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EXHIBIT (10b)
EMPLOYMENT AGREEMENT
AGREEMENT, made this 20th day of April, 2000, by and between Yellow
Corporation, a Delaware corporation ("Yellow"), and Xxxxxxx X. Xxxxxxxxx, III
(the "Executive").
WITNESSETH
WHEREAS, the Board of Directors of Yellow has approved the employment
of the Executive on the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive is willing, for the consideration provided, to
enter into employment with Yellow on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Employment. Yellow hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, upon the terms and
conditions set forth in this Agreement.
2. Term. The term of this Agreement shall be for two (2) years from
the date hereof (the "Effective Date"), with said term renewing
daily, and ending on the date of termination of the Executive's
employment determined pursuant to Section 5, 6, 7, 9 or 10,
whichever shall be applicable.
3. Position and Duties. The Executive shall serve as President,
Regional Carrier Group, and shall have such responsibilities and
authority as commensurate with such offices and as may from time to
time be prescribed by or pursuant to Yellow's bylaws. The Executive
shall devote
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substantially all of his working time and efforts to the business
and affairs of Yellow.
4. Compensation. During the period of the Executive's employment,
Yellow shall provide the Executive with the following compensation
and other benefits:
(a) Base Salary. Yellow shall pay to the Executive base salary at
the rate of $350,000 per annum, retroactive to February 1,
2000, which shall be payable in accordance with the standard
payroll practices of Yellow. Such base salary rate shall be
reviewed annually in accordance with Yellow's normal policies
beginning in calendar year 2001; provided, however, that at no
time during the term of this Agreement shall the Executive's
base salary be decreased from the rate then in effect except
(i) in connection with across-the-board reductions similarly
affecting substantially all senior executives of Yellow or (ii)
with the written consent of the Executive.
(b) Annual Bonus. The Executive shall participate in a bonus
program established and maintained by Yellow pursuant to which
a threshold award for each fiscal year is 13.75% of the
Executive's base salary; a target award is 55% of base salary;
and a maximum award is 110% of base salary in respect of each
fiscal year of Yellow commencing with 2000, provided that any
payment under such award shall be conditioned upon satisfaction
of the threshold. The criteria for establishment of the
threshold and
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target and the parameters for payments at, above or below the
target shall be determined annually by the Compensation
Committee of the Board of Directors of Yellow. At least 80% of
the criteria established by the Compensation Committee which
would result in a payment of 55% of base salary to the
Executive shall be based on specific measurements of financial
performance of Yellow during the applicable fiscal year and the
remaining percentage may be based on non-financial criteria.
(c) Stock Options. Yellow has previously granted to Executive
options to purchase 290,000 shares of Common Stock of Yellow in
five separate grants, each grant having an option term of ten
years and an option price per share equal to the closing price
of a share of Common Stock of Yellow as reported on the NASDAQ
National Market System on the date of each grant, and each
grant vesting over four years in equal annual installments.
With respect to succeeding years, the Compensation Committee of
the Board of Directors of Yellow shall determine the number of
stock options, if any, to be granted to the Executive and the
terms and conditions of any such options.
(d) Supplemental Retirement Benefits. Yellow shall provide
Executive with supplemental retirement benefits in accordance
with this subsection (d) and Appendix A pursuant to which the
Executive shall receive from Yellow upon his termination of
employment with Yellow, the difference between (i) the monthly
benefit that
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he would have received under Section 4.4 of the Yellow Freight
Office, Clerical, Sales and Supervisory Personnel Pension Plan
(the "Pension Plan") (calculated as a single life annuity
payable commencing at his Normal Retirement Date as defined
under the Pension Plan with an actuarial reduction if payment
commences prior to his Normal Retirement Date) using 16 years
of Credited Service as defined under the Pension Plan plus his
actual Credited Service credited under the Pension Plan from
June 1, 1994, the date of Executive's commencement of
employment with Yellow and using Compensation as defined in
Section 2.1(h) (2) of the Pension Plan, but without any
reduction under Section 401(a) (17) of the Internal Revenue
Code of 1986, as amended (the "Code") and (ii) the monthly
benefit actually payable to the Executive under Section 4.4 of
the Pension Plan, calculated at the time the Executive
commences payment of a Vested Pension under the Pension Plan.
Following the termination of Executive's employment, the
supplemental retirement benefit described in this subsection
(d) shall be payable no sooner than the earliest date of
Executive's eligibility to receive retirement benefits under
the Plan measured from his date of termination with Executive
having the option of deciding when to commence payments
following achieving such eligibility, subject to actuarial
reduction for payments commencing prior to Executive's Normal
Retirement Date, and shall continue until the Executive's
death. Upon the
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Executive's death, if at the time of his death payments had
already commenced under this Supplemental Retirement Benefit
and if he is survived by and still married to the person who
was his spouse on June 1, 1994, the monthly supplemental
retirement benefit payable to the Executive during his life
shall continue to said surviving spouse until her death. If at
the time of his death, the Executive had not yet qualified for
payment of a retirement benefit under the Pension Plan or if
Executive had qualified but payments had not yet commenced, if
he is survived by and still married to the person who was his
spouse on June 1, 1994, the Supplemental Retirement Benefit
shall be payable to said spouse no sooner than the earliest
date that Executive would have been eligible to receive
retirement benefits under the Plan measured from his date of
death with said spouse having the option of deciding when to
commence payments following the date that Executive would have
achieved such eligibility, subject to actuarial reduction for
payments commencing prior to the date that Executive would have
reached his Normal Retirement Date, and shall continue to said
surviving spouse until her death. If the Executive at the time
of his death is neither survived by or not married to the
person who was his spouse on June 1, 1994, no further
supplemental retirement benefits shall be payable under this
subsection (d) following his death. The Executive acknowledges
that these supplemental retirement benefits are an
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element of the compensation to be paid for his services and not
an unfunded plan of deferred compensation within the meaning of
Section 201 of the Employee Retirement Income Security Act, as
amended.
(e) Other Benefits. In addition to the compensation and benefits
otherwise specified in this Agreement, the Executive (and, if
provided for under the applicable plan or program, his spouse)
shall be entitled to participate in, and to receive benefits
under, Yellow's employee benefit plans and programs that are or
may be available to senior executives generally and on terms
and conditions that are no less favorable than those generally
applicable to other senior executives of Yellow. At no time
during the term of this Agreement shall the Executive's
participation in or benefits received under such plans and
programs be decreased except (i) in connection with
across-the-board reductions similarly affecting substantially
all senior executives of Yellow or (ii) with the written
consent of the Executive.
(f) Expenses. The Executive shall be entitled to prompt
reimbursement of all reasonable expenses incurred by him in
performing services hereunder, provided he properly accounts
therefore in accordance with Yellow's policies.
(g) Office and Services Furnished. Yellow shall furnish the
Executive with office space, secretarial assistance and such
other facilities
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and services as shall be suitable to the Executive's position
and adequate for the performance of his duties hereunder.
5. Termination of Employment by Yellow.
(a) Cause. Yellow may terminate the Executive's employment for
Cause if the Executive willfully engages in conduct which is
materially and demonstrably injurious to Yellow or if the
Executive willfully engages in an act or acts of dishonesty
resulting in material personal gain to the Executive at the
expense of Yellow. Yellow shall exercise its right to terminate
the Executive's employment for Cause by (i) giving him written
notice of termination at least 30 days before the date of such
termination specifying in reasonable detail the circumstances
constituting such Cause; and (ii) delivering to the Executive a
copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board
of Directors after reasonable notice to the Executive and an
opportunity for the Executive and his counsel to be heard
before the Board of Directors, finding that the Executive has
engaged in the conduct set forth in this subsection (a). In the
event of such termination of the Executive's employment for
Cause, the Executive shall be entitled to receive (i) his base
salary pursuant to Section 4(a) and any other compensation and
benefits to the extent actually earned pursuant to this
Agreement or any benefit plan or program of Yellow as of the
date of such termination at the normal time for
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payment of such salary, compensation or benefits, but not
including the Supplemental Retirement Benefit described in
Section 4(d), and (ii) any amounts owing under Section 4 (f).
In addition, in the event of such termination of the
Executive's employment for Cause, all outstanding options held
by the Executive at the effective date of such termination
which had not already been exercised shall be forfeited. Except
as provided in Section 11, the Executive shall receive no other
compensation or benefits from Yellow.
(b) Disability. If the Executive incurs a Permanent and Total
Disability, as defined below, Yellow may terminate the
Executive's employment by giving him written notice of
termination at least 30 days before the date of such
termination. In the event of such termination of the
Executive's employment because of Permanent and Total
Disability, (i) the Executive shall be entitled to receive his
base salary pursuant to Section 4(a) and any other compensation
and benefits to the extent actually earned by the Executive
pursuant to this Agreement or any benefit plan or program of
Yellow as of the date of such termination of employment at the
normal time for payment of such salary, compensation or
benefits, including specifically the Supplemental Retirement
Benefit described in Section 4(d), and any amounts owing under
Section 4(f), and (ii) all outstanding stock options held by
the Executive at the time of his termination of
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employment shall become immediately exercisable at that time,
and the Executive shall have one year from the date of such
termination of employment to exercise any or all of such
outstanding options (but not beyond the term of such option).
For purposes of this Agreement, the Executive shall be
considered to have incurred a Permanent and Total Disability if
he is unable to engage in any substantial gainful employment by
reason of any materially determinable physical or mental
impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period
of not less than 12 months. The existence of such Permanent and
Total Disability shall be evidenced by such medical
certification as the Secretary of Yellow shall require and
shall be subject to the approval of the Compensation Committee
of the Board of Directors of Yellow.
(c) Without Cause. Yellow may terminate the Executive's employment
at any time and for any reason, other than for Cause or because
of Permanent and Total Disability, by giving him a written
notice of termination to that effect at least 30 days before
the date of termination. In the event of such termination of
the Executive's employment without Cause, the Executive shall
be entitled to the benefits described in Section 8.
6. Termination of Employment by the Executive.
a. Good Reason. The Executive may terminate his employment for
Good Reason by giving Yellow a written notice of
termination at
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least 30 days before the date of such termination specifying in
reasonable detail the circumstances constituting such Good
Reason. In the event of the Executive's termination of his
employment for Good Reason, the Executive shall be entitled to
the benefits described in Section 8. For purposes of this
Agreement, Good Reason shall mean the failure of Yellow in any
material way either (i) to pay or provide to the Executive the
compensation and benefits that he is entitled to receive
pursuant to this Agreement by the later of (A) 60 days after
the applicable due date or (B) 30 days after the Executive's
written demand for payment, or (ii) to maintain the titles,
positions and duties of the Executive commensurate with those
titles and positions and as required by this Agreement except
with the Executive's written consent, or (iii) Executive's
receipt of notice from Yellow of the cut-off of the automatic
renewal of the term of this Agreement as described in Section 2
above.
b. Other. The Executive may terminate his employment at any time
and for any reason, other than pursuant to subsection (a)
above, by giving Yellow a written notice of termination to that
effect at least 30 days before the date of termination. In the
event of the Executive's termination of his employment pursuant
to this subsection (b), the Executive shall be entitled to
receive (i) his base salary pursuant to Section 4(a) and any
other compensation and benefits to the extent actually earned
by the Executive
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pursuant to this Agreement or any benefit plan or program of
Yellow as of the date of such termination at the normal time
for payment of such salary, compensation or benefits including
specifically the Supplemental Retirement Benefit described in
Section 4(d), and (ii) any amounts owing under Section 4(f). In
the event of the Executive's termination of his employment
pursuant to this subsection (b), all outstanding options held
by the Executive not previously exercised by the date of
termination shall be forfeited. Except as provided in Section
10, the Executive shall receive no other compensation or
benefits from Yellow.
7. Termination of Employment By Death. In the event of the death of
the Executive during the course of his employment hereunder, (i)
the Executive's estate shall be entitled to receive his base salary
pursuant to Section 4(a) and any other compensation and benefits to
the extent actually earned by the Executive pursuant to this
Agreement or any other benefit plan or program of Yellow as of the
date of such termination at the normal time for payment of such
salary, compensation or benefits, and any amounts owing under
Section 4(f), (ii) any death benefit due under the Pension Plan and
any death benefit due under Section 4(d) shall be paid to the
Executive's spouse as provided under Section 4(d) and (iii) all
outstanding stock options held by the Executive at the time of his
death shall become immediately exercisable upon his death, and the
Executive's spouse or, if predeceased, the Executive's estate,
shall have
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one year from the date of his death to exercise any or all of such
outstanding options (but not beyond the term of such option).
8. Benefits Upon Termination Without Cause or Good Reason If the
Executive's employment with Yellow shall terminate (i) because of
termination by Yellow pursuant to Section 5(c) and not for Cause or
because of Permanent and Total Disability, or (ii) because of
termination by the Executive for Good Reason pursuant to Section
6(a), the Executive shall be entitled to the following:
(a) Yellow shall pay to the Executive his base salary pursuant to
Section 4 (a) and, subject to the further provisions of this
Section 8, any other compensation and benefits to the extent
actually earned by the Executive under this Agreement or any
benefit plan or program of Yellow as of the date of such
termination at the normal time for payment of such salary,
compensation or benefits.
(b) Yellow shall pay the Executive any amounts owing under Section
4(f).
(c) Yellow shall pay to the Executive as a severance benefit an
amount equal to twice the sum of (i) his annual rate of base
salary immediately preceding his termination of employment, and
(ii) the target bonus payable pursuant to subsection (d) below.
Such severance benefit shall be paid in a lump sum within 30
days after the date of such termination of employment.
(d) Yellow shall pay to the Executive his target bonus under
Yellow's target bonus plan for the fiscal year in which his
termination of
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employment occurs as if the target had been exactly met. Such
payment shall be made in a lump sum within 30 days after the
date of such termination of employment, and the Executive shall
have no right to any further bonuses under said program.
(e) The Executive shall become eligible for payment of the
supplemental retirement benefits pursuant to Section 4(d), and
Yellow's nonqualified defined contribution plans. Payment of
benefits under such plans, and under the Pension Plan and
Yellow's qualified defined contribution plans, shall be made at
the time and in the manner determined under the applicable
plan.
(f) During the period of 24 months beginning on the date of the
Executive's termination of employment, the Executive (and, if
applicable under the applicable program, his spouse) shall
remain covered by the employee benefit plans and programs that
covered him immediately prior to his termination of employment
as if he had remained in employment for such period, provided,
however, that there shall be excluded for this purpose any plan
or program providing payment for time not worked (including
without limitation holiday, vacation, and long- and short-term
disability). In the event that the Executive's participation in
any such employee benefit plan or program is barred, Yellow
shall arrange to provide the Executive with substantially
similar benefits. Any medical insurance coverage for such
two-year period pursuant to this subsection (f) shall become
secondary upon the earlier of (i)
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the date on which the Executive begins to be covered by
comparable medical coverage provided by a new employer, or (ii)
the earliest date upon which the Executive becomes eligible for
Medicare or a comparable Government insurance program.
(g) All outstanding stock options held by the Executive at the time
of termination of his employment shall become fully exercisable
upon such termination of employment and may be exercised for
the balance of the term of such option.
(h) If any payment or benefit received by or in respect of the
Executive under this Agreement or any other plan, arrangement
or agreement with Yellow (determined without regard to any
additional payments required under this subsection (h) and
Appendix B of this Agreement) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") (or any similar tax that
may hereafter be imposed) or any interest or penalties are
incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties,
being hereinafter collectively referred to as the "Excise
Tax"), Yellow shall pay to the Executive with respect to such
Payment at the time specified in Appendix B an additional
amount (the "Gross-up Payment") such that the net amount
retained by the Executive from the Payment and the Gross-up
Payment, after reduction for any Excise Tax upon the payment
and any federal, state and local
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income and employment tax and Excise Tax upon the Gross-up
Payment, shall be equal to the Payment. The calculation and
payment of the Gross-up Payment shall be subject to the
provisions of Appendix B.
9. Termination as a Result of a Corporate Restructuring. In the event
that Executive's employment with Yellow is terminated as a result
of a corporate restructuring which results in Executive performing
essentially the same or greater duties that he currently performs
for Yellow at essentially the same or greater level of compensation
and benefits provided for under this Agreement for an entity that
is no longer owned by Yellow, then Yellow and Executive shall
negotiate, in good faith, a Transition Agreement documenting which
payments and benefits provided for under this Agreement will be
owing to Executive following a termination as a result of a
corporate restructuring. Said Transition Agreement shall provide,
at a minimum, that Executive shall be eligible for payments under
the Pension Plan and for the supplemental retirement benefit
provided for in Section 4(d) upon the effective date of a
termination as a result of a corporate restructuring with actual
payments under the Supplemental Retirement Benefit and the Pension
Plan to be payable at the time and in the manner set forth in
Section 4(d).
10. Termination or Resignation Following a Change of Control. In the
event that Executive resigns his employment with Yellow or suffers
a "Termination" of such employment within two years after a "Change
of Control" of Yellow under the circumstances described and the
definitions
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set forth in paragraphs 3 and 1 (c) of the Executive Severance
Agreement entered into between Executive and Yellow on October 20,
1998, the provisions of which are hereby incorporated by reference,
the Executive shall be entitled to the greater of each benefit
described in Section 8 or each benefit provided for under the
Executive Severance Agreement.
11. Entitlement To Other Benefits. Except as provided in this
Agreement, this Agreement shall not be construed as limiting in any
way any rights to benefits that the Executive may have pursuant to
any other plan or program of Yellow.
12. Arbitration.
(a) Arbitration of Disputes. Any dispute between the parties hereto
arising out of, in connection with, or relating to this
Agreement or the breach thereof shall be settled by arbitration
in Overland Park, Kansas, in accordance with the rules then in
effect of the American Arbitration Association ("AAA").
Arbitration shall be the exclusive remedy for any such dispute
except only as to failure to abide by an arbitration award
rendered hereunder. Regardless of whether or not both parties
hereto participate in the arbitration proceeding, any
arbitration award rendered hereunder shall be final and binding
on each party hereto and judgment upon the award rendered may
be entered in any court having jurisdiction thereof.
The party seeking arbitration shall notify the other party in
writing and request the AAA to submit a list of 5 or 7
potential arbitrators.
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In the event the parties do not agree upon an arbitrator, each
party shall, in turn, strike one arbitrator from the list,
Yellow having the first strike, until only one arbitrator
remains, who shall arbitrate the dispute. The parties shall
have the opportunity to conduct reasonable discovery as
determined by the arbitrator, and the arbitration hearing shall
be conducted within 30 to 60 days of the selection of an
arbitrator or at the earliest date thereafter that the
arbitrator is available or as otherwise set by the arbitrator.
b. Indemnification. If arbitration occurs as provided for herein
and the Executive is awarded more than Yellow has asserted is
due him or otherwise substantially prevails therein, Yellow
shall reimburse the Executive for his reasonable attorneys'
fees, costs and disbursements incurred in such arbitration and
hereby agrees to pay interest on any money award obtained by
the Executive from the date payment should have been made until
the date payment is made, calculated at the prime interest rate
of Bank of America, Inc., Kansas City, Missouri in effect from
time to time from the date that payment(s) to him should have
been made under this Agreement. If the Executive enforces the
arbitration award in court, Yellow shall reimburse the
Executive for his reasonable attorneys' fees, costs and
disbursements incurred in such enforcement.
13. Confidential Information. The Executive shall retain in confidence
any confidential information known to him concerning Yellow and its
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subsidiaries, and their respective businesses until such
information is publicly disclosed. This provision shall survive the
termination of the Executive's employment for any reason under this
Agreement.
14. Indemnification under Bylaws. Yellow shall provide the Executive
with rights to indemnification by Yellow that are no less favorable
to the Executive than those set forth in Yellow's by-laws as in
effect as of the Effective Date.
15. Successors. This Agreement shall be binding upon and inure to the
benefit of the Executive and his estate and Yellow and any
successor of Yellow, but neither this Agreement nor any rights
arising hereunder may be assigned or pledged by the Executive.
16. Severability. Any provision in this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition
or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
17. Notices. All notices required or permitted to be given under this
Agreement shall be given in writing and shall be deemed
sufficiently given if delivered by hand or mailed by registered
mail, return receipt requested, to his residence in the case of the
Executive and to its principal executive offices in the case of
Yellow. Either party may by giving written notice to the other
party in accordance with this Section 15 change the address at
which it is to receive notices hereunder.
18. Controlling Law. This Agreement shall in all respects by governed
by and construed in accordance with the laws of the State of
Kansas.
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19. Changes to Agreement. This Agreement may not be changed orally but
only in a writing, signed by the party against whom enforcement is
sought.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an
original but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
20th of April, 2000.
EXECUTIVE: YELLOW CORPORATION
/s/ X. X. Xxxxxxxxx, III By: /s/ Xxxxxxx X. Xxxxxx
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ATTEST
By: /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------
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Appendix A
Supplemental Retirement Benefits
The following provisions shall be applicable with respect to the
supplemental retirement benefits described in Section 4(D) of this Agreement.
1. Benefit Calculation
For purposes of calculating the supplemental retirement benefits, the
following assumptions shall be utilized.
(a) "Credited Service", shall be assumed to be sixteen (16) years plus
Executive's actual credited service credited under the Pension Plan
from June 1, 1994.
(b) Any vested accrued benefit which the Executive is paid under the
Pension Plan, shall reduce any supplement retirement benefits
payable under this Agreement; and
(c) The defined terms used in this Appendix A and in Section 4(e) of
this Agreement shall have the meanings provided in the Yellow
Freight Office, Clerical, Sales and Supervisory Personnel Pension
Plan as restated as of January 1, 1989 and as amended by Amendment
No. 1 dated July 15, 1992, by Amendment No. 2 dated December 28,
1994, all as in existence as of the Effective Date of this
Agreement (collectively the "Pension Plan") unless another meaning
is expressly provided in this Agreement and Appendix or unless the
Executive and Yellow agree in writing to apply any subsequent
amendments, revisions, interpretations or restatements of the
Pension Plan.
2. Taxability of Benefit
The Executive and Yellow understand and agree that for federal tax
purposes, all supplemental retirement benefits paid under this
agreement to the Executive or his spouse shall be treated as ordinary
income under the applicable provisions of the Internal Revenue Code of
1986, as amended, and are subject to any taxes required to be withheld
by federal, state or local law; provided that the Executive shall have
the right to determine the timing of any withholding within the
parameters permitted under the Code and under any Regulations or
proposed Regulations under Code Section 3121(v) or any successor
thereto.
3. Nonassignability
The supplemental retirement benefits payable under this Agreement, and
any and all rights thereto, shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge,
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garnishment, execution, or levy of any kind, either voluntarily or
involuntarily. Any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge, or otherwise dispose of any rights to
benefits payable hereunder shall be void.
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