Document:

Exhibit 10.8

 

SOUTHCROSS ENERGY LLC
 SEVERANCE AGREEMENT

 

August 6, 2009

 

Ronald J. Barcroft
 1700 Pacific Ave., Suite 2900
 Dallas, Texas 75201

 

Dear Mr. Barcroft:

 

On behalf of Southcross Energy LLC and its wholly owned subsidiary Southcross Energy GP LLC (the “Company”), we are pleased to offer you the following terms in connection with your employment or service relationship with the Company or any of its direct or indirect subsidiaries.  Your employment or service relationship with the Company or any of its direct or indirect subsidiaries is on an at-will basis and will continue on an at-will basis following the execution of this Severance Agreement.  Thus, you or the Company or any of its direct or indirect subsidiaries may terminate your employment or service relationship for any reason and at any time, with or without notice.  The Termination Benefits (as defined below) as outlined in this letter do not, in any way, amend the terms of your employment or service relationship.

 

In the event your employment or service relationship with the Company or any of its direct or indirect subsidiaries is terminated by the Company without Cause or if you terminate your employment or service relationship with the Company or any of its direct or indirect subsidiaries for Good Reason (provided such termination for Good Reason occurs no more than 45 days after the last event constituting Good Reason), the Company shall provide the Termination Benefits to you for a period of 12 months from the date of such termination (the “Termination Date”).

 

For purposes of this Severance Agreement, the following capitalized terms shall have the meanings set forth below:

 

“Cause” shall mean (i) your indictment for, conviction of, or entering into a plea of nolo contendere to, any crime (whether or not a felony) involving dishonesty, fraud, embezzlement, breach of trust or other crime of moral turpitude; (ii) your conviction of, or entering a plea of nolo contendere to, a felony (other than a traffic violation); (iii) acts by you constituting fraud or willful misconduct in connection with your employment or service relationship by the Company or any of its direct or indirect subsidiaries, including but not limited to misappropriation or embezzlement in the performance of your to duties the Company or any of its direct or indirect subsidiaries; (iv) your failure or willful refusal to perform any of your duties to the Company or any of its direct or indirect subsidiaries (other than any such failure resulting from your incapacity due to physical or mental illness) which is reasonably likely to result in material harm to the Company or any of its direct or indirect subsidiaries; provided, however, that if such failure or refusal to perform your duties is of such a nature that may be cured, you shall have 30

 

 

days after receipt of written notice from the Company to cure such failure or refusal to perform your duties; provided, however, that you shall only be entitled to notice and opportunity to cure a failure or refusal to perform one (1) time; (v) your violation or breach of the ethics provisions of the employee handbook applicable to all employees of the Company or any of its direct or indirect subsidiaries or your fiduciary duty of loyalty to the Company or any of its affiliates; (vi) your willfully or grossly negligently engaging in conduct materially injurious to the Company or any of its direct or indirect subsidiaries; or (vii) your failure or refusal to devote all of your Business Time (as hereinafter defined) to the business and affairs of the Company and its direct or indirect subsidiaries; except for usual, ordinary, and customary periods of vacation and absence due to illness or other disability; provided, however, that if such failure or refusal to devote such amount of your business time is of such a nature that may be cured, you shall have 30 days after receipt of written notice from the Company to cure such failure or refusal.  As used herein, “Business Time” means all your business time but excludes time that you may spend in respect of (A) serving on charitable or civic boards or committees, (B) serving on corporate boards on which you serve on the date hereof and have disclosed to the Company and committees of such boards, (C) with the approval of the Board of Managers of the Company, serving on other corporate boards or committees, (D) delivering lectures, fulfilling speaking engagements now or hereafter made, or teaching at educational institutions, and (E) managing your personal and family investments, including family trusts, entities and fiduciary positions, so long as such activities do not significantly interfere with the performance and fulfillment of your duties and responsibilities to the Company or any of its direct or indirect subsidiaries and, in the case of the activities described in clauses (C) and (E) of this proviso, will not, in the good faith judgment of the Board of Managers of the Company, constitute an actual or potential conflict of interest with the business of the Company or any of its direct or indirect subsidiaries.

 

“Good Reason” shall mean (i) an involuntary reduction in your annual base salary except (A) for across-the-board salary reductions similarly affecting all or substantially all management employees or (B) if consented to by you, (ii) a relocation, without your prior written consent, of the Company’s or any of its direct or indirect subsidiaries’ offices where you are principally employed to a location that is 25 miles or more from where those offices are currently located, or (iii) the failure of the Company or any of its direct or indirect subsidiaries to pay any cash compensation (i.e., base salary or bonus) to you when due under the terms of your employment agreement, if any, or under the terms of any employee bonus plan established by the Company or any of its direct or indirect subsidiaries in which you are entitled to participate; provided, however, that the Company shall have 30 days after receipt of written notice from you to cure or cause any of its direct or indirect subsidiaries to cure such failure to pay.

 

“Termination Benefits” shall mean the continuation of (i) your base compensation at the rate then in effect, payable in accordance with the Company’s or any of its direct or indirect subsidiaries’ normal payroll practice; and (ii) group health plan benefits to the extent

 

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authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company or any of its direct or indirect subsidiaries and you as in effect on Termination Date; provided, however, that the Company may reduce the amounts payable to you under clause (i) above by offsetting and/or cancelling dollar-for-dollar any amounts then owed by you to the Company or any of its direct or indirect subsidiaries.

 

Notwithstanding anything to the contrary in this Severance Agreement, you shall not be entitled to any Termination Benefits under the terms of this Severance Agreement unless you first (i) enter into a valid and irrevocable release of all claims against the Company and its direct or indirect subsidiaries and (ii) resign from any and all positions, including, without limitation, as a manager, trustee, and officer, that you then hold with the Company and any of its direct or indirect subsidiaries.  All compensation and benefits payable to you, other than the Termination Benefits, shall terminate on the Termination Date.

 

If you breach your obligations under the Confidentiality Agreement and Covenant Not to Compete or Solicit executed between you and the Company, the Company may immediately cease payment of all Termination Benefits set forth in this Severance Agreement.  The cessation of any Termination Benefits shall be in addition to, and not as an alternative to, any other remedies at law or in equity available to the Company and its affiliates, including the right to seek specific performance or an injunction.

 

[Signature page follows]

 

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Please sign below to acknowledge your acceptance of the terms of this Severance Agreement.

 

	
 
    	
 
    	
Sincerely   yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SOUTHCROSS   ENERGY LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   David W. Biegler
    
	
 
    	
 
    	
 
    	
David   W. Biegler, Chairman and
    
	
 
    	
 
    	
 
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED   AND AGREED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Ronald J. Barcroft
    	
 
    	
 
    
	
Ronald   J. Barcroft
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:   August 6, 2009Exhibit 10.9

 

SEVERANCE AGREEMENT

 

This Severance Agreement (“Agreement”) is between Southcross Energy GP, LLC, (the “Company”), and J. Michael Anderson (the “Employee”) and is effective as of April 2, 2012 (the “Effective Date”).

 

WHEREAS, Employee accepted employment with the Company pursuant to an offer letter dated January 17, 2012 (the “Offer Letter”) and Employee is employed as an at-will employee of Company;

 

WHEREAS, on April 20, 2012, Southcross Energy Partners, L.P. (“SEP”), an affiliate of Company, filed a Registration Statement on Form S-1, File No. 333-180841, with the Securities and Exchange Commission (as the same may be amended, the “Registration Statement”), pursuant to which it is proposed that SEP offer and sell partnership units to the public in an initial public offering (the “IPO”);

 

WHEREAS, although management of Southcross Energy LLC (“Southcross”) and Company currently contemplate effectuating the IPO as contemplated by the Registration Statement, certain third parties may express  an interest in entering into a transaction with Southcross or certain of its affiliates prior to the consummation of the IPO; and

 

WHEREAS, the Parties mutually desire to enter into this Agreement to provide an incentive for Employee to remain an employee of Company prior to the consummation of the IPO;

 

NOW, THEREFORE, in consideration of the promises and mutual agreements, provisions and covenants contained herein and other good and valuable consideration, the adequacy of which is hereby acknowledged, the Parties agree as follows:

 

1.             Definitions.  The following terms when used herein shall have the meanings set forth below.

 

(a)           “Bonus” means two times the annual target amount of the bonus, expressed as a percent of Base Salary, for which Employee is eligible under the Annual Bonus Plan sponsored by the Company.

 

(b)           “Base Salary” means the annual base salary of Employee in effect as of the date on which this Agreement is executed, which amount does not include any bonus, commission, incentive pay, overtime, equity compensation grants or exercises, auto or travel allowance, or other similar payments or compensation.

 

(c)           “Cause” means, the Employee’s (i) failure to satisfactorily perform Employee’s material duties or to devote Employee’s full time and effort to Employee’s position; (ii) violation of any material Company policy that remains unremedied after reasonable notice to cure the violation; (iii) failure to follow lawful directives from the Company’s CEO, President, Executive Vice President, the Board of Directors, or Employee’s direct supervisor, (iv) negligence or material misconduct; (v) dishonesty or fraud; or (vi) felony conviction.

 

(d)           “Code” means the Internal Revenue Code of 1986, as amended, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury or the Internal Revenue Service with respect thereto.

 

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(e)           “General Release Agreement” means an agreement to be executed by Employee as a precondition to receipt of the termination payments as set forth below that provides, among other things, for a comprehensive release of all claims Employee may have against the Company, its subsidiaries and affiliates, and its officers, directors, employees, and agents, an agreement not to solicit Company employees for a period of one year following the Termination Date, and an agreement to maintain the confidentiality of the Company’s confidential and proprietary information.

 

(f)            “Good Reason” means (i) a material change in Employee’s job duties and responsibilities; (ii) a reduction in Employee’s compensation unless the reduction applies to all Company employees employed at similar levels; or (iii) a change in the location that Employee regularly works of more than twenty-five (25) miles.

 

(g)           “Sale Event” means any of the following events: (i) a merger or consolidation of Southcross with or into another entity (with respect to which less than a majority of the outstanding voting power of the surviving or consolidated entity immediately following such event is held by persons or entities who were members of Southcross immediately prior to such event), (ii) the sale, license or transfer of all or substantially all of the properties and assets of Southcross and/or its subsidiaries, (iii) any acquisition by any person or entity (or group of affiliated or associated persons or entities) of beneficial ownership of a majority of the voting securities of Southcross or any material subsidiary (whether or not newly issued voting securities) in single transaction or series of related transaction, (iv) the redemption or repurchase of membership units in Southcross representing a majority of the voting power of the outstanding Units or (v) any other transaction, or series of related transactions, that results in a change of control of 50% or more of the outstanding voting power of Southcross; provided, however, for the avoidance of doubt, the following shall not constitute a “Sale Event:” (A) the IPO and/or (B) any transaction or series of related transactions effectuated by Southcross, SEP, the Company or any of their respective affiliates directly or indirectly in connection with or contemplated by the IPO or the Registration Statement filed by SEP.

 

(h)           “Separation from Service” within the meaning of Code Section 409A and Treasury Regulation Section 1.409A-1(h) or any successor there, shall mean the date Employee retires, dies, or otherwise has a termination of employment.

 

(i)            “Severance Payment” means an amount equal to 24 months of Employee’s annual Base Salary, including any payments received or due under any other severance agreement.

 

(j)            “Termination Date” means the date on which Employee’s employment with the Company involuntarily ends and shall have the meaning of “involuntary separation from service” within the meaning of Code Section 409A and Treasury Regulation Section 1.409A-1(h) or any successor.

 

2.             Term of Agreement.  This Agreement shall commence on the Effective Date and remain in effect for a period of 12 months following a Sale Event (the “Term”).  After the Term, this Agreement shall be null and void and neither party shall have any obligations under this Agreement.

 

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3.             Termination Payments and Benefits.

 

(a)           Reason other than Sale Event.  In the event of a Separation from Service for any reason other than a termination due to a Sale Event, including a termination with cause or a resignation for any reason, Employee shall be entitled to Employee’s Base Salary earned through the date of termination.

 

(b)           Termination.  In the event that Employee has a Separation from Service within 12 months of a Sale Event, Employee shall be entitled to the following benefits:

 

(i)            Base Salary through the date of termination

 

(ii)           the Bonus

 

(iii)          the Severance Payment and,

 

(iv)          reimbursement for the cost of COBRA coverage for 18 months

 

(c)           Conditions to Receipt of Severance Payment and other benefits.  Employee shall not be entitled to receive the benefits described in Section 3(b) or any portion thereof:

 

(i)            if Employee’s employment terminates for any reason other than a termination by the Company without Cause or a resignation by Employee for Good Reason, including, without limitation, a termination by the Company for Cause or resignation for other than Good Reason; and

 

(ii)           unless Employee has, within 46 days of the date on which Employee otherwise becomes entitled to payment, executed the General Release Agreement (in a form substantially similar to the attached form) and, if applicable, has not thereafter revoked the release.  The Company shall pay Employee the Severance Payment, or any portion thereof earned by Employee on the first regularly scheduled payday following the eighth day on which Employee executes and does not revoke the General Release Agreement required by this Agreement as a condition precedent to any payment.

 

(d)           Timing of Severance Payment.  Assuming that the conditions to receipt of the Severance Payment have been met as set forth above, the Company shall pay Employee the benefits described in Sections (b)(i) and (b)(ii) no later than 60 days after the Termination Date.

 

(e)           Form of Payment.  The payments specified in Sections 3(b)(i), 3(b)(ii), and 3(b)(iii) shall be paid in a lump sum, less withholding for applicable taxes.  The payment specified in Section 3(a)(iv) shall be made on behalf of Employee by the Company.

 

4.             Section 409A.  To the extent applicable, it is intended that portions of this Agreement either comply with or be exempt from the provisions of Section 409A of the Code (as defined above).  Any provision of this Agreement that would cause this Agreement to fail to comply with or be exempt from Code Section 409A shall have no force and effect until such

 

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provision is either amended to comply with or be exempt from Code Section 409A (which amendment may be retroactive to the extent permitted by Code Section 409A and Employee hereby agrees not to withhold consent unreasonably to any amendment requested by the Company for the purpose of either complying with or being exempt from Code Section 409A.

 

5.             Not a Contract of Employment.  This Agreement is not a contract of employment and does not guarantee Employee employment for any specified period of time.

 

6.             Confidentiality.   Employee agrees that this Agreement and all discussions and negotiations concerning this Agreement and its terms shall be confidential and shall not be disclosed to anyone other than Employee’s spouse and financial advisor and only after Employee has received assurances from such person(s) to abide by the terms of this Section 6.   Employee acknowledges that the Company may have an obligation to file or disclose this Agreement to governmental agencies.

 

7.             Assignment.  No interest of Employee under this Agreement, or any right to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims against Employee, including claims for alimony, support, separate maintenance, and claims in bankruptcy proceedings with respect to Employee.

 

8.             Waiver.  No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by the Employee and such officer as may be specifically designated by the Company.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

9.             Choice of Law; Venue.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Texas.  Any dispute arising under or relating to this Agreement shall be resolved exclusively in Dallas County, Texas.

 

10.          Entire Agreement.  This Agreement constitutes the entire agreement of the parties relating to any severance payments and supersedes all previous agreements with respect to this matter or for payment of any severance, retention bonus, or employment related bonus after the Effective Date.  No term, provision or condition of this Agreement may be modified in any respect except by a writing executed by both of the parties hereto.  No person has any authority to make any representation or promise not set forth in this Agreement.  This Agreement has not been executed in reliance upon any representation or promise except those contained herein.

 

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11.          Validity.  The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

12.          Counterparts.  This Agreement may be executed in one or more counterparts (including by facsimile), each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

13.          Withholding of Taxes.  The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or government regulation or ruling.

 

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IN WITNESS WHEREOF, Employee and the Company have executed this Agreement as of the Effective Date:

 

	
SOUTHCROSS   ENERGY GP, LLC
    	
 
    	
EMPLOYEE:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:   
    	
/s/   David W. Biegler
    	
 
    	
By:   
    	
/s/   J. Michael Anderson
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Printed   Name: David W. Biegler
    	
 
    	
Printed   Name: J. Michael Anderson
    
	
 
    	
 
    	
 
    
	
Title:   Chief Executive Officer
    	
 
    	
 
    
							

 

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