Exhibit 10(iii)
June 23, 2003
Xx. Xxxxxx X. Xxxxx
Chairman & Chief Executive Officer
Overseas Shipholding Group, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xx. Xxxxx:
In light of your long and valued service to Overseas Shipholding Group, Inc.
("OSG"), and your expressed desire to retire from your positions as Chairman of
the Board of Directors (the "Chairman") and Chief Executive Officer ("CEO") of
OSG, and to separate from your employment with OSG no later than the end of this
year, this letter agreement and the General Release attached hereto set forth
the arrangement agreed to by OSG and you regarding such retirement and
separation.
1. (a) You shall continue to serve as Chairman and CEO of OSG, at your current
rate of salary, until the earliest to occur of (i) December 31, 2003, (ii)
the date on which a successor Chairman and CEO is appointed by the Board of
Directors of OSG (the "Board") and commences employment with OSG, or (iii)
your date of death (the "Retirement Date"). You may continue to serve as a
director of OSG (without compensation) through the regularly scheduled 2004
annual meeting of the shareholders of OSG. If your Retirement Date occurs
prior to December 31, 2003 (and other than due to your death), your duties
as an ongoing employee shall be mutually determined by you and the Board,
but in any event your salary shall continue at its current rate through the
earlier to occur of December 31, 2003 or your date of death. You shall also
be entitled to receive your bonus for 2003, to be based solely on OSG's
financial performance, as computed by the Compensation Committee utilizing
the applicable provisions of the bonus formula currently in existence under
OSG's Incentive Compensation Plan, which will be paid to you on the date on
which bonuses for 2003 are payable to other senior executives of OSG.
(b) Prior to your Retirement Date, all matters of a strategic nature
received by you will be referred to the Board for its consideration and
review.
2. Your employment with OSG shall end as of December 31, 2003 or, if earlier,
your date of death. Except in the event of your earlier death or as
otherwise set forth herein, December 31, 2003 shall be the termination date
for purposes of your participation in and
coverage as an active employee under all employee benefit plans and
programs sponsored by OSG or its subsidiaries, including but not limited
to, vacation accrual, tuition reimbursement, participation in any pension
plan or savings plan, and eligibility for short-term and long-term
disability benefits and life insurance. All benefits due you shall be paid
or made available to you in accordance with the terms of those established
policies or plans of OSG. Moreover, any benefit continuation or conversion
rights existing under such policies or plans will be made available to you
in accordance with the terms of such established policies or plans.
3. You shall resign as an officer and director of any subsidiaries, affiliates
and related companies of OSG, including but not limited to, Tankers
International and Aframax International, effective as of the Retirement
Date.
4. During the period from January 1, 2004 through June 30, 2004 (the
"Transition Period"), you shall serve as an independent consultant to OSG,
and as such shall be reasonably available at mutually-agreed times and
places to consult with your successor on matters relating to your
experience as Chairman and CEO. During the Transition Period, OSG shall pay
you a monthly consulting fee (payable as soon as practicable after the end
of each such month) which shall be based on your current annual salary
(i.e., the total fee will be equal to $600,000) and reimburse you, in
accordance with OSG's reimbursement and expense policies, for all
reasonable expenses incurred by you in performing the consulting services
described herein.
5. Subject to your execution of the General Release following your separation
of employment and your election not to exercise your right to revoke the
General Release as described therein, you shall be entitled to a lump sum
cash payment of $1,200,000, payable on the first business day following the
eighth day after your execution of such General Release.
6. On January 5, 2004, in full settlement of your rights and benefits under
the Overseas Shipholding Group, Inc. Supplemental Executive Retirement Plan
and the Overseas Shipholding Group, Inc. Supplemental Executive Retirement
Plan Plus, OSG shall pay you, in cash, a lump sum of $15,852,846, minus the
present value of your accrued benefit under the Pension Plan for Employees
of OSG Ship Management, Inc. as of December 31, 2003 (the "Pension Plan"),
calculated pursuant to the Pension Plan using the Pension Plan's actuarial
assumptions applicable to payment of a retirement benefit thereunder in the
form of a lump sum.
7. Effective as of the Retirement Date, all of your OSG stock options that are
not yet vested will become fully vested and exercisable. Thereafter, all of
your OSG options shall be subject to the terms and conditions of the
applicable stock option plans, provided that such options shall remain
exercisable until the earlier of January 4, 2005 or the end of their
original ten-year terms.
8. OSG shall provide you with the use of a suitable, mutually agreed-upon
office off of the OSG premises and full-time secretary (who shall be your
current secretary unless you determine otherwise) at OSG's expense (subject
to an all-inclusive monthly billing
system acceptable to OSG) for the period beginning on the Retirement Date
and ending on June 30, 2004.
9. OSG shall pay all reasonable legal fees and expenses of Xxxxxxx Xxxxxxx &
Xxxxxxxx LLP incurred by you in connection with the negotiations of this
letter agreement and the General Release; provided, however, that such fees
shall not exceed $25,000.
10. You shall retain all rights to indemnification under applicable law or
under OSG's Certificate of Incorporation or By-Laws, as they may be amended
or restated from time to time. In addition, OSG shall maintain Director's
and Officer's liability insurance on your behalf, at the level in effect
for all other officers and directors of OSG from time to time, through
December 31, 2003 and throughout the period of any applicable statute of
limitations.
11. (a) You agree not to disclose any information, files, documents and other
materials proprietary to OSG and not in the public domain which relate to
OSG or its business and which are treated as confidential by OSG, its
subsidiaries, affiliates or related companies, except (i) with the prior
consent of OSG or (ii) as otherwise required by law or legal process.
Nothing in the preceding sentence shall be deemed to limit what you may
discuss with the other directors of OSG.
(b) Through June 30, 2005 you agree not to use any proprietary or
confidential information relating to OSG, its subsidiaries, affiliates or
related companies ("Confidential Information") in any commercial activity
in which you engage, other than on behalf of OSG, whether as an officer,
employee, director, owner, partner or otherwise; provided, however, that
Confidential Information shall not include any information which is or has
been acquired by you other than only through your position as an officer or
director of OSG, its subsidiaries or affiliates.
12. (a) Until such time as OSG files this document with the Securities and
Exchange Commission, (i) except as may be required by law or legal process,
OSG shall keep the terms of this letter agreement confidential and not
disclose such terms to anyone other than directors, officers, employees,
attorneys, advisors, auditors and agents of OSG, its subsidiaries,
affiliates and related companies, without your prior consent, each of whom
shall be requested by OSG to maintain such information in confidence, and
(ii) you agree to keep the terms of this letter agreement confidential and
not to disclose its contents to anyone without OSG's prior consent, except
members of your immediate family, your attorney, financial consultant or
other professional advisor and any potential employer, each of whom shall
be requested by you to maintain such information in confidence.
(b) Notwithstanding anything herein to the contrary, either party to this
letter agreement (and any employee, representative, or other agent of any
party to this letter agreement) may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this letter agreement and all materials of any
kind (including opinions or other tax analyses) that are provided to it
relating to such tax treatment and tax structure. However, any such
information relating to the tax
treatment or tax structure is required to be kept confidential to the
extent necessary to comply with any applicable federal or state securities
laws.
13. You agree not to make, participate in the making of, or encourage any other
person to make, any statements, written or oral, which criticize, disparage
or defame the goodwill or reputation of OSG, its subsidiaries, affiliates
or related companies, or any of their respective directors, officers and
employees. OSG agrees not to make, participate in the making of, or
encourage any other person to make, any statements, written or oral, which
criticize, disparage or defame your reputation.
14. The parties to this letter agreement shall issue a joint public
announcement regarding your retirement. The parties agree that no public
disclosure, press release or discussions with the press will be made or
occur with respect to this letter agreement and the General Release without
the other party's prior written consent, except as required by law.
15. (a) Any breach of the provisions of sections 11, 12, 13 and 16 hereof by
you or any person to whom you have made a permitted disclosure of the terms
of this letter agreement shall be considered a material breach of this
letter agreement. In the event of such breach, and due to the difficulties
in calculating damages that might be sustained (directly or indirectly) as
a result of such breach, you specifically consent to the entry of
injunctive relief against you, in addition to any and all of OSG's remedies
under the law, and you further agree that OSG may obtain the foregoing
relief without the posting of a bond.
(b) Any breach of the provisions of sections 10, 12 and 13 hereof by OSG or
any person to whom OSG has made a permitted disclosure of the terms of this
letter agreement shall be considered a material breach of this letter
agreement. In the event of such breach, and due to the difficulties in
calculating damages that might be sustained (directly or indirectly) as a
result of such breach, OSG specifically consents to the entry of injunctive
relief against it, in addition to any and all of your remedies under the
law, and OSG further agrees that you may obtain the foregoing relief
without the posting of a bond.
16. (a) During the period from the date hereof through the first anniversary of
the Retirement Date, you agree not to directly or indirectly: (i) enter the
employ of, or render services to, any business that competes with the
business of OSG or any of its subsidiaries, affiliates or related companies
as of the Retirement Date in any geographical area that is within any
geographical area where OSG or any of its subsidiaries, affiliates or
related companies provides its products or services (a "Competitive
Business"); or (ii) acquire a financial interest in, or otherwise become
actively involved with, any Competitive Business as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant.
(b) Notwithstanding anything to the contrary in this letter agreement, you
may directly or indirectly own, solely as an investment, securities of any
Competitive Business which is publicly traded on a national or regional
stock exchange or on the over-the-counter market if you (i) are not a
controlling person of, or a member of a group which controls,
such Competitive Business and (ii) do not, directly or indirectly, own 5%
or more of any class of securities of such Competitive Business.
17. During the period from the date hereof through the fifth anniversary of the
last day of the Transition Period, you agree not to solicit directly or
indirectly for employment any person who is employed by or under contract
with OSG or any of its subsidiaries or affiliates (other than (a) your
secretary or (b) for the benefit of OSG or any of its subsidiaries or
affiliates).
18. You agree to return all property belonging to OSG as of the last day of the
Transition Period; except that you may purchase from OSG any office
furniture currently in your office and any laptop computers (devoid of OSG
property) which you currently use, each at the depreciated book value of
such property on the books of OSG.
19. The parties to this letter agreement shall execute the General Release as
soon as practicable following your separation of employment hereunder.
20. This letter agreement and the General Release contain the entire agreement
between you and OSG and supersede any and all prior agreements or
understandings, other than that certain agreement dated as of October 21,
1996 between OSG and you, as amended through June 21, 2002, relating to a
Change of Control of OSG (the "Change of Control Agreement"), with respect
to the subject matter hereof and the terms and provisions of this letter
agreement may not be modified or amended, except in a writing signed by
both parties; provided, however, that (a) clause (iii) of Section 2 of the
Change of Control Agreement hereby shall be amended to read "one hundred
twenty (120) days after the Retirement Date (as defined in the letter
agreement dated June 23, 2003 between the Company and the Executive) if a
Change of Control does not occur on or prior to such date" and (b) the
payments under Sections 4 and 5 of this letter agreement shall offset any
payments to you under the Change of Control Agreement.
21. You represent and warrant that (a) you have carefully read this letter
agreement in its entirety and you fully understand the significance of all
of the terms and conditions hereof, and (b) you are signing this letter
agreement voluntarily and of your own free will, and assent to all the
terms and conditions contained herein.
22. No waiver by either party of any breach by the other party of its
obligations hereunder shall be deemed a waiver of any prior or subsequent
breach. Except to the extent otherwise specifically provided herein, any
waiver must be in writing and signed by you or an authorized officer of
OSG, as the case may be.
23. Nothing contained in this letter agreement or the General Release shall (a)
affect your rights to indemnification in your continued capacity as a
director of OSG and (b) affect or limit your ability to perform your duties
and obligations as a director of OSG.
24. All payments made by OSG to you pursuant to this letter agreement shall be
subject to appropriate deductions for FICA, Federal, state and local income
taxes.
25. You shall not be required to mitigate the amount of any payment provided
for pursuant to this letter agreement by seeking other employment or
otherwise and the amount of any payment provided for pursuant to this
letter agreement shall not be reduced by any amounts earned by you for
subsequent employment or otherwise.
26. This letter agreement and the General Release shall be governed by,
construed and enforced in accordance with, the laws of the State of New
York applicable to contracts to be performed therein.
27. This letter agreement and all the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, permitted assigns, heirs,
executors and administrators of the parties hereto.
If you agree to the foregoing, please so indicate by dating and signing both
enclosed copies of this letter agreement. One copy of the letter agreement
should be returned to the undersigned. The second original is for you.
On behalf of OSG, I wish to thank you for your many years of valuable service to
OSG, and wish you well in your future endeavors.
Sincerely,
OVERSEAS SHIPHOLDING GROUP, INC.
By: /s/ XXXXXX X. XXXXX
---------------------
Name: Xxxxxx X. Xxxxx
-----------------
Title: Senior Vice President and Chief Operating Officer
----------------------------------------------------
I hereby agree to be bound by the terms and conditions of the above letter
agreement.
Date: June 23, 2003 /s/ XXXXXX X. XXXXX
--------------------
Xxxxxx X. Xxxxx
EXHIBIT A
GENERAL RELEASE
---------------
Reference is made to the letter agreement, dated June 23, 2003, which you
countersigned on June 23, 2003, between Overseas Shipholding Group, Inc.
("OSG") and you (herein referred to as the "Agreement").
OSG hereby agrees as follows:
OSG, on behalf of itself and any affiliated companies and their past
and present parents and subsidiaries, agrees to forever release you,
your wife, children, estate, agents, attorneys, heirs, executors,
successors and assigns from any and all claims, demands, causes of
action, controversies, agreements, promises and remedies, in connection
with or in relationship to your capacity as (a) an employee or officer
of OSG or any of its subsidiaries, affiliates and related companies and
(b) a director of OSG or any of its subsidiaries, affiliates and
related companies, which they may have as of the date hereof, whether
known or unknown (collectively, the "Company Release"); provided,
however, that the Company Release shall not apply with respect to any
conduct on your part which is grossly negligent, fraudulent or illegal,
or includes willful misconduct or is otherwise violative of any
applicable laws or rules or regulations issued under such laws.
You hereby agree as follows:
You, on your behalf, as well as your heirs, executors, administrators,
successors and assigns, hereby irrevocably and unconditionally release
and discharge OSG, OSG Ship Management, Inc., their predecessors and
transferors and affiliated and related companies, all of their
respective shareholders, officers, directors, employees, agents,
principals, advisors, parents and subsidiaries, and each of their
respective heirs, executors, administrators, successors and assigns
(collectively, the "Company Released Parties" and each, a "Company
Released Party"), from all claims, demands, causes of action,
controversies, agreements, promises and remedies, in connection with or
in relationship to your capacity as an employee, shareholder, officer
or director of any of the Company Released Parties which you may have
as of the date hereof, whether known or unknown, including under any
statute, rule, order, law or ordinance, express or implied contract,
public policy or otherwise (collectively, "Employee Claims"). This
General Release applies to all Employee Claims, including any and all
Employee Claims relating to the terms and conditions of your employment
with any of the Company Released Parties or the termination of your
employment; any and all Employee Claims for discrimination on the basis
of age, alienage, color, creed, disability, gender, handicap, marital
status, national origin, race, religion, sex or sexual orientation; any
and all claims arising under Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, the Equal Pay Act, the
Rehabilitation Act, the Americans with Disabilities Act, the New York
State Human Rights Act, the New York City Human Rights Law, all as
amended, and any other federal, state or local statute, ordinance,
rule, regulation or order relating to employment; and any and all
Employee Claims for attorney's fees, costs or disbursements.
2
You agree that you will not, from any source or proceeding, seek or
accept any award or settlement with respect to any Employee Claim
covered hereunder. In addition, except as otherwise prohibited by law,
you represent and warrant that you will not xxx or commence any
proceeding (judicial or administrative), or participate in any action,
suit or proceeding, against any of the Company Released Parties, with
respect to any act, event, occurrence, or any alleged failure to act,
released hereunder.
Notwithstanding the foregoing, nothing herein shall be deemed to
release the Company Released Parties in respect of your rights (i)
under the Agreement including, but not limited to, your rights pursuant
to section 23 of the Agreement, (ii) to indemnification, in your
capacity as a current or former director or officer of any of the
Company Released Parties, under the by-laws and articles of
incorporation of each Company Released Party, as in effect from time to
time, or pursuant to indemnification policies maintained by one or more
of the Company Released Parties, (iii) to any unpaid salary and other
compensation (including any bonus under OSG's Incentive Compensation
Plan), (iv) to reimbursement pursuant to the policies of any Company
Released Party for expenses incurred by you prior to January 1, 2004 or
pursuant to section 4 of the Agreement, and (v) to any benefits payable
to you pursuant to any qualified pension plan or employee benefit plan
maintained by the Company Released Parties.
You represent and warrant that you have carefully read this General
Release in its entirety; that you have had an opportunity to consider
fully the terms of this General Release for twenty-one (21) days; that
you have been advised by OSG in writing to consult with an attorney of
your choosing in connection with this General Release; that you fully
understand the significance of all of the terms and conditions of the
Agreement and this General Release; that you have discussed it with
your independent legal counsel, or you have had a reasonable
opportunity to do so; that you have had answered to your satisfaction
any questions that you have asked with regard to the meaning and
significance of any of the provisions of the Agreement and this General
Release; and that you are signing this General Release voluntarily and
of your own free will and you assent to all the terms and conditions
contained in the Agreement and herein.
You further acknowledge that after executing the General Release you
have seven (7) days to revoke it by delivery of a Notice of Revocation
to the Released Parties, directed to the attention of [____], prior to
the eighth (8th) day after execution and delivery by you of the General
Release. You understand that if so revoked by you, this General Release
shall be deemed to be null and void.
3
If you agree to the foregoing, please so indicate by dating and signing both
enclosed copies of this General Release. One copy of the General Release should
be returned to the undersigned. The second original is for you.
Sincerely,
OVERSEAS SHIPHOLDING GROUP, INC.
By: _______________________________
Name: ________________________
Title: ________________________
Agreed to and accepted by:
_______________________________
Xxxxxx X. Xxxxx
Date: ____________________
