Exhibit 10.12

KEY EXECUTIVE EMPLOYMENT PROTECTION AGREEMENT

THIS AGREEMENT between Landstar System, Inc., a Delaware corporation (the
“Company”), and [name of Executive] (the “Executive”), dated as of this [    ]
day of [                ], 20[    ].

W I T N E S S E T H :

WHEREAS, the Company has employed the Executive in an executive officer position
and has determined that the Executive holds a position of significant importance
with the Company;

WHEREAS, the Company believes that, in the event it is confronted with a
situation that could result in a change in ownership or control of the Company,
continuity of management will be essential to its ability to evaluate and
respond to such situation in the best interests of shareholders;

WHEREAS, the Company understands that any such situation will present
significant concerns for the Executive with respect to his financial and job
security;

WHEREAS, the Company desires to assure itself of the Executive’s services during
the period in which it is confronting such a situation, and to provide the
Executive certain financial assurances to enable the Executive to perform the
responsibilities of his position without undue distraction and to exercise his
judgment without bias due to his personal circumstances;

WHEREAS, to achieve these objectives, the Company and the Executive desire to
enter into an agreement providing the Company and the Executive with certain
rights and obligations upon the occurrence of a Change of Control (as defined in
Section 2);

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is hereby agreed by and between the Company and the Executive as
follows:

1. Operation of Agreement. (a) Effective Date. The effective date of this
Agreement shall be the date on which a Change of Control occurs (the “Change of
Control Date”), provided that, except as provided in Section 1(b), if the
Executive is not employed by the Company on the Change of Control Date, this
Agreement shall be void and without effect. Notwithstanding the foregoing, if,
prior to the occurrence of a Potential Change of Control (as defined in
Section 2) or, if a Potential Change of Control has not occurred, prior to the
occurrence of a Change of Control, the Executive is demoted, the Board of
Directors shall have the right to declare this Agreement void and without
effect.

(b) Termination of Employment Following a Potential Change of Control.
Notwithstanding Section 1(a), if (i) the Executive’s employment is terminated by
the

 

1

--------------------------------------------------------------------------------

Company without Cause (as defined in Section 2) after the occurrence of a
Potential Change of Control and prior to the occurrence of a Change of Control
and (ii) a Change of Control occurs within one year of such termination,
provided such Change of Control constitutes a change in control event within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), the Executive shall be deemed, solely for purposes of determining his
rights under this Agreement, to have remained employed until the date such
Change of Control occurs and to have been terminated by the Company without
Cause immediately after this Agreement becomes effective.

(c) Termination of Employment Following Death or Disability. This Agreement
shall terminate automatically upon the Executive’s termination of employment as
a result of the Executive’s death or due to Disability (as defined in
Section 2).

2. Definitions. (a) Change of Control. For the purposes of this Agreement, a
“Change of Control” shall mean (i) any “person,” including a “group” (as such
terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (“the Act”)), but excluding the Company, any of its
subsidiaries, or any employee benefit plan of the Company or any of its
subsidiaries, is or becomes the “beneficial owner” (as defined in Rule 13(d)(3)
under the Act), directly or indirectly, of common stock of the Company
representing 35% or more of the combined voting power of the Company’s then
outstanding common stock; (ii) the Shareholders of the Company approve a
definitive agreement (a “Definitive Agreement”) (a) for the merger or other
business combination of the Company with or into another corporation, a majority
of the directors of which were not directors of the Company immediately prior to
the merger and in which the shareholders of the Company immediately prior to the
effective date of such merger directly or indirectly own less than 50% of the
voting power in such corporation or (b) for the sale or other disposition of all
or substantially all of the assets of the Company, and the transactions
contemplated by such Definitive Agreement are, in either case, consummated; or
(iii) the purchase of common stock of the Company pursuant to any tender or
exchange offer made by any “person,” including a “group” (as such terms are used
in Sections 13(d) and 14(d)(2) of the Act), other than the Company, any of its
subsidiaries, or an employee benefit plan of the Company or any of its
subsidiaries for 35% or more of the common stock of the Company.

(b) Potential Change of Control. For the purposes of this Agreement, a
“Potential Change of Control” shall be deemed to have occurred if (i) any
“person” (as such term is used in Sections 13(d) and 14(d)(2) of the Act)
commences a tender or exchange offer for common stock, which if consummated,
would result in such person owning 35% or more of the combined voting power of
the Company’s then outstanding common stock; (ii) the Company enters into an
agreement the consummation of which would constitute a Change of Control; (iii)
proxies for the election of directors of the Company are solicited by anyone
other than the Company; or (iv) any other event occurs which is deemed to be a
Potential Change of Control by the Board of Directors of the Company.

(c) Cause. For the purposes of this Agreement, “Cause” means (i) the Executive’s
conviction or plea of nolo contendere to a felony; (ii) an act or acts of
extreme dishonesty or gross misconduct on the Executive’s part which result or
are intended to result in

 

2

--------------------------------------------------------------------------------

material damage to the Company’s business or reputation; or (iii) repeated
material violations by the Executive of his position, authority or
responsibilities as in effect at the Change of Control Date, which violations
are demonstrably willful and deliberate on the Executive’s part and which result
in material damage to the Company’s business or reputation.

(d) Good Reason. “Good Reason” means the occurrence of any of the following,
without the express written consent of the Executive, after the occurrence of a
Potential Change of Control or a Change of Control:

(i) (A) the assignment to the Executive of any duties inconsistent in any
material adverse respect with the Executive’s position, authority or
responsibilities as in effect at the Change of Control Date, or (B) any other
material adverse change in such position, including titles, authority or
responsibilities;

(ii) any failure by the Company, other than an insubstantial or inadvertent
failure remedied by the Company promptly after receipt of notice thereof given
by the Executive, to provide the Executive with (A) an annual base salary, as it
may be increased from time to time (the “Base Salary”), which is at least equal
to the Base Salary paid to the Executive immediately prior to the Change of
Control Date, or (B) incentive compensation opportunities at a level which is at
least equal to the level of incentive compensation opportunities made available,
to the Executive immediately prior to the Change of Control Date;

(iii) the failure by the Company to permit the Executive (and, to the extent
applicable, his dependents) to participate in or be covered under all pension,
retirement, deferred compensation, savings, medical, dental, health, disability,
group life, accidental death and travel accident insurance plans and programs of
the Company and its affiliated companies at a level that is commensurate with
the Executive’s participation in such plans immediately prior to the Change of
Control Date (or, if more favorable to the Executive, at the level made
available to the Executive or other similarly situated officers at any time
thereafter);

(iv) the Company’s requiring the Executive to be based at any office or location
more than 50 miles from that location at which he performed his services for the
Company immediately prior to the Change of Control, except for travel reasonably
required in the performance of the Executive’s responsibilities; or

(v) any failure by the Company to obtain the assumption and agreement to perform
this Agreement by a successor as contemplated by Section 5.

In no event shall the mere occurrence of a Change of Control, absent any further
impact on the Executive, be deemed to constitute Good Reason.

(e) Disability. For purposes of this Agreement, “Disability” shall mean the
Executive’s inability to perform the duties of his position, as determined in
accordance with the policies and procedures applicable with respect to the
Company’s long-term disability plan, as in effect immediately prior to the
Change of Control Date.

 

3

--------------------------------------------------------------------------------

(f) Notice of Termination. Any termination by the Company for Cause or by the
Executive for Good Reason shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 6(d). For purposes of this
Agreement, a “Notice of Termination” means a written notice given, in the case
of a termination for Cause, within 10 business days of the Company’s having
actual knowledge of the events giving rise to such termination, and in the case
of a termination for Good Reason, within 90 days of the later to occur of (x)
the Change of Control Date or (y) the Executive’s having actual knowledge of the
events giving rise to such termination, and which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets 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, and
(iii) if the termination date is other than the date of receipt of such notice,
specifies the termination date of this Agreement (which date shall be not more
than 30 days after the giving of such notice). The failure by the Executive to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such fact or
circumstance in enforcing his rights hereunder.

(g) Date of Termination. For the purpose of this Agreement, the term “Date of
Termination” means (i) in the case of a termination for which a Notice of
Termination is required, the date of receipt of such notice of Termination or,
if later, the date specified therein, as the case may be, and (ii) in all other
cases, the actual date on which the Executive’s employment terminates.

3. Employment Protection Benefits. (a) Basic Benefits. If (x) on or before the
second anniversary of the Change in Control Date (i) the Company terminates the
Executive’s employment for any reason other than for Cause or Disability or (ii)
the Executive voluntarily terminates his employment for Good Reason or (y) if
the Executive’s employment is terminated by the Company for any reason other
than death, Disability or Cause or by the Executive for Good Reason, after the
execution of a Definitive Agreement but prior to the consummation thereof and
the transaction contemplated by such Definitive Agreement are consummated, then
the Company shall pay to the Executive the following amounts:

(i) the Executive’s Base Salary earned through the Date of Termination (the
“Earned Salary”) and, if the Date of Termination occurs in the same fiscal year
in which occurs the Change in Control Date, a prorated bonus for such fiscal
year, determined by (A) multiplying the Executive’s Annual Base Salary by his
total Participant’s Percentage Participation established for such year under the
Company’s Incentive Compensation Plan (or any successor plan thereto) multiplied
by a fraction, the numerator of which is the number of days from the first day
of such fiscal year through the Termination Date, and the denominator of which
is 365;

 

4

--------------------------------------------------------------------------------

(ii) a cash amount (the “Severance Amount”) equal to [one][two][three]1 times
the sum of

 

  (A) the Executive’s Annual Base Salary; and

 

  (B) the amount that would have been payable to the Executive as a bonus for
the year in which the Change of Control occurs, determined by multiplying the
Executive’s Annual Base Salary by his total Participant’s Percentage
Participation established for such year under the Company’s Incentive
Compensation Plan (or any successor plan thereto); and

(iii) any vested amounts or benefits owing to the Executive under the Company’s
otherwise applicable employee benefit plans and programs, including any
compensation previously deferred by the Executive (together with any accrued
earnings thereon) and not yet paid by the Company and any accrued vacation pay
not yet paid by the Company (the “Accrued Obligations”).

The Earned Salary and Severance Amount shall be paid in a single lump sum within
ten business days following the Executive’s Date of Termination or, if payment
is required to be delayed pursuant to Section 409A of the Code because the
Executive is deemed to be a “specified employee” within the meaning of Section
409A, within ten business days immediately following the six-month anniversary
of the Executive’s Date of Termination. Accrued Obligations shall be paid in
accordance with the terms of the applicable plan, program or arrangement. The
Severance Amount is inclusive of, and in lieu of, any amounts under any salary
continuation or cash severance arrangement of the Company and to the extent paid
or provided under any other such arrangement shall be offset from the Severance
Amount.

(b) Continuation of Benefits. If the Executive receives the Severance Amount
described in this Section 3, the Executive (and, to the extent applicable, his
dependents) shall be entitled, after the Date of Termination until the earlier
of (x) the first anniversary of his Date of Termination (the “End Date”) or (y)
the date the Executive becomes eligible for comparable benefits under a similar
plan, policy or program of a subsequent employer, to continue participation in
all of the Company’s employee and executive welfare and fringe benefit plans
(the “Benefit Plans”) as were generally provided to the Executive in accordance
with the Company’s policies and practices immediately prior to the Change of
Control Date. To the extent any such benefits cannot be provided under the terms
of the applicable plan, policy or program, the Company shall provide a
comparable benefit under another plan or from the Company’s general assets. The

 

1 

The applicable multiples for the Company’s Named Executives are as follows:
three times for James B. Gattoni, President and Chief Executive Officer of the
Company; two times for L. Kevin Stout, Vice President and Chief Financial
Officer of the Company; two times for Michael K. Kneller, Vice President,
General Counsel and Secretary of the Company; one time for Patrick J. O’Malley,
Vice President and Chief Commercial and Marketing Officer of the Company; and
one time for Joseph J. Beacom, Vice President and Chief Safety and Operations
Officer of the Company.

 

5

--------------------------------------------------------------------------------

Executive’s participation in the Benefit Plans will be on the same terms and
conditions that would have applied had the Executive continued to be employed by
the Company through the End Date; provided, however, that to the extent that the
benefits provided under any such Benefit Plan are not medical benefits and the
provision of such benefits would not be exempt from Federal income taxation (the
“Taxable Other Benefits”), the Executive will reimburse the Company for the full
cost of such Taxable Other Benefits for the first six months following the
Executive’s termination of employment (unless and solely to the extent the
Executive elects, within ten business days of the date of the Executive’s
termination, to forego receipt of such Taxable Other Benefits under this
Agreement); and provided further that, notwithstanding anything in this
Agreement to the contrary, in no event shall the benefits provided under this
clause (b) during any calendar year affect the benefits provided under this
clause (b) during any other calendar year and, to the extent any reimbursement
or payment is made in respect of, or in lieu of the provision of, Benefit Plans,
such reimbursement or payment shall be made no later than December 31 following
the calendar year in which the expense is incurred or the benefits would
otherwise have been provided.

(c) Indemnification. The Company shall indemnify the Executive and hold the
Executive harmless from and against any claim, loss or cause of action arising
from or out of the Executive’s performance as an officer, director or employee
of the Company or any of its subsidiaries or in any other capacity, including
any fiduciary capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the Company’s
Certificate of Incorporation and By-Laws (as each may be amended from time to
time, and as then in effect, the “Governing Documents”), provided that in no
event shall the protection afforded to the Executive hereunder be less than that
afforded under the Governing Documents as in effect immediately prior to the
Change of Control Date.

(d) Imposition of Cap on Severance Payments: Notwithstanding anything in this
Agreement to the contrary, the severance payable to the Executive under this
Agreement in connection with a Change in Control shall be reduced if and to the
extent necessary so that no excise tax under Section 4999 of the Code would be
imposed if doing so would result in the Executive retaining a larger after–tax
amount, taking into account the income, excise and employment taxes imposed on
the payments payable to the Executive and benefits made available to the
Executive in connection with the change in control.

(e) Discharge of the Company’s Obligations. Except as expressly provided in
Section 4, the Severance Amount and the other amounts payable and benefits
provided in respect of the Executive pursuant to this Section 3 following
termination of his employment shall be in full and complete satisfaction of the
Executive’s rights under this Agreement and any other claims he may have in
respect of his employment by the Company or any of its subsidiaries. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon the Executive’s receipt of such amounts, the Company
shall be released and discharged from any and all liability to the Executive in
connection with this Agreement or otherwise in connection with the Executive’s
employment with the Company and its subsidiaries. Without limiting the
generality of the foregoing, the Company’s obligation to make the payments
provided for

 

6

--------------------------------------------------------------------------------

in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others whether by reason of the subsequent employment
of the Executive or otherwise. Nothing in this Section 3(e), however, shall in
any way limit the Company’s obligations to the Executive pursuant to Section
3(c) hereof.

4. Legal Fees and Expenses. If the Executive asserts any claim in any contest
(whether initiated by the Executive or by the Company) as to the validity,
enforceability or interpretation of any provision of this Agreement, the Company
shall pay the Executive’s legal expenses (or cause such expenses to be paid)
including, without limitation, his reasonable attorney’s fees, on a quarterly
basis, upon presentation of proof of such expenses, provided that the Executive
shall reimburse the Company for such amounts, plus simple interest thereon at
the 90-day United States Treasury Bill rate as in effect from time to time,
compounded annually, if the Executive shall not prevail, in whole or in part, as
to any material issue as to the validity, enforceability or interpretation of
any provision of this Agreement.

5. Successors. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors. The Company shall require any successor to all
or substantially all of the business and/or assets of the Company, whether
direct or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent as the Company would be required to perform if no such
succession had taken place. This Agreement is personal to the Executive and is
not assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.

6. Miscellaneous. (a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, applied without
reference to principles of conflict of laws.

(b) Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be resolved by binding arbitration. The arbitration shall
be held in Jacksonville, Florida, and except to the extent inconsistent with
this Agreement, shall be conducted pursuant to the terms and conditions of the
Arbitration Agreement, between the Company and the Executive, on file in the
personnel records of the Company.

(c) Entire Agreement. Upon the Change of Control Date, this Agreement shall
constitute the entire agreement between the parties hereto with respect to the
matters referred to herein and expressly supersedes and replaces in all respects
any Key Executive Employment Protection Agreement (and any amendments thereto)
previously executed between the Company and the Executive. There are no
promises, representations, inducements or statements between the parties other
than those that are expressly contained herein. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors

 

7

--------------------------------------------------------------------------------

and legal representatives. In the event any provision of this Agreement is
invalid or unenforceable, the validity and enforceability of the remaining
provisions hereof shall not be affected. The Executive acknowledges that he is
entering into this Agreement of his own free will and accord, and with no
duress, that he has read this Agreement and that he understands it and its legal
consequences.

(d) Notices. All notices and other communications hereunder shall be in writing
and shall be given by hand-delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:    at the home address of the Executive as noted in the
corporate records of the Company If to the Company:   

Landstar System, Inc.

13410 Sutton Park Drive South

Jacksonville, Florida 32224

Attn.: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

(e) Section 409A. It is intended that this Agreement will comply with Section
409A of the Code (and any regulations and guidelines issued thereunder) to the
extent the Agreement is subject thereto, and the Agreement shall be interpreted
on a basis consistent with such intent. If an amendment to the Agreement is
necessary in order for it to comply with Section 409A, the parties hereto will
negotiate in good faith to amend the Agreement in a manner that preserves the
original intent of the parties to the extent reasonably possible.

[signature page to follow]

 

8

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has
caused this Agreement to be executed in its name on its behalf as of the day and
year first above written.

 

LANDSTAR SYSTEM, INC.

By:     Name:   James B. Gattoni

Title:

 

President and

Chief Executive Officer

 

[Executive]

 

9