EXHIBIT 10.5
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the "Agreement"), is entered into as of
March 31, 2002, by and between Genesis Energy, L.L.C., a Delaware
limited liability corporation (the "Company"), and Xxxx X. Xxxxxx (the
"Executive") who is employed as President.
WHEREAS, the Company's Board of Directors (the "Company Board")
and the Compensation Committee of the Company Board (the "Committee")
have determined that it is in the best interests of the Company and its
Members to assure that the Company will have the continued dedication
of the Executive, notwithstanding the possibility, threat or occurrence
of a Change in Circumstances (as defined herein); and
WHEREAS, the Company Board believes that it is imperative to
diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened
Change in Circumstances, to encourage the Executive's full attention
and dedication to the Company currently and in the event of any
threatened or pending Change in Circumstances, and to provide the
Executive with compensation arrangements upon a Change in Circumstances
which provide the Executive with individual financial security and
which are competitive with those of other corporations.
NOW, THEREFORE, in consideration of the premises and the
agreements herein contained, the receipt and sufficiency of which are
hereby acknowledged, the Company and Executive hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings (the singular includes the plural,
unless the context clearly indicates otherwise):
(a) A "Changed Circumstance" shall be deemed to have
occurred if, within one year of any Change in Control, any of the
following occur: (i) the Executive is terminated for any reason
other than cause, (ii) the duties and responsibilities of the
Executive are materially changed without the Executive's
agreement, (iii) the Executive's salary or benefits are reduced,
or (iv) there is a change of greater than 50 miles in the location
of Executive's place of work.
(b) "Changed Circumstances Date" shall be the effective date
for a Changed Circumstance.
(c) A "Change in Control" shall be deemed to have occurred
on the earliest of the following dates:
(i) The date any entity or person (including a "group"
within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, or any comparable successor provisions)
shall have become the beneficial owner of, or shall have
obtained voting control over, fifty percent (50%) or more of
the then outstanding shares of the Company; or
(ii) (1) The closing date of any transaction to sell or
otherwise dispose of substantially all the assets of Genesis
Energy, L.P. (the "MLP"), or to merge or consolidate the MLP
with or into another partnership or corporation, in which the
MLP is not the continuing or surviving partnership or
corporation or pursuant to which any common shares of the MLP
would be converted into cash, securities or other property of
another partnership or corporation, other than a merger of
the MLP in which holders of common shares immediately prior
to the merger have the same proportionate ownership of common
stock of the surviving partnership or corporation immediately
after the merger as immediately before, or (2) the closing
date of any transaction to sell or otherwise transfer
(including without limitation by merger or consolidation) to
one or more unaffiliated entities or persons not less than a
majority of the outstanding interests in the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Termination" shall be deemed to have occurred upon the
Company terminating the Executive's employment on or after a
Changed Circumstance Date or the Executive terminating employment
within 30 days after a Changed Circumstance Date pursuant to the
terms of this Agreement.
(f) "Termination Date" shall mean the date of Termination.
(g) "Termination for Cause" shall mean:
(i) a conviction of any crime involving the misuse or
misappropriation of Company assets;
(ii) a material violation of Company policy;
(iii) a material violation of any rule or regulation of
any regulatory body to which the Company or any
subsidiary partnership is subject; or
(iv) a material breach by the Executive of Executive's
fiduciary responsibilities to the Company.
2. Benefits upon Termination. At any time after the Executive's
Termination, the Company shall be required to provide the following
benefits to Executive:
(a) The Company shall pay to the Executive concurrently with
the Termination Date and subject to the terms of the Release
attached as Exhibit A, a cash lump sum payment of the annual
salary of Executive on the Termination Date, but in no event less
than $270,000; and
(b) In addition to the cash benefits payable pursuant to
Section 2(a) hereof, all Phantom Units (as defined in the
Restricted Unit Plan) and similar awards granted to Executive by
the Company shall immediately vest on the Termination Date,
notwithstanding any existing vesting schedule or other terms set
forth in any plan or agreement governing the term of such
restricted stock awards and similar awards.
(c) In the event the Executive elects to continue medical
and/or dental coverage under COBRA, the Company will pay the
required premiums for a period of six months.
(d) Any incentive compensation due in accordance with any
Incentive Compensation Plan then in effect.
(e) The Company shall make any payment required to be made
under this Agreement in cash and on demand. Any payment required
to be paid by the Company under this Agreement which is not paid
within five days of receipt by the Company of Executive's demand
therefor shall thereafter be deemed delinquent, and the Company
shall pay to Executive immediately upon demand interest at the
highest nonusurious rate per annum allowed by applicable law from
the date such payment becomes delinquent to the date of payment of
such delinquent sum.
(f) In the event that there is any change to the Code which
results in the recodification of Section 280G (Excess Parachute
Payments) or Section 4999 of the Code, or in the event that either
such section of the Code is amended, replaced or supplemented by
other provisions of the Code of similar import ("Successor
Provisions"), then this Agreement shall be applied and enforced
with respect to such new Code provisions in a manner consistent
with the intent of the parties as expressed herein, which is to
assure that Executive is in the same after-tax position and has
received the same benefits that he would have been in and received
if any taxes imposed by Section 4999 or any Successor Provisions
had not been imposed.
(g) As a condition to Executive receiving severance
compensation, the employee will execute a severance and release
agreement in the form attached hereto as Exhibit A.
(h) Executive shall not be entitled to any of the benefits
of this Agreement if Terminated for Cause as defined herein.
3. Executive is employed as Company's President. As President,
Executive will report directly to the Chairman of the Board and the
Board of Directors and will have such duties and responsibilities with
respect to the Company, Genesis MLP and Genesis OLP as customarily
would be undertaken by the President of companies engaged in business
similar to, or competitive with, the Company. Executive will act in
the best interest of Company, Genesis MLP and Genesis OLP and their
subsidiaries and affiliates in the performance of Executive's services
and duties. Executive will not actively engage in any other business
or business activity without the prior consent of the Chairman of the
Board and the Board of Directors of the Company. Nothing herein
contained will limit the right of Executive to manage Executive's
personal investment activities, provided that such personal investment
activities do not materially interfere with the performance of
Executive's duties and responsibilities to the Company or otherwise
materially conflict with any policies which have been promulgated and
distributed by the Company.
4. Full Settlement. The Company's obligations to perform
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company
may have against the Executive. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement. The Company agrees to pay, to the
fullest extent permitted by law, all legal fees and expenses which the
Executive may incur as a result of any contest by the Company or others
of the validity or the enforceability of, or liability under, any
provision of this Agreement.
As consideration for Company entering into this Agreement with
Executive, Executive agrees to release and hold harmless Company from
any and all obligations that Company may otherwise have to Executive
pursuant to the terms of that certain Severance Agreement with
Executive dated October 29, 1999, as amended. If a Change in Control,
as defined in this Agreement, occurs on or before June 30, 2001, then
the benefits described in Section 2 of the Severance Agreement dated
October 29, 1999 will be paid to the Executive concurrently with such
Change in Control, as defined in this Agreement, and no benefits will
be paid pursuant to this Agreement.
5. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in
any benefit, bonus, incentive or other plans, programs, policies or
practices provided by the Company or any of its subsidiaries and for
which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any stock
option, restricted stock or other agreements with the Company or any of
its subsidiaries except for any benefit, bonus, incentive or right to
which the Executive would be entitled to which are released pursuant to
Section 4 of this Agreement. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of the Company or any of its subsidiaries
on the Termination Date shall be payable in accordance with such plan,
policy, practice or program.
6. Funding. The Company shall pay the benefits under this
Agreement out of its general assets pursuant to the terms of this
Agreement. There shall be no special fund out of which benefits shall
be paid, nor shall the Executive be required to make a contribution as
a condition of receiving benefits.
7. Tax Withholding. The Company may withhold or cause to be
withheld from any benefits payable under this Agreement all federal,
state, city or other taxes that are required by any law or governmental
regulation or ruling.
8. Notices. Any notice required or desired to be given under
this Agreement or other communications relating to this Agreement shall
be in writing and delivered personally or mailed, return receipt
requested, to the party concerned at the address set forth below:
If to the Company: Genesis Energy, L.L.C.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
General Counsel
If to Executive: At his residence address as maintained by
the Company in the regular course of its
business for payroll purposes.
9. Entire Agreement. This Agreement contains the entire
agreement of the parties hereto with respect to severance payments and
supersedes any prior agreement, arrangement or understanding, whether
oral or written, between the Company and Executive concerning severance
payments.
10. Choice of Law. This Agreement shall be governed by, and
enforced according to, the laws of the State of Texas. The invalidity
of any provision shall be automatically reformed to the extent
permitted by applicable law and shall not affect the enforceability of
the remaining provisions hereof. Executive hereby waives any objection
which he may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement
brought in the District Court of Xxxxxx County, State of Texas, or in
the United States District Court for the Southern District of Texas,
and hereby further waives any claims that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum.
11. Assignment. The rights and obligations under this Agreement
of the Company and Executive may not be assigned, except that the
Company may, at its option, assign one or more of its rights or
obligations under this Agreement to any of its subsidiaries or
affiliates, provided that in each case the Company shall remain
responsible for its obligation hereunder.
12. Counterparts. This Agreement may be executed in several
identical counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when so executed and delivered,
shall constitute an original instrument, and all such separate
counterparts shall constitute but one and the same instrument.
13. Modification. This Agreement may be modified only by written
agreement signed by Executive and by the President or Secretary of the
Company. The failure to insist upon compliance with any provision
hereof shall not be deemed a waiver of such provision or any other
provision hereof.
14. Term. This Agreement shall commence as of March 31, 2002,
and shall terminate on March 31, 2003; provided, however, that if any
Change in Control occurs before March 31, 2003, and a Changed
Circumstance occurs within one year of the Change in Control Date, then
the provisions of this Agreement shall be applicable to the benefit of
Executive.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement effective as of the date first written above.
GENESIS ENERGY, L.L.C.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: President
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
President
