Severance AgreementTermination Severance Agreement |
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Exhibit 10.10
Severance Agreement
This Severance Agreement dated as of March 1, 2004 (the “Agreement”) is made by and between Horizon Lines, LLC, a Delaware Limited Liability Company, (together with any successor thereto, the “Company”) and Robert S. Zuckerman, (the “Executive”).
RECITALS
| A. | It is the desire of the Company to provide incentives to the Executive to continue to perform his/her duties as an at will employee of the Company during a time when the Company may be undergoing a “Liquidity Event”, as defined herein. |
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below, the Parties hereto agree as follows:
| 1. | Certain Definitions. |
| a) | “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act. |
| b) | “Annual Base Salary” means the base salary of the Executive as shown on the Company’s payroll records on the “Date of Termination”, as defined herein, of the Executive. |
| c) | “Board” shall mean the Board of Directors of the Company. |
| d) | The Company shall have “Cause” to terminate the Executive’s employment hereunder upon the occurrence of any one of the following: |
i. the Board’s determination that the Executive failed to substantially perform his/her duties;
ii. the Board’s determination that the Executive failed to carry out, or comply with, in any material respect, any lawful and reasonable directive of the Board;
iii. the Executive’s conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation of any felony or crime involving moral turpitude;
iv. the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities; or
v. the Executive’s commission of an act of fraud, embezzlement, misappropriation, willful misconduct, or breach of fiduciary duty against the Company.
| e) | “Company” shall have the meaning set forth in the preamble hereto. |
| f) | “Date of Termination” shall mean the last day of the Executive’s employment on the Company’s active payroll. |
| g) | “Executive” shall have the meaning set forth in the preamble hereto. |
| h) | “Liquidity Event” shall mean the first occurrence after the date of this agreement of the following: consummation of the sale, transfer, conveyance or other disposition in one or a series of related transactions, of the equity securities of the Company or its successor held by the Principal Stockholder(s) in exchange for currency such that immediately following such transaction (or transactions), (i) any Person and/or its Affiliates, other than a Principal Stockholder, acquires more than 50% of the outstanding voting securities of the Company or (ii) the Principal Stockholders cease to hold at least 30% of the outstanding voting securities of the Company and any Person and its Affiliates (other than the Principal Stockholder(s)) holds more voting securities of the Company than the Principal Stockholders. |
| i) | “Person” means a corporation, partnership, limited liability company, individual or other entity capable under law of owning an interest in the Company. |
| j) | “Principal Stockholder(s)” means Carlyle-Horizon Partners, L.P. or any of its Affiliates to which (a) Carlyle-Horizon Partners, L.P. or any other Person transfers common stock or (b) the Company issues common stock. |
| 2. | Severance Payments. |
If the Executive’s employment is terminated by the Company for other than Cause within 24 months following a Liquidity Event (as defined herein), the Company shall pay the Executive the sum of (a) and (b) below.
| a) | In accordance with the Company’s regular payroll practice, the Executive’s Annual Base Salary that the Executive would have been entitled to receive if the Executive had continued his/her employment hereunder for a period of one year following the Date of Termination (the “Severance Payment”). This Severance Payment shall be made in addition to any other payment due to the Executive under a change in control agreement, severance agreement or other similar such agreement maintained and sponsored by the Company, provided that the sum of the Severance Payment and all other severance payments (the “Total Severance Payment”) does not exceed an amount equal to two years of Annual Base Salary. To the extent that the Total Severance Payment exceeds two years of Annual Base Salary, the Severance Payment shall be reduced by such amount that is necessary in order for the Total Severance Payment to equal two years of Annual Base Salary. |
| b) | Provide the Executive with continuation of any attendant medical benefits during the severance period, to run concurrent with COBRA, at a cost to the Executive equal to the cost paid by current employees of the Company under the terms of the Company’s severance pay plan. |
| c) | Notwithstanding the foregoing, the Executive’s receipt of the payments or benefits under this Section 2 is conditioned upon the |
| execution by the Executive of a binding general waiver and release of claim in a form agreed upon by the parties. |
| 3. | Nondisclosure of Proprietary Information. |
| a) | Except as required by applicable law or the faithful performance of the Executive’s duties, the Executive shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for his/her benefit or the benefit of any person, firm, corporation or other entity any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment, or deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets. The parties hereby stipulate and agree that as between them the foregoing matters are important, material and confidential proprietary information and trade secrets and affect the successful conduct of the businesses of the Company (and any successor or assignee of the Company). |
| b) | Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes. |
| c) | The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought and shall assist such counsel in resisting or otherwise responding to such process. |
| d) | As used in this Section 3, the term “Company” shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries and affiliates. |
| 4. | Non-Competition. |
| a) | The Executive shall not, at any time during the [24 month period] following the Date of Termination directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership or business (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in any containerized shipping business in the Jones Act trade which competes with any business of the Company or any entity owned by the Company anywhere in the world provided, however, that the Executive shall be permitted to acquire a passive stock or equity interest in such a business provided the stock or other equity interest acquired is not more than five percent of the outstanding interest in such business. |
| b) | During the term set forth in Section 4(a), the Executive will not, and will not permit any of his/her affiliates to, directly or indirectly, recruit or otherwise solicit or
induce any emplo
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