CHANGE IN CONTROL SEVERANCE AGREEMENT

           This Change in Control Severance Agreement (this “Agreement”), dated as of [______________], [____], is made by and between USA Truck, Inc., a Delaware corporation (as hereinafter defined, the “Company”), and [__________] (as hereinafter defined, the “Executive”).

 

WHEREAS, in recognition that the services of the Executive are integral to the success of the operations of the Company, the Executive should remain focused on execution of his responsibilities without fear of unwarranted termination of his employment or the possibility of a Change in Control (as hereinafter defined) of the Company, and that either of such circumstances, and the uncertainty it may cause, may result in the departure or distraction of key management employees of the Company to the detriment of the Company and its stockholders; and

 

WHEREAS, the Executive is a key management employee of the Company, and the Board of Directors of the Company (the “Board”) through its Executive Compensation Committee (the “Committee”) has determined that the Company should encourage the continued employment of the Executive by the Company and the continued dedication of the Executive to his assigned duties without distraction as a result of the circumstances set forth above;

 

WHEREAS, the Company and the Executive desire to set forth the circumstances under which the Executive may receive payments under this Agreement;

 

           NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

 

1.           Defined Terms.

 

           For purposes of this Agreement, the following terms shall have the meanings indicated below:

 

           (A)           “Board” shall mean the Board of Directors of the Company, as constituted from time to time.

 

           (B)           “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful violation of Company policy or willful failure by the Executive to substantially perform the Executive’s duties with the Company, other than any failure resulting from the Executive’s incapacity due to physical or mental illness, that continues for at least 30 days after the Board delivers to the Executive a written demand for performance that identifies in reasonable detail the manner in which the Board believes that the Executive willfully has failed substantially to perform the Executive’s duties; or (ii) the willful violation of any law, rule or regulation applicable to the Company’s business operations; or (iii) the willful engaging by the Executive in misconduct that is demonstrably and materially injurious to the Company, from a monetary or reputational standpoint. For purposes of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company.

 

           (C)           A “Change in Control” shall mean the occurrence of any of the following occurring after the date of this Agreement:

 

(i)           Any “Person” as defined in Section 3(a)(9) of the Exchange Act, and as used in Section 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act (but excluding the Company and any employee benefit plan sponsored or maintained by the Company (including any trustee of such plan acting as trustee)), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities (other than indirectly as a result of the Company’s redemption of its own securities); or 

   

    (iii)           Within any twenty-four (24)-month period, the individuals who were directors immediately before the beginning of such period (the “Incumbent Directors”) shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Company, including any Surviving Entity.  For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of, or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a Person who commenced or threatened to commence an election contest or proxy solicitation by or on behalf of a Person (other than the Board) or who has entered into an agreement to effect a Change in Control or expressed an intention to cause such a Change in Control).

   

    (D)           “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

           (E)           “Company” shall mean USA Truck, Inc. and any successor to its business or assets, by operation of law or otherwise.

 

           (F)           “Constructive Termination” shall mean the occurrence of any of the following, without the Executive’s express written consent, at any time within twelve (12) months following a Change in Control:

 

(i)           material diminution in the overall scope of the Executive’s duties, authorities and responsibilities from those held by the Executive immediately prior to the time of a Change in Control;

 

(ii)           geographic relocation of the Executive’s principal business location to a location greater than forty (40) miles from the place of the Executive’s principal business location immediately prior to the time of a Change in Control; or

 

(iii)           diminution by ten percent (10%) or more of the Executive’s base salary or target bonus in effect immediately prior to the time of a Change in Control;

 

    (G)           “Date of Termination” shall have the meaning stated in Paragraph (B) of Section 5 hereof.

 

           (H)           “Disability” shall mean a 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 six months, where such impairment causes the Executive to be unable to perform the duties of his or her position of employment or any substantially similar position of employment.

 

(I)           “Executive” shall mean the individual named in the first paragraph of this Agreement.

 

           (J)           “Incumbent Directors” shall mean directors who were directors of the Company as of the date hereof or who are appointed, elected or nominated to the Board in accordance with the following sentence. It is understood that any individual becoming a member of the Board subsequent to the date hereof whose appointment was approved by a vote of at least a two-thirds majority of the Continuing Directors remaining in office at the time of appointment or whose election or nomination for election by the Company’s stockholders was approved by a vote of at least a two-thirds majority of the Continuing Directors remaining in office at the time of election or nomination shall be considered, for purposes of this Agreement, as though such individual were a Continuing Director on the date hereof.

           (K)           “Notice of Termination” shall have the meaning stated in Paragraph (A) of Section 5 hereof.

 

           (L)           “Payment Trigger” shall mean any of the following that occurs during the term of this Agreement:

 

           (i)           termination of the Executive’s employment by the Company without Cause, at any time other than within twelve (12) months following a Change in Control, and other than as a result of the Executive’s Disability; or

 

(ii)           Constructive Termination of the Executive while the Executive remains employed by the Company or its successor, or termination of the Executive’s employment by the Company without Cause within twelve (12) months following a Change in Control occurring during the term of this Agreement.

 

For the avoidance of doubt, a termination of the Executive by the Company for Disability shall not be deemed a termination of the Executive without Cause.

 

           (M)           “Person” shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time, as modified and used in Sections 13(d) and 14(d) thereof; except that, a Person shall not include (i) the Company, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (iii) an underwriter temporarily holding securities pursuant to an offering of such securities.

 

2.           Term of Agreement.

 

This Agreement shall be effective as of the date set forth in the first paragraph of this Agreement and shall continue in effect until the earliest of (i) a Date of Termination in accordance with Section 5 or the death of the Executive, or (ii) if a Payment Trigger occurs during the term of this Agreement under subparagraphs (i) or (ii) of Paragraph (L) of Section 1, the performance by the Company of all its obligations and the satisfaction by the Company of all its liabilities under this Agreement.

 

3.           General Provisions.

 

           (A)           The Company hereby represents and warrants to the Executive that the execution and delivery of this Agreement and the performance by the Company of the actions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement is a legal, valid and legally binding obligation of the Company enforceable in accordance with its terms.

 

           (B)           No amount or benefit shall be payable under this Agreement unless there shall have occurred a Payment Trigger during the term of this Agreement.

 

           (C)           This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. Notwithstanding the immediately preceding sentence or any other provision of this Agreement, any purported termination of the Executive’s employment that is not effected in accordance with a Notice of Termination satisfying Paragraph (A) of Section 5 shall not be effective for purposes of this Agreement. The Executive’s continued employment for any period of time after a Payment Trigger, up to the maximum time specified in Paragraph (B) of Section 5, shall not constitute a waiver of the Executive’s rights with respect to any payment obligations of the Company under this Agreement.  The waiver by the Executive of any particular event meeting the definition of or constituting a Constructive Termination shall not operate as a waiver by the Executive of any benefits or rights under this Agreement should any subsequent event or circumstance occur that constitutes a Constructive Termination under this Agreement.

 

4.           Payments Due Upon a Payment Trigger.

 

           (A)           The Company shall pay to the Executive the payments described in this Section 4 upon the occurrence of a Payment Trigger during the term of this Agreement.

 

           (B)           (i)           Upon the occurrence of a Payment Trigger during the term of this Agreement arising by reason of the circumstances described in subparagraph (i) of Paragraph (L) of Section 1:

 

 

           (b)           the Company shall pay the Executive any other amounts (other than any unearned or pro-rated portion of target or other incentive bonus payments) that may be due Executive under any employee welfare or benefit plan then in effect and in which the Executive is an eligible participant, upon the terms and conditions set forth in any such plan.

 

(c)           notwithstanding the foregoing, the payments set forth above shall not exceed two times: (i) the sum of the annualized compensation paid to the Executive by the Company for the taxable year preceding the taxable year of the Executive’s Date of Termination; or (ii) the maximum amount that may be taken into account pursuant to Code Section 401(a)(17) for the year of the Executive’s Date of Termination.  To the extent payments exceed this limit and such payments are found to be in violation of Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”), the Company shall reimburse the Executive for any applicable excise tax, including a tax true-up payment, that the Executive may incur due to such violation.

 

                  (ii)           Upon the occurrence of a Payment Trigger during the term of this Agreement arising by reason of the circumstances described in subparagraph (ii) of Paragraph (L) of Section 1:

 

           (a)           the Company shall pay the Executive a lump sum payment, in cash, equal to the sum of (1) _________________ per cent (___%) of the Executive’s annual base salary in effect immediately prior to the Payment Trigger, plus (2) the amount, if any, set forth on the signature page of this Agreement and identified as relocation services benefit, to defray the Executive’s costs of relocation services; and

 

(b)           the Company shall pay or provide for continuation of the Executive’s health care benefits under the health care plans of the Company as they exist on the Date of Termination or as in effect immediately prior to the Payment Trigger, whichever provides the greater economic benefit to the Executive, for a period of ______ months following the Date of Termination.

 

(c)           the Company shall pay the Executive any other amounts (other than any unearned or pro-rated portion of target or other incentive bonus payments) that may be due Executive under any employee welfare or benefit plan then in effect and in which the Executive is an eligible participant, upon the terms and conditions set forth in any such plan.

 

           (C)           Notwithstanding any provision of any incentive compensation plan, and in addition to any payments under Paragraph (B) hereof, the Company shall pay to the Executive a lump sum amount, in cash, equal to the amount of any incentive compensation that has been awarded to and earned by the Executive under any incentive compensation plan for a completed fiscal year preceding the occurrence of a Payment Trigger but that has not yet been paid to the Executive.

 

           (D)           The payments provided for in subparagraph (ii)(a) of Paragraph (B) and, if applicable, Paragraph (C) of this Section 4 shall be made within two (2) business days following the Date of Termination, or such later required date as may be prescribed, allowing for applicable waiting periods, under the terms of the General Release (hereafter defined), unless the amounts of such payments cannot be finally determined on or before that date, in which case, the Company shall pay to the Executive on that date an estimate, as reasonably determined in good faith by the Company, of the minimum amount of the payments to which the Executive is clearly entitled and shall pay the remainder of the payments within five (5) business days following the final determination of such amounts due to the Executive under this Agreement.

 

(E)           As a condition to the receipt of the severance and other payment benefits described in this Agreement, the Executive shall execute and comply with the terms of a general release of all claims (the “General Release”) against the Company, its affiliates and representatives, including non-disparagement and other provisions customary in release agreements executed under similar circumstances by executives of similarly situated companies.

 

5.           Termination Procedures.

 

           (A)           During the term of this Agreement, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice that indicates the specific termination provision in this Agreement relied upon, and, if applicable, the notice shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.  Further, a Notice of Termination for Cause shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board that was called and held for the purpose of considering the termination finding that, in the informed, reasonable, good faith judgment of the Board, the Executive was guilty of conduct set forth in the definition of Cause in Paragraph (B) of Section 1, and specifying the particulars thereof in reasonable detail.  A Notice of Termination by the Employee in the case of a Constructive Termination shall specify in reasonable detail the event or circumstance constituting the Constructive Termination under Paragraph (F) of Section 1 of this Agreement.  Such notice of Constructive Termination must be provided by the Executive to the Company within sixty (60) days of the initial existence of the condition giving rise to the Constructive Termination.

 

           (B)           “Date of Termination” with respect to any purported termination of the Executive’s employment during the term of this Agreement (other than by reason of death) shall mean:

 

(i)           if the Executive’s employment is terminated by the Company for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during that thirty (30) day period);

 

(ii)           if the Executive’s employment is terminated by the Company for any other reason except in the case of a termination for Cause, thirty (30) days after Notice of Termination is given;

 

(iii)           if the Executive’s employment is terminated by the Company for Cause, the date specified in the Notice of Termination; and

 

(iv)           in the case of termination by the Executive (including a Constructive Termination following a Change in Control), thirty (30) days after the date such Notice of Termination is given; provided, in the case of a Constructive Termination, the Notice of Termination contemplated by Paragraph (A) of this Section 5 shall be deemed cancelled, void and of no further force and effect, and no payment obligation of the Company shall arise therefrom, if the Company rescinds or otherwise eliminates or reverses the action or event that would otherwise constitute grounds for Constructive Termination, and so notifies the Executive in writing within thirty (30) days of its receipt of the notice of Constructive Termination.  The rescission, elimination or reversal of any such action or event constituting a Constructive Termination shall not operate to release or discharge the Company from any other liability or obligation under this Agreement, including any liability or obligation arising from any subsequent action or event that constitutes a Constructive Termination.

 

6.           No Mitigation; No Setoff.

 

           The Executive shall not be required to mitigate the amount of any benefits the Company becomes obligated to provide to the Executive in connection with this Agreement by seeking other employment or otherwise.  The benefits to be provided to the Executive in connection with this Agreement may not be reduced, setoff or subject to recovery by the Company by any benefits the Executive may receive from other employment, from retirement benefits or otherwise.  Further, the amount of any payment or benefit provided for in this Agreement shall not be setoff against any amount claimed to be owed by the Executive to the Company, or otherwise.

7.           Disputes.

 

           (A)           If a dispute or controversy arises out of or in connection with this Agreement, the parties shall first attempt in good faith to settle the dispute or controversy by mediation under the Commercial Mediation Rules of the American Arbitration Association before resorting to arbitration or litigation.  Thereafter, any remaining unresolved dispute or controversy arising out of or in connection with this Agreement may be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association in a city located within Crawford or Sebastian County, Arkansas. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  The Executive shall, however, be entitled to seek specific performance of the Company’s obligations hereunder during the pendency of any dispute or controversy arising under or in connection with this Agreement.

 

           (B)           Any legal action concerning this Agreement, other than a mediation or an arbitration described in Paragraph (A) of this Section 7, whether instituted by the Company or the Executive, shall be brought and resolved only in a state or federal court of competent jurisdiction located in Crawford County, Arkansas or the Fort Smith Division of the Western District of Arkansas.  The parties hereby irrevocably consent and submit to and shall take any action necessary to subject themselves to the personal jurisdiction of any such court and hereby irrevocably agree that all claims in respect of the action shall be instituted, heard, and determined in such court. The parties agree that such court is a convenient forum, and hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of the action. Any final judgment in the action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

           (C)           The Company shall pay all costs and expenses, including attorneys’ fees and disbursements, of the Company and the Executive in connection with any legal proceeding (including arbitration), whether or not instituted by the Company or the Executive, relating to the interpretation or enforcement of any provision of this Agreement, that is resolved in favor of the Executive pursuant to a final, unappealable judgment.  The Executive shall pay all costs and expenses, including attorneys’ fees and disbursements, of the Company and the Executive in connection with any legal proceeding (including arbitration), whether or not instituted by the Company or the Executive, relating to the interpretation or enforcement of any provision of this Agreement, that is resolved in favor of the Company pursuant to a final, unappealable judgment. The non-prevailing party, as set forth above, shall pay prejudgment interest on any money judgment obtained by the prevailing party as a result of such proceeding, calculated at the rate provided in Section 1274(b)(2)(B) of the Code.

 

 

           (A)           In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise, and whether or not such a transaction constitutes a Change in Control) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain the assumption and agreement prior to the effectiveness of any succession shall be a breach of this Agreement for which the Executive shall have any and all of the remedies available to him under this Agreement. The provisions of this Section 8 shall continue to apply to each subsequent employer of the Executive bound by this Agreement in the event of any merger, consolidation, or transfer of all or substantially all of the business or assets of that subsequent employer, whether or not that transaction constitutes a Change in Control.

 

           (B)           This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive shall die while any amount would be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, the amount, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives, or administrators of the Executive’s estate.

 

9.           Effect on Prior Agreements.

 

           This Agreement contains the entire understanding among the parties hereto and supersedes in all respects any prior or other agreement or understanding, written or oral, among the parties with respect to the subject matter of this Agreement.

10.           Exclusive Remedy.

 

           In the event of a Payment Trigger, the provisions of Section 4 are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive or the Company may otherwise be entitled (including any contrary provisions in any written or oral employment agreement or arrangement Executive may have with the Company), whether at law, tort or contract, in equity, or under this Agreement. Executive shall not be entitled to any severance or Change in Control benefits or rights upon a Payment Trigger other than those benefits expressly set forth in Section 4.

 

11.           Notices.

 

           For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

 

12.           Miscellaneous.

 

           No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by the Executive and an officer of the Company specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections.

 

 

The validity, interpretation, construction, and performance of this Agreement shall be governed by the internal, substantive laws of the State of Delaware, without giving effect to the law or principles of conflict of laws of any jurisdiction.

 

 

All payments provided for hereunder will be subject to required withholding of federal, state and local income, excise and employment-related taxes.  If any such excise taxes would otherwise be imposed, the Company shall determine in good faith whether the Executive will either receive all of the benefits to which he is entitled under this Agreement, subject to the excise tax, or have his benefits under this Agreement reduced to a level at which the excise tax will not apply, depending upon which approach will provide the Executive with the greater net after-tax benefit.

 

15.           Severability.

 

           The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

 

           This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

 

Benefits payable under this Agreement will be paid only from the general assets of the Company.  No person has any right to or interest in any specific assets of the Company by reason of this Agreement.  To the extent benefits under this Agreement are not paid when due to any individual, he or she is a general unsecured creditor of the Company with respect to any amounts due.  Benefits payable pursuant to this Agreement and the right to receive future benefits may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered or subject to any charge.

 

18.           Further Assurances.

 

The parties to this Agreement agree to perform, or cause to be performed, such further acts and deeds and to execute and deliver or cause to be executed and delivered, such additional or supplemental documents or instruments as may be reasonably required by the other party to carry into effect the intent and purpose of this Agreement.

 

 

It is the intention of the Company that payments and benefits under this Agreement be exempt from or comply with Code Section 409A and the Company shall have complete discretion to interpret and construe this Agreement and any related plan or agreement in any manner that establishes an exemption from or compliance with the requirements of Code Section 409A.  If for any reason any provision of this Agreement does not accurately reflect its intended establishment of an exemption from or compliance with Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, such provision shall be considered ambiguous as to its exemption from or compliance with Code Section 409A and shall be interpreted by the Company in a manner consistent with such intent, as determined in the discretion of the Company.