Item 1.01
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Entry into a Material Definitive Agreement
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The Board of Directors (“Board”) of Saia, Inc. (the “Company”) has appointed Robert S. Chambers, as the Vice President of Finance and Chief Financial Officer of the Company effective May 6, 2019.
Executive Severance
Agreement
On May 6, 2019, the Company entered into an Executive Severance Agreement with Mr. Chambers. The Executive Severance Agreement provides that in the event of a “Change of Control” of the Company followed within two years by (i) the termination of Mr. Chambers’ employment for any reason other than death, disability, retirement or “cause” or (ii) the resignation of Mr. Chambers due to an adverse change in title, authority or duties, a transfer to a new location, a reduction in salary, or a reduction in fringe benefits or annual bonus below a level consistent with the Company’s practice prior to the Change of Control, then Mr. Chambers will (i) be paid a lump sum cash amount equal to the sum of two times his highest compensation (salary plus bonus) for any consecutive 12 month period within the previous three years; and (ii) remain eligible for coverage under applicable medical, life insurance and long-term disability plans for two years following termination.
Any payment or benefit received or deemed received by Mr. Chambers under the Executive Severance Agreement that triggers the excise tax imposed by Section 4999 of the Internal Revenue Code, as amended (“Code”)
or any similar tax imposed by state or local law (including interest or penalties with respect to such taxes) (collectively, “Excise Tax”)
, will be either
(i) reduced to the minimum extent necessary to ensure that no portion of the payment or benefit is subject to the Excise Tax (that amount, the “Reduced Amount”) or (ii) payable in full if his receipt on an after-tax basis of the full amount of payments and benefits (after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax)) would result in Mr. Chambers receiving an amount greater than the Reduced Amount. The payments or benefits will be reduced in a manner that maximizes his economic position.
For the purpose of the Executive Severance Agreement, a “Change of Control” will be deemed to have taken place if:
(i) a third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, purchases or otherwise acquires shares of the Company and as a result thereof becomes the beneficial owner of shares of the Company having 20 percent or more of the total number of votes that may be cast for election of directors of the Company; or (ii) as the result of, or in connection with any cash tender or exchange offer, merger or other business combination, or contested election, or any combination of the foregoing transactions, the directors then serving on the Board cease to constitute a majority of the Board of the Company or any successor to the Company.
Severance Agreement
On May 6, 2019, the Company also entered into a Severance Agreement with Mr. Chambers. The Restricted Stock Agreement described below contains non-competition and employee and customer non-solicitation provisions, as well as provisions designed to protect Saia’s intellectual property, in consideration of receiving the restricted stock award. To provide an additional incentive for Mr. Chambers to agree to the restrictive covenants, the Company entered into the Severance Agreement that generally provides for severance payments equal to base salary over the non-compete period in the event Mr. Chambers’ employment is involuntarily terminated without cause as defined in the agreement. To receive the severance payments, Mr. Chambers must sign a general release of claims against the Company and must comply with his obligations under any other agreement with the Company, including the restrictive covenants in the Restricted Stock Agreement.
Restricted Stock Agreement
On May 6, 2019, the Company entered into a Restricted Stock Agreement with Mr. Chambers under the Saia, Inc. 2018 Omnibus Incentive Plan (“Restricted Stock Agreement”). The Restricted Stock Agreement provides for the award of 6,531 shares of the Company’s common stock. The restricted stock award will vest 25 percent on each of May 6, 2022 and May 6, 2023 with the remaining 50 percent vesting on May 6, 2024. The restricted stock award will immediately vest upon a Change of Control. The restricted stock award is conditioned upon Mr. Chambers’ compliance with the non-disclosure, non-competition and employee and customer non-solicitation provisions of the Restricted Stock Agreement.
The foregoing description of the Executive Severance Agreement, Severance Agreement and the Restricted Stock Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of each agreement, copies of which are filed herewith as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference. A copy of the press release announcing Mr. Chambers’ appointment is attached hereto as Exhibit 99.1.