AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit
10.9
AMENDMENT
TO EMPLOYMENT AGREEMENT
This
AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”) is made and entered into
effective as of December 30, 2008, by and between Forward Air Corporation, a
corporation organized under the laws of the State of Tennessee (the “Company”),
and Xxxxx X. Xxxxxxxx (the “Executive”).
WHEREAS,
the Company and the Executive entered into an Employment Agreement, effective as
of October 30, 2007 (the “Employment Agreement”);
WHEREAS,
section 11(c) of the Employment Agreement specifies that the Employment
Agreement may be amended only by an instrument in writing signed by the
parties;
WHEREAS,
the Company and the Executive find it mutually desirable and in the best
interests of the parties to amend the Employment Agreement to the extent
necessary to comply with section 409A of the Internal Revenue Code and the
Treasury regulations promulgated under that section, which relate to
nonqualified deferred compensation.
For and
in consideration of the mutual covenants and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree to amend the Employment Agreement
as follows:
1. Section
6(b) is hereby amended in its entirety to read as follows:
(b) BONUS. Executive
shall be eligible for an annual cash bonus to be paid to him in the form of a
Year-End Bonus (“Year-End Bonus”). Executive shall be eligible to
receive a Year-End Bonus equal to fifty percent (50%) of his Base Salary upon
the Company’s achievement of the performance criteria set forth in a Business
Plan established by the Board of Directors for that year and upon such other
criteria that the Board of Directors may establish. Executive shall
be eligible to receive a Year-End Bonus equal to one hundred percent (100%) of
his Base Salary upon the Company’s achievement of the “Stretch” performance
criteria established by the Board of Directors for that year and upon such other
criteria that the Board of Directors may establish. The Board of Directors shall
have the discretion to award a Year-End Bonus to Executive upon such other terms
as the Board of Directors may establish which amount shall be consistent with
the annual incentives awarded to chief executive officers of companies within a
peer group chosen by the Compensation Committee. The Year-End Bonus
for each calendar year, if any, shall be paid to Executive on or after January
1st,
but by no later than March 15th, of the
immediately succeeding year.
2. Section
8(c) is hereby amended in its entirety to read as follows:
(c) “MATERIAL CHANGE IN DUTIES”
shall be deemed to have occurred when, without the Executive consent, the
Executive is assigned any duties inconsistent in any material respect with the
Executive’s position (including status, offices, titles, and reporting
requirements), authority, duties or responsibilities as in effect on the
Effective Date, or any other action by the Company which results in a materially
demonstrable diminution in such position, authority, duties or
responsibilities. No Material Change in
Duties shall be deemed to have occurred unless (i) the Executive notifies the
Company in writing within 90 days after the assignment of materially
inconsistent duties, and the Company fails to cure this material inconsistency
within 30 days after receipt of the notice, and (ii) the termination of
employment occurs no later than one year after the initial assignment of
materially inconsistent duties.
3. Section
8(d) is hereby amended in its entirety to read as follows:
(d) “BY DEATH OR
DISABILITY” If Executive’s employment is terminated due to
Executive’s death, the Executive’s surviving spouse, or if none, his estate,
shall receive the benefits payable under (i), (ii), (iii), and (iv) of Paragraph
7(a) above; provided, however, any payments due thereunder shall be made in a
lump sum payment within 90 days of the Executive’s death. In
addition, if the Executive’s dependents are eligible to and actually elect to
continue under COBRA any coverages provided under Paragraph 7(a)(iii), the
Company shall pay the cost of such COBRA coverage for the period remaining under
Paragraph 7(a)(iii). If Executive’s employment is terminated due to
Executive’s permanent and total disability (as defined in the Company’s
long-term disability plan or insurance policy in which Executive is
participating at the time, or if no such plan or policy exists, as determined in
good faith by the Board of Directors of the Company based on Executive’s
inability 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). Executive shall be entitled to the benefits payable or to be
provided under (i), (ii), (iii), and (iv) of Paragraph
7(a). Executive or his estate, as the case may be, shall not by
operation of this paragraph forfeit any rights in which he is vested at the time
of his death or disability.
4. Section
11 is hereby amended by adding the following new subsection (l) to the end
of that section:
(l) CODE SECTION 409A
COMPLIANCE.
(i) This
Agreement is intended to comply with, or otherwise be exempt from, Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”) and any
regulations and Treasury guidance promulgated thereunder.
(ii) The
Company shall undertake to administer, interpret, and construe this Agreement in
a manner that does not result in the imposition on the Executive of any
additional tax, penalty, or interest under Section 409A of the
Code.
(iii) If
the Company determines in good faith that any provision of this Agreement would
cause the Executive to incur an additional tax, penalty, or interest under
Section 409A of the Code, the Compensation Committee and the Executive shall use
reasonable efforts to reform such provision, if possible, in a mutually
agreeable fashion to maintain to the maximum extent practicable the original
intent of the applicable provision without violating the provisions of Section
409A of the Code or causing the imposition of such additional tax, penalty, or
interest under Section 409A of the Code.
(iv) The
preceding provisions, however, shall not be construed as a guarantee by the
Company of any particular tax effect to Executive under this
Agreement. The Company shall not be liable to Executive for any
payment made under this Agreement, at the direction or with the consent of
Executive, that is determined to result in an additional tax, penalty, or
interest under Section 409A of the Code, nor for reporting in good faith any
payment made under this Agreement as an amount includible in gross income under
Section 409A of the Code.
(v) For
purposes of Section 409A of the Code, the right to a series of installment
payments under this Agreement shall be treated as a right to a series of
separate payments.
(vi) With
respect to any reimbursement of expenses of, or any provision of in-kind
benefits to, the Executive, as specified under this Agreement, such
reimbursement of expenses or provision of in-kind benefits shall be subject to
the following conditions: (A) the expenses eligible for reimbursement or the
amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Section 105(b) of the
Code; (B) the reimbursement of an eligible expense shall be made no later than
the end of the year after the year in which such expense was incurred; and (C)
the right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.
(vii) “Termination
of employment,” “resignation,” or words of similar import, as used in this
Agreement means, for purposes of any payments under this Agreement that are
payments of deferred compensation subject to Section 409A of the Code, the
Executive’s “separation from service” as defined in Section 409A of the
Code.
(viii) If
a payment obligation under this Agreement arises on account of the Executive’s
separation from service while the Executive is a “specified employee” (as
defined under Section 409A of the Code and determined in good faith by the
Compensation Committee), any payment of “deferred compensation” (as defined
under Treasury Regulation Section 1.409A-1(b)(1), after giving effect to
the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12))
that is scheduled to be paid within six months after such separation from
service (the aggregate of such scheduled payments, the “Delayed Payment”) shall,
in lieu thereof, be paid, as adjusted for earnings or losses thereon, within 15
days after the end of the six-month period beginning on the date of such
separation from service or, if earlier, within 15 days after the appointment of
the personal representative or executor of the Executive’s estate following his
death. In the event that the provisions of this
Section 11(l)(viii) shall apply to any payment obligation under this
Agreement, and provided that the Executive executes a general release as the
Company may request, the Company shall make an irrevocable contribution of an
amount equal to the Delayed Payment to a grantor trust established consistent
with the terms of Revenue Procedure 92-64, 1992-33 I.R.B. 11 (the “Rabbi Trust”)
with a financial institution approved by the Executive, which approval will not
be withheld unreasonably, serving as the third-party trustee thereof, under the
terms of which the assets of the trust may be used, in the absence of the
Company’s insolvency, solely for purposes of fulfilling the Company’s obligation
to pay the Delayed Payment to the Executive in compliance with
Section 409A(a)(2)(B)(i) of the Code. The Company’s obligation
to make the contribution to the Rabbi Trust under the immediately preceding
sentence shall arise on the due date of the payment obligation had this Section
11(l)(viii) not applied or, if later, the date that any general release becomes
effective, and such contribution shall be made by no later than the tenth
business day (excluding federal holidays) after the applicable
date. The Executive shall be permitted to direct the trustee how to
invest the trust assets held on the Executive’s behalf.
5. In all other
respects, the Employment Agreement is hereby ratified and
confirmed.
IN WITNESS WHEREOF, the
Company and the Executive have executed this Amendment as of the date first
written above.
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By:
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/s/
Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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FORWARD
AIR CORPORATION
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By:
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/s/
Xxxxxx X. Xxxx
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Xxxxxx
X. Xxxx
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Its:
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Chief
Financial Officer, Senior
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Vice
President and
Treasurer
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