AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of January 20,
2009, by and between Suburban Propane, L.P. (the “
Partnership ”) and Michael J. Dunn, Jr. (the “
Executive ”).
WHEREAS, the Partnership desires to retain the
services of the Executive and the Executive desires to perform
services for the Partnership, in each case, upon the terms and
conditions set forth herein; and
WHEREAS, the Partnership and the Executive are
party to an Employment Agreement dated November 13, 2008 (the
“Previous Agreement”), and
WHEREAS, the Executive is currently President of
the Partnership and desires to continue in such
position;
WHEREAS, the
Partnership desires to continue to employ the Executive as
President;
WHEREAS, the Parties desire to amend and restate
the Previous Agreement to the extent necessary to cause the
definition of a Change of Control to be consistent with the
definitions used in other compensation plans maintained by the
Partnership.
NOW, THEREFORE, in consideration of the premises
and the mutual benefits and covenants contained herein, the parties
hereto, intending to be bound, hereby agree as follows:
The initial term of employment under this
Agreement shall be for the period commencing on February 1,
2007 (the “Effective Date”) and ending on the second
anniversary thereof (the “ Renewal Date ”), or
if extended pursuant to this Section 1, ending on any
anniversary of the Renewal Date, subject to termination as
hereinafter provided (such initial period and extension(s) thereof
being hereinafter referred to as the “ Employment Term
”). Unless earlier terminated in accordance with the
provisions of Section 5 hereof, upon the Renewal Date
and upon each anniversary date thereof, the Employment Term shall
be automatically extended for an additional period of one year upon
the terms and conditions set forth herein unless written notice of
termination (a “ Non-Renewal Notice ”) is given
by either party at least ninety days prior to the Renewal Date or
relevant anniversary thereof, in which event the provisions of
Section 6 shall apply.
2.1. Duties . The Partnership hereby
employs the Executive as President. Executive shall report to the
Chief Executive Officer and shall perform duties of the type
customarily performed by persons serving in the position of
President of a business of the size, type and nature of the
Partnership. If requested to do so, the Executive shall serve
(without additional compensation) on the Board of Supervisors of
the Partnership and Suburban Propane Partners, L.P. (the
“MLP”) (the “ Board ”) and
committees thereof. The Executive accepts such positions and agrees
to perform those duties, services and responsibilities incident
thereto as may be assigned to him or vested in him by the Chief
Executive Officer and the Board from time to time. The Executive
also agrees (a) subject to Section 2.2 below, to devote
his full business time, attention and skill to the performance of,
and to perform faithfully, efficiently and with undivided loyalty,
such duties, services and responsibilities and (b) to use his
best efforts to promote the interests of the
Partnership.
2.2. Exclusive Employment . During the
Employment Term, the Executive shall not engage in other employment
or consulting work or any trade or business for his own account or
for or on behalf of any other person, firm or corporation.
Notwithstanding the foregoing, during the Employment Term the
Executive may (a) serve on (i) civil and charitable
boards and committees and (ii) such other corporate boards or
committees as are approved by the Board, which approval shall not
be unreasonably withheld and (b) manage personal investments,
provided that such service or management does not interfere with
the performance of the Executive’s duties
hereunder.
3.
Compensation and Benefits
In consideration for his services under this
Agreement. the Executive shall be compensated as
follows:
3.1. Salary . The Partnership shall pay
to the Executive during the Employment Term a salary (the “
Base Salary ”), payable in accordance with the normal
payroll practices of the Partnership then in effect, in the amount
of $400,000 per fiscal year (pro rated in the case of the first
fiscal year and any other partial fiscal year). The amount of Base
Salary shall be reviewed by the Compensation Committee of the Board
(the “Compensation Committee”) on at least an annual
basis and may be increased as the Compensation Committee deems
appropriate but Base Salary, as increased, may not be decreased
during the Employment Term.
3.2. Bonuses . For each fiscal year (or
portion thereof) of the Partnership during the Employment Term, the
Executive will be eligible for a bonus under the
Partnership’s Annual Incentive Plan for Salaried Employees,
as in effect from time to time, based on the attainment by the
Partnership of performance targets set by the Compensation
Committee. The amount of such bonus for a fiscal year or portion
thereof (the “ Annual Bonus ”) payable
pursuant to the terms hereof shall not exceed 110% of the
Executive’s Base Salary for such year (or portion thereof) to
which it relates (the “Maximum Annual Bonus”). Any
Annual Bonus under this Section 3.2 shall be paid no later
than the 15 th day of the third month following the end of the
calendar year that includes the end of the fiscal year used in
determining achievement of the performance targets payable (the
exact payment date to be determined by the Company).
3.3. Long-Term Incentive Compensation
Programs . Executive shall be eligible to participate in
long-term incentive compensation programs (including the 2000
Restricted Unit Plan and the 2003 Long-Term Incentive Plan)
applicable to other senior executives of the Partnership in the
discretion of the Compensation Committee from time to
time.
3.4. Vacation . The Executive shall be
entitled to such number of annual paid vacation days and the number
of days of paid holidays, leaves of absence, and leaves for illness
or temporary disability as may be provided in the policies of the
Partnership in respect of other executives and senior managers of
the Partnership, but in no event shall the Executive be entitled to
less than four weeks vacation per year.
3.5. Reimbursement of Expenses . The
Executive shall be entitled to receive reimbursement of all
reasonable expenses incurred by him in connection with the
performance of his duties hereunder, in accordance with the
policies and procedures of the Partnership.
3.6. Benefits . The Executive shall be
entitled to participate in employee benefit and fringe benefit
plans and programs (including life, health, disability and officer
indemnity insurance and retirement plans) generally made available
to other senior executives and senior managers by the Partnership.
Nothing in this Agreement shall restrict the right of the
Partnership to amend, modify or terminate any such plans or
programs.
3.7. Company Car . The Partnership shall
reimburse the Executive for any and all costs and expenses
reasonably incurred by the Executive in connection with the
Executive’s leasing of a car in accordance with Partnership
policy relating to gas, insurance, maintenance, etc. provided,
however, (i) the Partnership shall pay the expenses not later
than the end of the calendar year following the calendar year in
which the expenses are incurred, (ii) the amount of such
expenses that the Partnership is obligated to pay in any given
calendar year shall not affect the expenses that the Partnership is
obligated to pay in any other calendar year, and (iii) the
Executive’s right to have the Partnership pay such expenses
may not be liquidated or exchanged for any other
benefit.
4. Non-Competition; Confidential
Information
The Executive and the Partnership recognize that
due to the nature of the Executive’s engagement hereunder and
the relationship of the Executive to the Partnership and the MLP,
the Executive will have access to and will acquire, and may assist
in developing, confidential and proprietary information relating to
the business and operations of the Partnership, the MLP and their
affiliates, including, without limiting the generality of the
foregoing, information with respect to the business of the
Partnership, the MLP and their affiliates. The Executive
acknowledges that such information will be of central importance to
the business of the Partnership, the MLP and their affiliates and
that disclosure of it to, or its use by, others could cause
substantial loss to the Partnership and the MLP. The Executive
accordingly agrees as follows:
4.1.
Non-Competition; Non-Solicitation .
(a) From the Effective Date until the later
of (i) if any severance is payable pursuant to
Section 6.2 hereof, the expiration of the Severance Period (as
defined in Section 6.2 hereof) or (ii) the first
anniversary of the Date of Termination (as defined in
Section 5.7 hereof), the Executive shall not, directly or
indirectly, either individually or as owner, partner, investor,
agent, director, officer, employee, consultant, independent
contractor or otherwise, except for the account of and on behalf of
the Partnership, the MLP or their affiliates, own, manage, operate,
direct, join, control, be employed by, or participate in the
ownership, management, operation or control of, or be connected in
any manner with, including, but not limited to, holding the
positions of shareholder, member, director, officer, consultant,
agent, representative, independent contractor, employee, partner or
investor, in or for any business or enterprise engaged in
(i) the marketing or distribution of domestic retail
distribution of propane, fuel oil and refined fuels for
residential, commercial, industrial (including engine fuel),
agricultural or other retail users, (ii) marketing of natural
gas and electricity in deregulated markets (ii) the wholesale
distribution of propane in the United States or the wholesale
brokerage of propane in Canada, or (iii) the domestic retail
distribution of energy-related supplies or equipment, including
home and commercial appliances.
(b) From the Effective Date until the
second anniversary of the Date of Termination (as defined in
Section 5.7 hereof), the Executive shall not, directly or
indirectly, either individually or as owner, partner, shareholder,
member, investor, agent, director, officer, employee, consultant,
agent, independent contractor or otherwise, except for the account
of and on behalf of the Partnership, the MLP or their affiliates,
solicit, endeavor to entice away from the Partnership, the MLP or
their affiliates, or otherwise engage in any activity to, directly
or indirectly, influence, attempt to influence, disrupt or
terminate the relationship of the Partnership, the MLP or any of
their affiliates with, any of its customers, prospective customers,
suppliers, prospective suppliers, employees, directors, independent
contractors, representatives, agents or other persons or entities
with a past, present or prospective relationship with the
Partnership, the MLP or any of their affiliates .
(c) Nothing in this Section 4.1 shall
be construed to prevent the Executive from owning as an investment
not more than 0.5% of a class of equity or debt securities issued
by any competitor of the Partnership, which securities are publicly
traded and registered under Section 12 of the Securities
Exchange Act of 1934.
4.2. Proprietary Information . The
Executive shall keep confidential any and all “confidential
or proprietary information” (as defined hereinafter) of the
Partnership and its affiliates, and shall not, other than in
connection with the business of the Partnership and the MLP or as
required, in the opinion of counsel, by law or an order of a court
or regulatory agency, directly or indirectly, disclose any such
information to any person or entity, or use the same in any way and
then, only after as much notice is provided to the Partnership as
is practicable under the circumstances. Upon the expiration of the
Employment Term, the Executive shall promptly return to the
Partnership all property, keys, notes, memoranda, writings, lists
(including customer lists), files, reports, correspondence, logs,
machines, software, technical data or any other tangible product or
document which has been produced by, received by, or otherwise
submitted to the Executive by the Partnership or any of its
affiliates at any time. For purposes of this Agreement,
“confidential or proprietary information” means any
information relating to the Partnership or any affiliate of the
Partnership which is not generally available from sources outside
the Partnership or any of its affiliates (other than as a result of
disclosure by the Executive).
4.3. Partnership’s Remedies for
Breach . It is recognized that damages in the event of breach
of this Section 4 by the Executive would be difficult to
ascertain, and it is therefore agreed that each of the Partnership
and the MLP, in addition to and without limiting any other remedy
or right either may have, shall have the right to an injunction or
other equitable relief in any court of competent jurisdiction,
enjoining any such breach or prospective breach. The existence of
this right shall not preclude any other rights and remedies at law
or in equity which the Partnership or the MLP may have. Neither the
Partnership nor the MLP shall be required to post any bond in
connection with the foregoing. The Executive acknowledges and
agrees that the provisions of this Section 4 are reasonable
and necessary for the successful operation of the Partnership and
the MLP and that the Partnership would not have entered into this
Agreement if the Executive had not agreed to the provisions of this
Section 4.
4.4. Enforceability . The covenants set
forth in Sections 4.1 and Section 4.2 shall be construed
as independent of any of the other provisions contained in this
Agreement and shall be enforceable as aforesaid, notwithstanding
the existence of any claim or cause of action of the Executive
against the Partnership, the MLP or any of their affiliates,
whether based on this Agreement or otherwise. In the event that any
of the provisions of this Section 4 should ever be adjudicated
to exceed the time or other limitations permitted by applicable
law, then such provisions shall be deemed reformed in any
jurisdiction to the time or other limitations permitted by
applicable law. The provisions of this Section 4 shall survive
the expiration or the termination of this Agreement. If the
Partnership asserts a claim against the Executive for violation of
any covenant set forth in Section 4.1 or Section 4.2 and
the Executive prevails on the merits in a material respect on such
claim, the Partnership shall pay the reasonable attorney’s
fees and costs incurred by the Executive in connection with such
claim.
5. Termination of Employment
5.1. Death or Disability . The Employment
Term shall terminate automatically upon the Executive’s death
or Disability (as hereinafter defined). “Disability”
shall mean any physical or mental impairment, infirmity or
incapacity rendering the Executive substantially unable to perform
his duties hereunder for a period of time exceeding 180 days
in the aggregate during any period of twelve consecutive months. A
determination of Disability shall be made by a physician
independent of the Partnership chosen by the Partnership. In the
event of an initial determination of Disability, the Executive may
seek a second opinion of his choosing. Where the first and second
opinions differ, a third opinion rendered by a physician mutually
agreed to by the Partnership and the Executive shall be deemed
final. For so long as the Executive is receiving the Base Salary
during such twelve month period, any benefits under the
Partnership’s disability insurance policies to which the
Executive would be entitled with respect to such period shall
accrue to, and be for the benefit of, the Partnership.
5.2. Cause . The Partnership may
terminate the Executive’s employment and the Employment Term
for “Cause.” For purposes of this Agreement,
“Cause” shall mean (a) the Executive’s gross
negligence or willful misconduct in the performance of his duties,
(b) the Executive’s willful or grossly negligent failure
to perform his duties, (c) the breach by the Executive of any
written covenants made to the Partnership or the MLP including a
material breach by the Executive of any of the provisions of
Section 4.1 or 4.2 hereof; (d) dishonest, fraudulent or
unlawful behavior by the Executive (whether or not in conjunction
with employment) including a willful or grossly negligent violation
of any securities or financial reporting laws, rules or regulations
or any policy of the Partnership or the MLP relating to the
foregoing or the Executive being subject to a judgment, order or
decree (by consent or otherwise) by any governmental or regulatory
authority which restricts his ability to engage in the business
conducted by the Partnership, the MLP and any of their affiliates,
or (e) willful or reckless breach by the Executive of any
policy adopted by the Partnership or the MLP, concerning conflicts
of interest, standards of business conduct or fair employment
practices or procedures with respect to compliance with applicable
law.
5.3. Good Reason . The Executive’s
employment and the Employment Term may be terminated by the
Executive for Good Reason. For purposes of this Agreement.
“Good Reason” means: (a) any failure by the
Partnership to comply in any material respect with any of the
provisions of Article 3 of this Agreement which is not cured
within thirty days following notice by the Executive; (b) a
material diminution in the Executive’s title, authority,
duties or responsibilities, without the consent of the Executive;
or (c) the requirement by the Partnership, without the
Executive’s consent, that the Executive be based more than 35
miles from the Executive’s present office location or more
than 50 miles from the Executive’s present
residence.
5.4. Termination without Cause .
Notwithstanding anything to the contrary herein, the Partnership
may terminate the Executive’s employment hereunder and the
Employment Term at any time and the Executive may be removed as an
officer of the Partnership at any time, subject to the provisions
of Section 6.
5.5. Non-Renewal . The Executive’s
employment and the Employment Term may be terminated by either
party pursuant to a Non-Renewal Notice, subject to the provisions
of Section 6.
5.6. Notice of Termination . Any
termination of employment hereunder (other than termination as a
result of death) by the Partnership or by the Executive shall be
communicated by Notice of Termination (as hereinafter defined) to
the other party hereto given in accordance with Section 8.2 of
this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (a) indicates
the specific termination provision in this Agreement relied upon,
and (b) sets forth the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated.
5.7. Date of Termination . The
termination of the Executive’s employment pursuant to
Section 5 shall be effective on the date that the Executive or
the Partnership, as the case may be, receives the Notice of
Termination; provided however, that (a) if the
Executive’s employment is terminated by reason of death, the
Date of Termination shall be the date of death of the Executive,
(b) if the Executive’s employment is terminated by
reason of Disability, the Date of Termination shall be the date
that a physician finally determines in accordance with
Section 5.1 that a Disability exists with respect to the
Executive, (c) if the Executive terminates his employment, the
Date of Termination shall be the tenth Business Day after receipt
by the Partnership of the Notice of Termination (or, in the event
of termination for Good Reason as set forth in Section 5.3(a), the
tenth Business Day after the expiration of the 30 day cure
period) and (d) if the Executive’s employment is
terminated pursuant to a Non-Renewal Notice, the Date of
Termination shall be the Renewal Date. For purposes of this
Agreement, references to a “termination,”
“termination of employment” or like terms shall mean
“Separation from Service” as defined in
Section 9.1 herein.
6. Payment
Upon Termination
6.1. Change of Control . In the event
that (x) within six months prior to a Change of Control or
(y) within two years following a Change of Control, either the
Partnership terminates the Executive’s employment hereunder
without Cause (including pursuant to a Non-Renewal Notice) or the
Executive terminates his employment hereunder with Good Reason,
(a) the Partnership shall pay to the Executive, in accordance
with Section 6.4 herein, the sum of (i) the portion of
the Base Salary earned but unpaid as of the Date of Termination,
(ii) the Pro-rata Bonus (as defined below) and (iii) an
amount equal to two times the sum of (A) the Base Salary plus
(B) the Maximum Annual Bonus and (b) the Partnership
shall provide to the Executive and his dependents from the Date of
Termination until the expiration of the second anniversary of the
Date of Termination, (the “Severance Period”), medical
benefits substantially equivalent to the medical benefits provided
by the Partnership to senior executives and their dependents during
such period; provided , however , (i) that
benefits otherwise receivable by the Executive pursuant to clause
(b) of this Section 6.1 shall be reduced to the extent
comparable benefits are actually provided to the Executive or his
dependents by another party (and the Executive shall report to the
Partnership any benefits that are actually provided to him);
(ii) the Severance Period shall run concurrently with any
period for which Executive is eligible to elect health coverage
under COBRA; (iii) during the Severance Period, the benefits
provided in any one calendar year shall not affect the amount of
benefits provided in any other calendar year; (iv) the
reimbursement of an eligible taxable expense shall be made on or
before the end of the calendar year following the calendar year in
which the expense was incurred; and (v) the Executive’s
rights pursuant to this Section 6.1(b) shall not be subject to
liquidation or exchange for another benefit. The
Partnership’s obligation and the Executive’s rights
under clause (a) (ii) and (iii) and clause (b) of
this Section 6.1 shall terminate immediately upon the
occurrence of a Competition Event (as defined below).
6.2. Good Reason, Termination without
Cause . In the event that the Executive terminates his
employment for Good Reason or the Partnership terminates the
Executive’s employment without Cause or has delivered a
Non-Renewal Notice to the Executive, the Partnership shall, without
duplication of any amounts paid or benefits provided pursuant to
Section 6.1, (a) pay to the Executive, in accordance with
Section 6.4 herein, (i) all earned but unpaid Base Salary
as of the Date of Termination, (ii) an amount equal to two
times the Base Salary and (iii) the Annual Bonus the Executive
would have received for such fiscal year, calculated as if the
executive had remained employed for the entire fiscal year
determined and paid in accordance with Section 3.2 herein and
(b) provide to the Executive and his dependents, until the
expiration of the Severance Period, medical benefits substantially
equivalent to the medical benefits provided by the Partnership to
senior executives and their dependents during such period;
provided , however , that (i) benefits otherwise
receivable by the Executive pursuant to clause (b) of this
Section 6.2 shall be reduced to the extent comparable benefits
are actually provided on the Executive’s behalf by another
party (and the Executive shall report to the Partnership any
benefits that are actually provided to him); (ii) the
Severance Period shall run concurrently with any period for which
Executive is eligible to elect health coverage under COBRA;
(iii) during the Severance Period, the benefits provided in
any one calendar year shall not affect the amount of benefits
provided in any other calendar year; (iv) the reimbursement of
an eligible taxable expense shall be made on or before the end of
the calendar year following the calendar year in which the expense
was incurred; and (v) the Executive’s rights pursuant to
this Section 6.2(b) shall not be subject to liquidation or
exchange for another benefit. The Partnership’s obligation
and the Executive’s rights under clause (a)(ii) and
(iii) and clause (b) of this Section 6.2 shall
terminate immediately upon the occurrence of a Competition Event
(as defined below). Notwithstanding anything in this Agreement to
the contrary the Executive’s Retirement (as defined below)
shall not to give rise to any benefits under this section
6.2.
6.3. Death, Disability, Cause, Without Good
Reason. In the event that the Executive’s employment is
terminated (a) by reason of the Executive’s death or
Disability, (b) by the Partnership for Cause, (c) by the
Executive without Good Reason or (d) by the Executive pursuant
to a Non-Renewal Notice, the Partnership shall pay to the
Executive, the Execu
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