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.
|
|
|
(i)
|
a conviction of
a felony involving moral turpitude by a court of competent
jurisdiction that is no longer subject to direct appeal,
|
|
|
(ii)
|
conduct that is
materially and demonstrably injurious to YRC, or
|
|
|
(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:
|
|
|
(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;
|
|
|
(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
|
|
|
(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 Separation Amount” means an amount equal to
(A) Executive’s target annual bonus percentage in effect
for the year in which the Termination occurs (or if no such
percentage has been established,
%, or such percentage as the Compensation Committee determines
in its sole discretion), times (B) the Executive’s
then-current base salary.
|
|
(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
|
-2-
|
|
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:
|
|
|
(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
|
|
|
(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:
|
|
|
(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;
|
-3-
|
|
(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;
|
|
|
(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).
|
|
|
(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
|
|
|
(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. In addition, YRC shall pay to the
Executive the Executive’s annual bonus for the year in which
the date of Termination occurs, if any, earned by the achievement
of performance goals set under the Corporation’s annual
incentive plan and paid at the same time the Corporation pays
bonuses to similarly situated employees under such plan.
|
|
(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:
|
|
|
(i)
|
the
Executive’s current base salary, and
|
|
|
(ii)
|
the
Executive’s Target Separation Amount.
|
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
-4-
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 such 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) 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, and for each calendar month during the
Applicable Period thereafter shall be paid in accordance with the
then existing payroll practices of the Corporation.
|
(d)
|
The Executive
shall be e
|
|
