of annual salary immediately prior to the
Change of Control; or |
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(v) |
any reduction in the level of the Executive’s fringe
benefits or bonus below a level consistent with the
Corporation’s practice prior to the Change of Control, other
than changes applicable to all similarly situated executives of the
Corporation. |
4. Termination
Payments . In the event of a Termination, YRC shall provide to
the Executive the following benefits:
| (a) |
YRC shall pay to the Executive, in accordance with its normal
payroll policies, the compensation and benefits that the Executive
accrued through the date of Termination. This amount shall include
the pro rata amount of the Executive’s Target Bonus for the
year that includes the date of Termination. |
| (b) |
YRC shall pay to the Executive, on the “ Termination
Payment Commencement Date ” (defined below), as
additional compensation for services rendered to the Corporation, a
lump sum cash amount (subject to the minimum applicable federal,
state or local lump sum withholding requirements, if any, unless
the Executive requests that a greater amount be withheld) equal to
two times the sum of: |
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(i) |
the Executive’s current base salary, and |
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(ii) |
the Executive’s Target Bonus in effect for the year that
includes the date of the Executive’s Termination (or if no
such Target Bonus has been set, the Target Bonus for the prior
year). |
With respect to a payment to
the Executive pursuant to this Agreement, the “
Termination Payment Commencement Date ” shall mean
(x) if the Board (or its delegate) determines in its sole
discretion that as of the date of the Executive’s Termination
the Executive is a “specified employee” (as defined in
Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986,
as amended (the “ Code ”), and Department of
Treasury regulations and other interpretive guidance issued
thereunder) as of the date of the Executive’s Termination and
that Section 409A of the Code applies with respect to such
payment, the first business day following the six-month anniversary
of the date of the Executive’s Termination; or (y) if
the Board (or its
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delegate) determines in its
sole discretion that the Executive is not such a “specified
employee” as of the date of the Executive’s Termination
(or that Section 409A of the Code does not apply with respect
to such payment), the date of the Executive’s Termination.
The period commencing on the Executive’s date of Termination
and ending on the six-month anniversary of such date is referred to
herein as the “ Six-Month Delay Period
”)
| (c) |
During the “ Applicable Period ” , the
Corporation shall arrange to provide the Executive with
substantially similar benefits to the benefits the Executive would
have received if the Executive had remained an employee of the
Corporation, including the applicable medical, dental, life
insurance, short-term disability, long-term disability and
perquisite plans and programs covering key executives of the
Corporation; provided that the Executive shall not be
entitled to accrue any benefits after Termination under any 401(k)
plan or defined benefit or contribution pension plan of the
Corporation. Any benefits accrued under any such 401(k) or defined
benefit or contribution pension plan shall be governed by those
plans. |
If the Board (or its
delegate) determines in its sole discretion that Section 409A
of the Code applies with respect to any amount payable to or on
behalf of the Executive under a perquisite plan or other similar
program of the Corporation, then any amount payable to or on behalf
of the Executive under such perquisite plan or other similar
program of the Corporation for each calendar month during the
Applicable Period, including any amounts payable to or on behalf of
the Executive following the initial 18-month coverage period of any
medical, dental or other benefit exempt under Section 409A of
the Code, shall be paid in accordance with the then existing
payroll practices of the Corporation; provided, however ,
that if the Board (or its delegate) also determines in its sole
discretion that the Executive is a “specified employee”
as of the date of the Executive’s Termination, any such
amount(s) that are subject to Section 409A of the Code and are
payable during the Six-Month Delay Period shall be paid in a lump
sum on the Termination Payment Commencement Date, or, if earlier
the Executive’s death
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