EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This is an EMPLOYMENT AGREEMENT ("Agreement"), effective as of January
14, 2004 between K-Sea Transportation Inc., a Delaware corporation (together
with its successors and assigns, the "Company"), and Xxxxxx X. Xxxxxxxx (the
"Employee").
BACKGROUND
Employee and the Company desire to enter into this Agreement in order
to secure the services of Employee for the benefit of the Company.
NOW, THEREFORE, intending to be legally bound, and in consideration of
the mutual promises and representations set forth in this Agreement, the Company
and Employee agree as follows:
ARTICLE I - EMPLOYMENT AND TERM
1.1. EMPLOYMENT AND EMPLOYMENT TERM. The Company agrees to employ Employee,
and Employee accepts employment with the Company, to serve as Vice President,
Operations of the Company and as an officer or in such other capacity of any of
K-Sea General Partner GP LLC, a Delaware limited liability company ("K-Sea GP"),
K-Sea General Partner L.P., a Delaware limited partnership, K-Sea Transportation
Partners L.P., a Delaware limited partnership (the "Partnership"), K-Sea
Operating Partnership L.P., a Delaware limited liability company (the "Operating
Partnership"), and any other subsidiary formed by any of the foregoing
(collectively, the "Companies"), as determined by the Board of Directors of such
company, for a term commencing on the date hereof and continuing for a period of
one year thereafter, unless earlier terminated pursuant to Article IV of this
Agreement ("Employment Term"). The Employment Term shall be automatically
renewed for successive one-year periods unless either party hereto gives
thirty-days prior written notice to the other party that such party desires not
to renew the Employment Term. During the Employment Term, Employee will render
such services to the Companies as are customary for the position (or positions)
held by Employee. During the Employment Term, Employee shall devote his full
time, ability and attention, and his best efforts, to the business of the
Companies. The Employee shall not directly or indirectly render any services of
a business, commercial, or professional nature to any other person, organization
or other entity, whether for compensation or otherwise, directly or indirectly,
without the prior written consent of the Board of Directors of the Company.
ARTICLE II - COMPENSATION
2.1. BASE SALARY. Subject to Article IV of this Agreement, as compensation
for services hereunder and in consideration of the protective covenants set
forth in Article III of this Agreement, during the Employment Term the Employee
shall be paid an annual base salary of $150,000, subject to increase at the
discretion of the Board of Directors, payable in accordance with the Company's
normal payroll practices.
2.2. BONUS AWARDS. Subject to Article IV of this Agreement, during the
Employment Term the Employee shall be eligible to receive an annual bonus award
based upon the financial performance of the Companies during the preceding
fiscal year, the amount of which shall be determined in the sole discretion of
the Board of Directors of K-Sea GP. Employee may also receive additional awards
in the amounts and at such times as determined in the sole discretion of the
Board of Directors of K-Sea GP.
2.3. EMPLOYEE BENEFITS. Employee shall be entitled to receive such
retirement and welfare benefits as are generally available to officers of the
Company and other employee perquisites and benefits as determined in the sole
discretion of the Board of Directors of the Company.
2.4. REIMBURSEMENT OF EXPENSES.
(a) GENERAL EXPENSES. During the Employment Term, the Company shall
pay or reimburse Employee for all reasonable travel and other expenses incurred
or paid by him in connection with the performance of duties under this
Agreement, in accordance with the Company's reimbursement policies and upon
submission of satisfactory evidence thereof.
(b) AUTOMOBILE EXPENSES. Employee shall be furnished with an
automobile for business use and shall be reimbursed for reasonable costs of
insurance, gasoline and repair for said automobile in accordance with the
Company's reimbursement policies and upon submission of satisfactory evidence
thereof.
2.5. LONG-TERM EQUITY INCENTIVE PLAN. Employee shall be eligible to
participate in any long-term equity incentive plan that may be adopted by the
Board of Directors of any of the Companies in its sole discretion, it being
understood that there is no obligation by the Companies or the Board of
Directors of the Companies to establish any such plan or to make any awards
under such plan to the Employee.
ARTICLE III - PROTECTIVE COVENANTS
3.1. NON-COMPETITION.
(a) TERM OF RESTRICTIVE COVENANTS. The term of the restrictive
covenants in this ARTICLE III (the "Non-Compete Term") shall commence on the
date hereof and shall terminate two years after the date of termination of
Employee, except that the Non-Compete Term shall terminate on such earlier date
as determined by the Board of Directors in its sole and absolute discretion if
(i) Employee is terminated by the Company other than for Cause and (ii) such
termination DOES NOT occur within 30 days after a Change in Control.
For purposes of this Agreement, a "Change in Control" shall be deemed
to have occurred upon the occurrence of one or more of the following events: (i)
any sale, lease, exchange or other transfer (in one or a series of related
transactions) of all or substantially all of the assets of the Partnership, the
Operating Partnership L.P. or the Company to any Person or its Affiliates, other
than the Partnership, the Operating Partnership, the Company or any of their
Affiliates or (ii) any merger, reorganization, consolidation or other
transaction pursuant to which more than 50% of the combined voting power of the
equity interests in the Partnership, the
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Operating Partnership or the Company ceases to be owned by Persons who own such
interests, respectively, as of the date of the initial public offering of common
units of the Partnership.
(b) NON-COMPETITION. During the Non-Compete Term, Employee shall not,
unless acting as an officer or employee of, or consultant to, the Companies
directly or indirectly, (i) own, manage, operate, join, control or participate
in the ownership, management, operation or control of, or be connected as an
officer, director, employee, stockholder, partner, advisor, consultant or
otherwise with, or provide any financing or lease any assets to, any entity that
engages in or intends to engage in any Competing Business (as hereinafter
defined), or (ii) solicit, employ, retain as a consultant, interfere with or
attempt to entice away from the Companies or their respective Affiliates, any
Protected Employee (as hereinafter defined), or (iii) solicit, interfere with or
attempt to entice away from the Companies or their respective Affiliates, any
Person, firm or corporation which has been or is during the two-year period
preceding the date on which a determination is made a customer of the Companies
or any of its subsidiaries. Ownership of not more than 2% of the outstanding
stock of any publicly traded company shall not be a violation of this Section
3.1 so long as Employee does not participate in the management of such company.
As used herein, "COMPETING BUSINESS" shall mean any business or other
enterprise which engages in the marine transportation business or otherwise
competes with the Companies; and "PROTECTED EMPLOYEE" shall mean any current or
former employee of the Companies during the period in which the covenants set
forth in this Section 3.1 are in effect, but excluding Persons who have not been
employed by the Companies during the two-year period preceding the date on which
a determination is made regarding whether a Person is a Protected Employee.
3.2. CONFIDENTIALITY. From and after the commencement of the Employment
Term, Employee agrees not to divulge, communicate, use to the detriment of the
Companies, for Employee's benefit or the benefit of any other person, firm,
corporation, association or other entity, or misuse in any way, in whole or in
part, any proprietary or confidential information or trade secrets related to
the Companies as they may exist from time to time, including, without
limitation, the Companies' trade secrets or other intellectual property rights,
personnel information, know-how, customer lists, or other confidential or
proprietary data. Employee acknowledges that the list of the Companies'
customers as it may exist from time to time, and the Companies' proprietary or
confidential information, and trade secrets, are valuable, special and unique
assets of the Companies. Employee acknowledges and agrees that any information
or data he has acquired on any of these matters or items was received in
confidence. Employee agrees to hold, as the property of the Companies, all
memoranda, books, papers, letters and other data and all copies thereof or
therefrom, made by him or otherwise coming into his possession, and at any time
to deliver the same to the Companies upon their demand.
3.3. REASONABLE LIMITATIONS. Employee acknowledges that given the nature of
Employee's employment with the Companies and of the Companies' business the
covenants contained in this Article III contain reasonable limitations as to
time, geographical area and scope of activity to be restrained, and do not
impose a greater restraint than is necessary to protect the legitimate business
interests of the Companies including, but not limited to, the protection of
confidential information. In the event that the covenants contained in this
Article
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III shall be determined by any court of competent jurisdiction to be
unenforceable by reason of their extending for too long a period of time or over
too large a geographical area or by reason of their being too extensive in any
other respect, they shall be interpreted to extend only over the longest period
of time for which they may be enforceable, and/or over the largest geographical
area as to which they may be enforceable and/or to the maximum extent in all
other aspects as to which they may be enforceable, all as determined by such
court in such action.
3.4. BREACH OF COVENANTS. Violation of any of the protective covenants
contained herein shall constitute a breach of trust and is grounds for immediate
dismissal with cause and for appropriate legal action by the Companies for
damages including reasonable attorney fees and costs, enforcement and/or
injunctive relief. Notwithstanding anything contained herein to the contrary,
the parties agree that both parties shall bear joint and equal responsibility
for attorney fees and costs if the Company prevails in any such legal action and
that the Company will bear sole responsibility for attorney fees and costs if
the Company does not prevail in any such legal action.
3.5. EXTENSION OF NON-COMPETE TERM. The parties acknowledge that if
Employee violates any of the protective covenants in this Article III and the
Companies bring legal action for injunctive, damages or other relief hereunder,
the Companies shall, as a result of the time involved in obtaining the relief,
be deprived of the benefit of the full Non-Compete Term of these protective
covenants. Accordingly, the length of time for which this covenant not to
compete shall be in force shall not include any period of violation or any other
period required for litigation during which the Companies seek to enforce this
Article III.
3.6. SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Employee contained in this Article III is independent of any other provision of
this Agreement, and shall survive the termination of Employee's employment under
this Agreement, and the existence of any claim or cause of action of Employee
against the Companies, whether based on this Agreement or otherwise, shall not
prevent the enforcement based of these covenants.
3.7. REMEDIES FOR BREACH. Employee agrees that a breach by him of this
Article III shall cause irreparable harm to the Companies and that their
remedies at law for any breach or threat of breach of the provisions of this
Article III shall be inadequate, and that they shall be entitled to an
injunction or injunctions to prevent breaches of this Article III and to enforce
specifically the terms and provisions hereof, in addition to any other remedy to
which the Companies may be entitled at law or in equity.
3.8. AFFILIATES OF THE COMPANY. The protective covenants in this Article
III shall also benefit the business of the Companies' Affiliates (as hereinafter
defined) and these covenants shall be enforceable against Employee by each of
such Affiliates as third party beneficiaries. An "Affiliate" is any person or
entity that, directly or indirectly, controls or is controlled by, or is under
common control with, the Companies.
ARTICLE IV - TERMINATION OF EMPLOYMENT
4.1. TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON. The Company
may terminate Employee's employment hereunder for "Cause" effective immediately
upon
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notice thereof from the Company to Employee. Employee may resign from the
Company "Without Good Reason" effective ten business days after written notice
thereof from Employee to the Company. If the Company terminates Employee for
Cause or if Employee terminates his employment Without Good Reason, Employee is
entitled to benefits accrued as of the effective date of his termination, but no
payments or benefits under this Agreement shall accrue after the date of
Employee's termination.
4.2. TERMINATION WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON. The Company
may terminate Employee's employment hereunder "Without Cause", effective ten
business days after written notice thereof from the Company to Employee.
Employee may resign from the Company with "Good Reason" effective ten business
days after written notice thereof from Employee to the Company. If the Company
terminates Employee Without Cause or if Employee terminates his employment with
Good Reason, the Company shall owe Employee severance (the "Severance Payment")
in an amount equal to the greater of the Option I Severance and the Option II
Severance. At the Company's option, the Severance Payment shall be paid either
(a) in equal monthly installments during the "Remaining Non-Compete Term", or
(b) in one lump sum payable within 30 days following the termination date. The
Company shall withhold all applicable income and employment taxes from the
Severance Payment. In addition, for a period commencing on the termination date
and ending on the first anniversary thereof, provided that Employee properly
elects such coverage, the Company shall pay (the "COBRA Payment") the premiums
necessary to provide Employee coverage continuation rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). Thereafter,
Employee shall be solely responsible for the full amount of such COBRA premiums
for the remainder of the COBRA continuation period. It is agreed that the
Severance Payment and the COBRA Payment shall constitute all amounts owed by the
Companies to Employee for the termination of his employment Without Cause or
Employee's resignation with Good Reason, and that no other payments or benefits
shall be owed by the Companies to Employee under any severance or benefit plan
other than any benefits under a retirement plan that is qualified under Section
401(a) of the Internal Revenue Code in which Employee is fully vested. No
Severance Payment or COBRA Payment shall be made by the Company unless Employee
executes a waiver in a form satisfactory to the Company releasing the Companies
from any claims Employee may assert against the Companies.
4.3. TERMINATION IN THE EVENT OF DEATH. If Employee's employment hereunder
is terminated because of Employee's death, the Company shall pay to Employee's
designated beneficiary, or, if none, to his estate (the "Estate"), an amount
equal to one-half of Employee's annual base salary at the time of such
termination. At the Company's option, such amount shall be payable either in one
lump sum within 30 days after such termination or in six (6) equal monthly
installments. The Company shall withhold applicable income and employment taxes
from such payment. It is agreed that the amount payable hereunder shall
constitute all amounts owed by the Companies to Employee for the termination of
his employment in the event of Employee's death, and that no other payments or
benefits shall be owed by the Companies to Employee's Estate under any severance
or benefit plan other than any benefits under a retirement plan that is
qualified under Section 401(a) of the Internal Revenue Code in which Employee is
fully vested.
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4.4. TERMINATION IN THE EVENT OF DISABILITY. If Employee's employment
hereunder is terminated because of Employee's Disability, the Company shall pay
to Employee an amount equal to one-half of Employee's annual base salary at the
time of such termination. At the Company's option, such amount shall be payable
either in one lump sum within 30 days after such termination or in six (6) equal
monthly installments. The Company shall withhold applicable income and
employment taxes from such payment. In addition, for a period commencing on the
termination date and ending on the first anniversary thereof, provided that
Employee properly elects such coverage, the Company shall make the COBRA
Payment. Thereafter, Employee shall be solely responsible for the full amount of
such COBRA premiums for the remainder of the COBRA continuation period. It is
agreed that the amount payable hereunder and the COBRA Payment shall constitute
all amounts owed by the Companies to Employee for the termination of his
employment in the event of Employee's Disability, and that no other payments or
benefits shall be owed by the Companies to Employee under any severance or
benefit plan other than any benefits under a retirement plan that is qualified
under Section 401(a) of the Internal Revenue Code in which Employee is fully
vested. No payment shall be made by the Company pursuant to this Section unless
Employee executes a waiver in a form satisfactory to the Company releasing the
Companies from any claims Employee may assert against the Companies.
4.5. CERTAIN DEFINITIONS.
"Cause" shall mean Employee, (i) after repeated notices and warnings, fails
to perform his reasonably assigned duties as reasonably determined by the
Company, (ii) materially breaches any of the terms or conditions of Articles I
or III of this Agreement, or (iii) commits or engages in a felony or any
intentional dishonest, unethical or fraudulent act which materially damages the
Companies' reputation.
"Disability" shall mean any physical or mental ailment or incapacity as
determined by a licensed physician agreed to by the Company and Employee (or, in
the event that Employee and the Company cannot so agree, by a licensed physician
agreed upon by a physician selected by Employee and a physician selected by the
Company), which prevents Employee from performing his duties hereunder which has
continued for a period of either (i) 90 consecutive days in any 12-month period
or (ii) 180 total days in any 12-month period, either of which can reasonably be
expected to be of permanent duration.
"Good Reason" shall mean the resignation of Employee after the location of
the principal office of the Company is moved outside of a 75-mile radius of the
current location of the Company unless such successor location is mutually
agreed upon by Employee and the Company.
"Option I Severance" shall mean the product of 1.75 MULTIPLIED BY .75
MULTIPLIED BY Employee's annual base salary at the time of termination or
resignation.
"Option II Severance" shall mean the product of 1.75 MULTIPLIED BY the
Remaining Non-Compete Term MULTIPLIED BY Employee's annual base salary at the
time of termination or resignation.
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"Remaining Non-Compete Term" shall mean the number of years remaining in
the Non-Compete Term after Employee's termination hereunder.
"Without Cause" shall mean any termination by the Company of Employee's
employment, other than for Cause or due to Employee's Disability or death.
"Without Good Reason" shall mean any resignation by Employee's employment,
other than for Good Reason or due to Employee's Disability or death.
ARTICLE V - MISCELLANEOUS
5.1. MODIFICATION OF THIS AGREEMENT. Employee acknowledges and agrees that
no one employed by or representing the Companies has any authority to make oral
statements which modify, waive or discharge, in any manner, any provision of
this Agreement. Employee further acknowledges and agrees that no provision of
this Agreement may be modified, waived or discharged unless agreed to in
writing, and signed and executed by Employee and a majority of the members of
the Board of Directors of the Company. Employee acknowledges and agrees that in
executing this Agreement he has not relied upon any representation or statement
made by the Companies or their representatives, other than those specifically
stated in this Agreement.
5.2. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (i) three business days
after mailing if mailed by certified or registered mail, return receipt
requested, (ii) one business day after delivery to Federal Express or other
nationally recognized overnight express carrier, if sent for overnight delivery
with fee prepaid, (iii) upon receipt if sent via facsimile with receipt
confirmed, or (iv) upon receipt if delivered personally, addressed as follows or
to such other address or addresses of which the respective party shall have
notified the other:
If to Employee, to:
Xxxxxx X. Xxxxxxxx
0 Xxxx Xxxxxx
Xxx Xxxxxx, XX 00000
If to the Company, to:
K-Sea Transportation Inc.
0000 Xxxxxxxx Xxxxxxx
X.X. Xxx 000000
Xxxxxx Xxxxxx, XX 00000-0000
Attention: Board of Directors
Fax No.: (000) 000-0000
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with a copy to:
K-Sea General Partner GP LLC
0000 Xxxxxxxx Xxxxxxx
X.X. Xxx 000000
Xxxxxx Xxxxxx, XX 00000-0000
Attention: Board of Directors
Fax No.: (000) 000-0000
with a copy to:
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
5.3. WAIVER OF BREACH. The waiver by the Company or Employee of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other or subsequent breach by the other party of
such or any other provision. No delay or omission by the Company or Employee in
exercising any right, remedy or power hereunder or existing at law or in equity
shall be construed as a waiver thereof, and any such right, remedy or power may
be exercised by the Company or Employee from time to time and as often as may be
deemed expedient or necessary by the Company or Employee in its or his sole
discretion.
5.4. SEVERABILITY. It is the intention of the parties that the provisions
contained herein shall be enforceable to the fullest extent permissible under
applicable law, but that the unenforceability (or modification to conform to
such law) of any provision or provisions hereof shall not render unenforceable,
or impair, the remainder hereof. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, either in whole or
in part, be held invalid or unenforceable by a court of competent jurisdiction,
this Agreement shall be deemed amended to delete or modify, as necessary, the
offending provision or provisions and to alter the bounds thereof in order to
render it valid and enforceable; but in such event the affected provisions of
this Agreement shall be curtailed and restricted only to the extent necessary to
bring them within the applicable legal requirements, and the remainder of this
Agreement shall not be affected.
5.5. APPLICABLE LAW; JURISDICTION. Each party irrevocably submits to the
exclusive jurisdiction of the federal and state courts for the State of New York
located in Richmond County, for purposes of any action, suit or other proceeding
arising out of this Agreement or any transaction contemplated hereby. This
Agreement shall be governed by and construed and enforced in accordance with the
internal laws (as opposed to the conflicts of laws provisions) of the State of
New York.
5.6. SETTLEMENT OF DISPUTES. Any claims, controversies, demands, disputes,
or differences between the parties hereto arising out of, or by virtue of, or in
connection with, or
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relating to this Agreement, Employee's employment relationship with the
Companies or termination of such employment relationship (a "Dispute") shall be
submitted to and settled by arbitration in New York, New York before a single
arbitrator who shall be knowledgeable in the field of business law and
employment relations and such arbitration shall be in accordance with the rules
of the American Arbitration Association then in force. The parties agree to
abide by any decision rendered as final and binding, and waive the right to
submit the dispute to a public tribunal for a jury or non-jury trial. The
parties agree that responsibility for all fees of the arbitrator shall be borne
in the following manner: (i) if the Company submits a Dispute to the arbitrator
and (A) the arbitrator finds in favor of the Company, the parties will bear
joint and equal responsibility for the fees (B) the arbitrator finds in favor of
the Employee, the Company will bear sole responsibility for the fees or (ii) if
the Employee submits a Dispute to the arbitrator and (A) the arbitrator finds in
favor of the Employee, the Company will bear sole responsibility for the fees
(B) the arbitrator finds in favor of the Company, the Employee will bear sole
responsibility for the fees.
5.7. HEADINGS. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
5.8. ACKNOWLEDGMENT. Employee acknowledges receipt of a copy of this
Agreement, and agrees that his obligations hereunder shall be binding upon his
heirs, assigns and legal representatives. Employee acknowledges and agrees that
this Agreement contains the entire agreement and understanding concerning the
subject matter covered by this Agreement, and that this Agreement supersedes and
replaces any other existing agreement, whether written or oral, entered into
between Employee, or any of the Companies, or among any of them, relating
generally to the subject matter covered by this Agreement, including
specifically any agreement that provides for the payment of severance benefits
to Employee.
5.9. AMENDMENT AND RESTATEMENT. The parties hereto hereby acknowledge that
this Agreement amends and restates in its entirety the Original Agreement.
EMPLOYEE HAS READ THE ABOVE DOCUMENT, AND BEEN GIVEN ADEQUATE TIME TO
CONSULT WITH AN ATTORNEY OR OTHER ADVISOR OF HIS CHOICE. EMPLOYEE
UNDERSTANDS THE DOCUMENT FULLY, AND AGREES TO ALL OF ITS TERMS.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the day and year first above written.
K-SEA TRANSPORTATION INC.
By: /S/ XXXXXXX X. XXXXX
------------------------------------
Xxxxxxx X. Xxxxx
PRESIDENT
/S/ XXXXXX X. XXXXXXXX
------------------------------------
Xxxxxx X. Xxxxxxxx
