EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT, made this 20th day of November, 2002, by and among SCS
Transportation, Inc., a Delaware corporation ("SCST"), Xxxx Motor Freight Line,
Inc., a Louisiana corporation ("Saia") and Xxxxxxx X. O'Dell (the "Executive").
WITNESSETH
WHEREAS, the Board of Directors of Saia 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 Saia on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Employment. Saia 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 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 or
7, whichever shall be applicable.
3. Position and Duties. The Executive shall serve as Chief
Executive Officer, 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 Xxxx'x bylaws.
The Executive shall devote substantially all of his working
time and efforts to the business and affairs of Saia.
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4. Compensation. During the period of the Executive's employment,
Saia shall provide the Executive with the following
compensation and other benefits:
(a) Base Salary. Saia shall pay to the Executive base
salary at the rate of $300,000.00 per annum which
shall be payable in accordance with the standard
payroll practices of Saia. Such base salary rate
shall be reviewed annually in accordance with SCST's
normal policies beginning in calendar year 2003;
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.
(b) Annual Bonus. The Executive shall participate in a
bonus program established and maintained by SCST,
which shall be paid by Saia. The criteria for
establishment of the parameters for payments shall be
determined annually by the Compensation Committee of
the Board of Directors of SCST.
(c) Stock Options. The Compensation Committee of the
Board of Directors of SCST shall determine the number
of stock options to purchase common stock of SCST, if
any, to be granted to the Executive and the terms and
conditions of any such options.
(d) 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,
Xxxx'x employee benefit plans and programs
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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 Saia. 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.
(e) 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 Xxxx'x
policies.
(f) Office and Services Furnished. Saia shall furnish the
Executive with office space, secretarial assistance
and such other facilities 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 Saia.
(a) Cause. Saia may terminate the Executive's employment
for "Cause" if the Executive willfully engages in
conduct which is materially and demonstrably
injurious to Saia or any of its affiliates (as
defined below) or willfully engages in an act or acts
of dishonesty resulting in material personal gain to
the Executive at the expense of Saia or any of its
affiliates. Saia 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
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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 Saia as of the date of such termination
at the normal time for payment of such salary,
compensation or benefits, and (ii) any amounts owing
under Section 4(e). In addition, in the event of such
termination of the Executive's employment for Cause,
all outstanding options to purchase common stock of
SCST 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 9,
the Executive shall receive no other compensation or
benefits from Saia or any of its affiliates.
(b) Disability. If the Executive incurs a Permanent and
Total Disability, as defined below, Saia 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
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Saia as of the date of such termination of employment
at the normal time for payment of such salary,
compensation or benefits and any amounts owing under
Section 4(e), and (ii) all outstanding stock options
to purchase common stock of SCST held by the
Executive at the time of his termination of
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 Saia shall require
and shall be subject to the approval of the
Compensation Committee of the Board of Directors of
SCST.
(c) Without Cause. Saia 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.
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6. Termination of Employment by the Executive.
(a) Good Reason. The Executive may terminate his
employment for Good Reason by giving Saia a written
notice of termination at 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 (i) the failure of Saia in any
material way either 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) the assignment to the Executive of
any duties that are materially inconsistent with
those of a Chief Executive Officer of a company that
results in a diminution in the Executive's normal
duties, responsibilities and authority as described
in Section 3; provided, that, the transfer of the
Executive to a comparable position with another
subsidiary of SCST or a transfer of the Executive to
a position with SCST shall not be deemed to give rise
to Executive's right to terminate his employment for
"Good Reason", or (iii) Executive's receipt of notice
from Saia of the cut-off of the automatic renewal of
the term of this Agreement as described in Section 2
above.
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(b) Other. The Executive may terminate his employment at
any time and for any reason, other than pursuant to
subsection (a) above, by giving Saia 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 pursuant to
this Agreement or any benefit plan or program of Saia
as of the date of such termination at the normal time
for payment of such salary, compensation or benefits,
and (ii) any amounts owing under Section 4(e). In the
event of the Executive's termination of his
employment pursuant to this subsection (b), all
outstanding options to purchase common stock of SCST
held by the Executive not previously exercised by the
date of termination shall be forfeited. Except as
provided in Section 9, the Executive shall receive no
other compensation or benefits from Saia or any of
its affiliates.
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 Saia as of the date of such termination at the
normal time for payment of such salary, compensation or
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benefits, and (ii) all outstanding stock options to purchase
common stock of SCST 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 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 Saia shall terminate (i) because
of termination by Saia 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) Saia 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 Saia as of the date of such termination at
the normal time for payment of such salary,
compensation or benefits.
(b) Saia shall pay the Executive any amounts owing under
Section 4(e).
(c) Saia shall pay to the Executive as a severance
benefit an amount equal to two times his annual rate
of base salary immediately preceding his termination
of employment. Such severance benefit shall be paid
in a lump sum within 30 days after the date of such
termination of employment.
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(d) Saia shall pay to the Executive a pro rated target
bonus based on the actual portion of the fiscal year
elapsed prior to the termination of Executive's
employment under Xxxx'x target bonus plan for the
fiscal year in which his termination of 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 retirement benefits pursuant to Xxxx'x
nonqualified defined contribution plans, if any.
Payment of benefits under such 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, Saia 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
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upon the earlier of (i) 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 to purchase common
stock of SCST held by the Executive at the time of
termination of his employment shall become fully
exercisable upon such termination of employment and
the Executive shall have two years 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).
(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 Saia (determined
without regard to any additional payments required
under this subsection (h) and Exhibit A 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"), Saia shall pay to the Executive with respect
to such Payment at the time specified in Exhibit A 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
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upon the payment and any federal, state and local
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 Exhibit A.
9. 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 Saia.
10. Termination or Resignation Following a Change of Control. In
the event that Executive resigns his employment with Saia and
its affiliates or suffers a "Termination" of such employment
within two years after a "Change of Control" of SCST under the
circumstances described and the definitions set forth in
paragraphs 3 and 1 (e) of the Executive Severance Agreement
entered into between Executive and SCST on September 28, 2002
(the "Executive Severance Agreement"), 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. Non-Competition, Non-Solicitation and Confidentiality. The
Executive acknowledges that in the course of his employment
with Saia he has become, and in the course of his employment
with Saia he will continue to become, familiar with Xxxx'x
trade secrets and those of any person or entity controlling,
controlled by or under common control with such person or
entity, including, without limitation, for Saia, each of SCST
and Jevic Transportation, Inc. (an "affiliate") and with other
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confidential information concerning Saia and its affiliates
and that his services will be of special, unique and
extraordinary value to Saia. Therefore, the Executive agrees
that:
(a) so long as the Executive is employed by Saia or
an affiliate of Saia and for a period of two years
after the date the Executive ceases to be employed by
Saia or an affiliate of Saia (the "Non-Compete
Period"), the Executive shall not, and shall not
allow any of his affiliates to, engage (whether as an
owner, operator, manager, employee, officer,
director, consultant, advisor, representative or
otherwise), directly or indirectly in any endeavor,
activity or business in (x) any country in the world
where Saia or any of its affiliates is doing business
during the term of such Non-Compete Period or (y) any
state in the United States or any province in Canada,
that engages, in whole or in part, in or that
otherwise competes, in whole or in part, with the
business of providing trucking transportation,
including, but not limited to, offering regional,
interregional or national less-than-truckload
services or truckload services, freight brokerage,
transportation logistics or any other business of
Saia and its affiliates or any of them (collectively,
the "Business") as conducted or as proposed to be
conducted at any time during the term of the
Executive's employment with Saia or any of its
affiliates; provided that this paragraph shall not be
construed to prohibit the ownership of less than 3%
of the outstanding stock of any publicly-traded
corporation.
(b) The Executive agrees that so long as the
Executive is employed by Saia or an affiliate of Saia
and for a period of two years after the date the
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Executive ceases to be employed by Saia or an
affiliate of Saia (the "Non-Solicitation Period"), he
shall not, and shall not permit any of his affiliates
to, directly or indirectly,
(i) contact, approach or solicit for the
purpose of offering employment to or hiring
(whether as an employee, consultant, agent,
independent contractor, salesperson,
distributor, supplier, vendor, manufacturer,
representative, agent, jobber or otherwise)
or actually hire any person employed by Saia
or any of its affiliates during the
Non-Solicitation Period, without the prior
written consent of Saia, or otherwise induce
any person or entity transacting business
with Saia or any of its affiliates to
terminate any relationship, association or
arrangement with Saia or any of its
affiliates, or to represent, distribute or
sell services or products of Saia or its
affiliates; or
(ii) divert or attempt to divert from Saia
or any of its affiliates any business with
any customer or account the identity of
which was learned by the Executive, as a
result of his operation of the Business or
employment with Saia or any of its
affiliates.
12. Confidentiality. The Executive shall treat and hold as
confidential any information concerning the Business, Saia or
any of its affiliates that is not already generally available
to the public (the "Confidential Information"), refrain from
using any of the Confidential Information except in connection
with his employment with Saia
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or any of its affiliates, and deliver promptly to Saia, at the
request and option of Saia, all tangible embodiments (and all
copies) of the Confidential Information which are in his
possession or under his control. In the event that the
Executive is requested or required (by oral question or
request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, the
Executive shall notify Saia promptly of the request or
requirement so that Saia may seek an appropriate protective
order or waive compliance with the provisions of this Section
12. If, in the absence of a protective order or the receipt of
a waiver hereunder, the Executive is, on the advice of
counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, the Executive
may disclose the Confidential Information to the tribunal;
provided, that the Executive shall use his best efforts to
obtain, at the request of and at the cost of Saia, an order or
other assurance that confidential treatment shall be accorded
to such portion of the Confidential Information required to be
disclosed as Saia shall designate.
13. Use of Information of Prior Employers. During the term of this
Agreement, the Executive will not improperly use or disclose
any confidential information or trade secrets, if any, of any
former employers or any other person to whom the Executive has
an obligation of confidentiality, and will not bring onto the
premises of Saia or any of its affiliates any unpublished
documents or any property belonging to any former employer or
any other person to whom the Executive has an obligation of
confidentiality unless consented to in writing by the former
employer or person.
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14. Remedy for Breach. The Executive acknowledges and agrees that
in the event of a breach by the Executive of any of the
provisions of Sections 11, 12 or 13 monetary damages shall not
constitute a sufficient remedy. Consequently, in the event of
any such breach, Saia and/or its respective successors or
assigns may, in addition to other rights and remedies existing
in their favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof, in each case without the
requirement of posting a bond or proving actual damages.
15. Enforcement. If the final judgment of a court of competent
jurisdiction declares that any term or provision of Sections
11, 12, 13 or 14 is invalid or unenforceable, each of the
Executive and Saia agree that the court making the
determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace
any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest
to expressing the intention of the invalid or unenforceable
term or provision, and the terms provided herein shall be
enforceable as so modified after the expiration of the time
within which the judgment may be appealed.
16. Acknowledgment. The Executive acknowledges and agrees that (i)
the restrictions contained in Sections 11, 12, 13, 14 or 15
are reasonable in all respects (including, without limitation,
with respect to subject matter, time period and geographical
area)
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and are necessary to protect Xxxx'x interest in, and value of,
the Business (including, without limitation, the goodwill
inherent therein) and (ii) Executive is responsible for the
creation of such value.
17. Arbitration.
(a) Arbitration of Disputes. Except as otherwise
expressly provided herein, 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 Kansas City,
Missouri, 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. In the event the
parties do not agree upon an arbitrator, each party
shall, in turn, strike one arbitrator from the list,
Saia 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.
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(b) Indemnification. If arbitration occurs as provided
for herein and the Executive is awarded more than
Saia has asserted is due him or otherwise
substantially prevails therein, Saia 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, N.A., 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,
Saia shall reimburse the Executive for his reasonable
attorneys' fees, costs and disbursements incurred in
such enforcement.
18. Indemnification under Charter and Bylaws. Saia shall provide
the Executive with rights to indemnification by Saia that are
no less favorable to the Executive than those set forth in
Xxxx'x governing documents as in effect as of the Effective
Date.
19. Successors. This Agreement shall be binding upon and inure to
the benefit of the Executive and his estate and Saia and any
successor or assign of Saia, but neither this Agreement nor
any rights arising hereunder may be assigned or pledged by the
Executive.
20. 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
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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.
21. Survival. The parties agree that the obligations contained in
this Agreement which by their terms survive the expiration,
termination or cancellation of this Agreement shall survive
any expiration, termination or cancellation of this Agreement
and continue to be enforceable.
22. 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 Saia and SCST. Either party may by
giving written notice to the other party in accordance with
this Section 22 change the address at which it is to receive
notices hereunder.
23. Controlling Law. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the
State of Missouri.
24. Changes to Agreement. This Agreement may not be changed orally
but only in a writing, signed by the party against whom
enforcement is sought.
25. 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 as of the
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20th of November, 2002.
EXECUTIVE XXXX MOTOR FREIGHT LINE, INC.
/s/ Xxxxxxx X. O'Dell /s/ Xxxxxxx X. Xxxxxxxx
---------------------------- ------------------------------------
Xxxxxxx X. O'Dell By: Xxxxxxx X. Xxxxxxxx
Senior Vice President,
Operations and Sales
ATTEST
/s/ Xxxxx X. Xxxxx
--------------------------------------------
By: Xxxxx X. Xxxxx
Secretary
SCS TRANSPORTATION, INC.,
for the sole purpose of binding itself to the
provisions in this Agreement regarding stock
options to purchase shares of SCST granted to
the Executive and for no other purpose shall
SCST be bound or obligated hereunder
/s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------
By: Xxxxxxx X. Xxxxxxxxx
Chairman, President and CEO
ATTEST
/s/ Xxxxx X. Xxxxxxxxxxxxx
--------------------------------------------
By: Xxxxx X. Xxxxxxxxxxxxx
Secretary
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EXHIBIT A
GROSS-UP PAYMENTS
The following provisions shall be applicable with respect to
the Gross-Up Payments described in Section 8 (h) of this Agreement.
(a) For purposes of determining whether any of the Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of
the Payments received or to be received shall be treated as "parachute payments"
within the meaning of Section 280G(b) (2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b) (1) of the Code shall be treated
as subject to the Excise Tax unless, in the opinion of tax counsel selected by
Saia, the Payments (in whole or in part) do not constitute parachute payments,
including by reason of Section 280G(b) (4) (A) of the Code, or excess parachute
payments (as determined after application of Section 280G(b) (4) (B) of the
Code), and (ii) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by independent auditors selected by Saia in
accordance with the principles of Sections 280G(d) (3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay Federal income taxes at the highest marginal rate of Federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation to
which such payment could be subject based upon the state and locality of the
Executive's residence or employment, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes. In addition, for purposes of determining the amount of the Gross-Up
Payment, Saia shall make a determination of the amount of any employment taxes
required to be paid on the Gross-Up Payment. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time the
Gross-Up Payment is made (including by reason of any payments the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), Saia
shall make an additional gross-up payment in respect of such excess (plus any
interest, penalties or additions payable with respect to such excess) at the
time that the amount of such excess is finally determined. Notwithstanding the
foregoing, Saia shall withhold from any payment due to the Executive the amount
required by law to be so withheld under Federal, state or local wage or
employment tax withholding requirements or otherwise (including without
limitation Section 4999 of the Code), and shall pay over to the appropriate
government authorities the amount so withheld.
(b) The Gross-Up Payment with respect to a Payment shall be
paid not later than the thirtieth day following the date of the Payment;
provided, however, that if the amount of such Gross-Up Payment or portion
thereof cannot be finally determined on or before such day, Saia shall pay to
the Executive on such date an estimate, as determined in good faith by Saia, of
the amount of such payments and shall pay the remainder of such payments
(together with interest at the Federal short-term rate provided in Section
1274(d) (1) (C) (i) of the Code) as soon as the amount thereof can be
determined. At the time that payments are made under Section 8(h) and this
Exhibit
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A, Saia shall provide the Executive with a written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations, including, without limitation, any opinions or other advice Saia
has received from outside counsel, auditors or consultants (and any such
opinions or advice which are in writing shall be attached to the statement).
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