Exhibit 10.19
SEVERANCE AND NON-COMPETITION AGREEMENT
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Agreement made as of the 25th day of September 2002, between Maritrans
General Partner Inc., a Delaware corporation (the "Company"), and Xxxxx Xxxxxxx
(the "Employee").
WHEREAS, the Employee is currently employed by the Company as Vice
President, Operations and Maintenance of Maritrans Operating Company L.P;
WHEREAS, the Company is a subsidiary of Maritrans Inc., a publicly
traded corporation ("Maritrans");
WHEREAS, in consideration for the Employee agreeing not to compete with
the Company in the event the Employee's employment is terminated, the Company
agrees that the Employee shall receive the compensation set forth in this
Agreement as a cushion against the financial and career impact on the Employee
in the event the Employee's employment with the Company is terminated without
cause whether or not there is a Change of Control of Maritrans;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Definitions. For all purposes of this Agreement, the following terms
shall have the meanings specified in this Section unless the context
clearly otherwise requires:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) "Base Salary " shall mean the sum of the Employee's base
salary, at the rate in effect on the Termination Date or at
the time of a Change of Control, if higher, together with
any and all salary reduction authorized amounts under any of
the Company's benefit plans or programs, but excluding any
amounts attributable to the exercise of stock options by the
Employee under the Company's Equity Compensation Plan and
the Cash Long Term Incentive Plan.
(c) "Beneficial Owner" of any securities shall mean:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or
not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options,
or otherwise, securities of the Company; provided,
however, that a Person shall not be deemed the
"Beneficial Owner" of securities tendered pursuant to
a tender or exchange offer made by such Person or any
of such Person's Affiliates or Associates until such
tendered securities are accepted for payment, purchase
or exchange;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to
vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act),
including without limitation pursuant to any
agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of any security
under this subsection (ii) as a result of an oral or
written agreement, arrangement or understanding to
vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy
given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not
then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor
report); or
(iii) where voting securities are beneficially owned,
directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether
or not in writing) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy
as described in the proviso to subsection (ii) above)
or disposing of any voting securities of the Company;
provided, however, that nothing in this subsection (d)
shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner"
of any securities acquired through such Person's
participation in good faith in a firm commitment
underwriting until the expiration of forty days after
the date of such acquisition.
(d) "Board" shall mean the Board of Directors of Maritrans Inc.
(e) "Cause" shall mean i) misappropriation of funds, ii)
habitual insobriety or substance abuse, iii) conviction of a
crime involving moral turpitude, iv) gross negligence in the
performance of duties, which gross negligence has had a
material adverse effect on the business, operations, assets,
properties or financial condition of the Company and its
Subsidiaries taken as a whole, or v) for purposes of Section
3(a), a judgment by the Board that the Employee is not
satisfactorily performing his duties after Employee has
received written notification of specific performance
deficiencies and has had a minimum of three months'
opportunity to correct such noted deficiencies In such case,
employee shall receive regular updates regarding his
performance and retain his rights under the Company's
Complaint Review Process during the six-month period, but
the ultimate ruling by the Board shall be considered final.
(f) "Change of Control" shall be deemed to have taken place
if (i) any Person (except the Company or any employee
benefit plan of the Company or of any Affiliate, any Person
or entity organized, appointed or established by the Company
for or pursuant to the terms of any such employee benefit
plan), together with all Affiliates and Associates of such
Person, shall become the Beneficial Owner in the aggregate
of 20% or more of the common stock of Maritrans then
outstanding); provided, however, that no "Change of Control"
shall be deemed to occur during any period in which any such
Person, and its Affiliates and Associates, are bound by the
terms of a standstill agreement under which such parties
have agreed not to acquire more than 30% of the common stock
of the Company of the Common Stock of the Company then
outstanding or to solicit proxies, (ii) during any
twenty-four month period, individuals who at the beginning
of such period constituted the board of directors of
Maritrans cease for any reason to constitute a majority
thereof, unless the election, or the nomination for election
by the Maritrans' shareholders, of at least seventy-five
percent of the directors who were not directors at the
beginning of such period was approved by a vote of at least
seventy-five percent of the directors in office at the time
of such election or nomination who were directors at the
beginning of such period, (iii) consummation by Maritrans of
a reorganization, merger or consolidation (a ?Business
Combination?), in each case, with respect to which all or
substantially all of the individuals and entities who were
the respective beneficial owners of the outstanding common
stock of Maritrans prior to such Business Combination do
not, following such Business Combination, beneficially own,
directly or indirectly, more than 50% of the then
outstanding shares of common stock entitled to vote
generally in the election of directors of the corporation,
business trust or other entity resulting from or being the
surviving entity in such Business Combination in
substantially the same proportion as their ownership
immediately prior to such Business Combination of the
outstanding common stock or Maritrans, or (iv) consummation
of a complete liquidation or dissolution of Maritrans or
sale or other disposition of all or substantially all of the
assets of Maritrans other than to a corporation, business
trust or other entity with respect to which, following such
sale or disposition, more than 50% of the then outstanding
shares of common stock entitled to vote generally in the
election of directors, is then owned beneficially, directly
or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of
the outstanding common stock of Maritrans immediately prior
to such sale or disposition in substantially the same
proportion as their ownership of the outstanding common
stock immediately prior to such sale or disposition,
provided, however, that no "Change of Control" shall be
deemed to occur if a management buy-out occurs i.e. the
acquirement by then current officers and directors of
Maritrans of more than fifty percent of its outstanding
common stock. If the Employee is not a member of the group
of officers acquiring such stock, then a Change of Control
shall be deemed to have occurred.
(g) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the
Employee's 65th birthday.
(h) "Person" shall mean any individual, firm, corporation,
partnership or other entity. (i) "Subsidiary" shall have the
meaning ascribed to such term in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
(j) "Termination Date" shall mean the date of receipt of the
Notice of Termination described in Section 2 hereof or any
later date specified therein, as the case may be.
(k) "Termination of Employment" shall mean the termination of
the Employee's actual employment relationship with the
Company.
(l) "Termination following a Change of Control" shall mean a
Termination of Employment within six months prior or two
years after a Change of Control either:
(i) initiated by the Company for any reason other than
(x) the Employee's continuous illness, injury or
incapacity for a period of six consecutive months or
(y) for "Cause;" or
(ii) initiated by the Employee upon one or more of the
following occurrences:
(A) any failure of the Company to comply with and
satisfy any of the terms of this Agreement;
(B) any significant reduction by the Company of the
authority, duties or responsibilities of the
Employee;
(C) any removal by the Company of the Employee from
the employment grade, compensation level which the
Employee holds as of the effective date hereof
except in connection with promotions to higher
office;
(D) the requirement that the Employee undertake
business travel to an extent substantially greater
than is reasonable and customary for the position
the Employee holds.
2. Notice of Termination. Any Termination of Employment shall be
communicated by a Notice of Termination to the other party hereto given
in accordance with Section 17 hereof. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific reasons for the termination, (ii) briefly summarizes the facts
and circumstances deemed to provide a basis for termination of the
Employee's employment, and (iii) if the Termination Date is other than
the date of receipt of such notice, specifies the Termination Date
(which date shall not be more than 15 days after the giving of such
notice).
3. Severance Compensation upon Termination.
(a) In the event of the Employee's involuntary Termination of
Employment for reason other than Cause, as consideration for
the non-competition and non-solicitation covenants contained
in Sections 12 and 13, the Company shall pay to the
Employee, upon the execution of a release in form and
substance satisfactory to the company and its counsel, his
regular Base Salary, subject to customary employment taxes
and deductions, for 12 months following the Termination Date
but all other benefit coverages, retirement benefits and
fringe benefit eligibility shall cease upon the Termination
Date.
(b) Subject to the provisions of Section 11 hereof, in the event
of the Employee's Termination following a Change of Control
requiring a payment under subsection (a), the Company shall
pay to the Employee, within 30 days after the Termination
Date (or as soon as possible thereafter in the event that
the procedures set forth in Section 11(b) hereof cannot be
completed within 30 days or payments have already commenced
under subsection (a) above), and in lieu of, or reduced by,
as applicable any payment under subsection (a) above, a
single sum in cash equal to the Employee's Base Salary.
(c) In the event the Employee's Normal Retirement Date would
occur prior to 12 months after the Termination Date, the
aggregate cash amount determined as set forth in (a) above
shall be reduced by multiplying it by a fraction, the
numerator of which shall be the number of days from the
Termination Date to the Employee's Normal Retirement Date
and the denominator of which shall be 730.
4. Other Payments. The payment due under Section 3 hereof shall be in
addition to and not in lieu of any payments or benefits due to the
Employee under any other plan, policy or program of the Company except
that no payments shall be due to the Employee under the Company's then
severance pay plan for employees.
5. Establishment of Trust. The Company may establish an irrevocable trust
fund pursuant to a trust agreement to hold assets to satisfy its
obligations hereunder. Funding of such trust fund shall be subject to
the Company's discretion, as set forth in the agreement pursuant to
which the fund will be established.
6. Enforcement.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due the Employee under Sections 3(b)
and 4 hereof within the respective time periods provided
therein, the Company shall pay to the Employee, in addition
to the payment of any other sums provided in this Agreement,
interest, compounded daily, on any amount remaining unpaid
from the date payment is required under Section 3(b) and 4,
as appropriate, until paid to the Employee, at the rate from
time to time announced by Mellon Bank (East) as its "prime
rate" plus 2%, each change in such rate to take effect on
the effective date of the change in such prime rate.
7. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for herein be reduced by any compensation
earned by other employment or otherwise.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in or rights
under any benefit, bonus, incentive or other plan or program provided
by the Company or any of its Subsidiaries or Affiliates and for which
the Employee may qualify; provided, however, that the Employee hereby
waives the Employee's right to receive any payments under any severance
pay plan or similar program applicable to other employees of the
Company.
9. No Set-Off. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Employee or others.
10. Taxes. Any payment required under this Agreement shall be subject to
all requirements of the law with regard to the withholding of taxes,
filing, making of reports and the like, and the Company shall use its
best efforts to satisfy promptly all such requirements.
11. Confidential Information. The Employee recognizes and acknowledges
that, by reason of his employment by and service to the Company, he has
had and will continue to have access to confidential information of the
Company and its affiliates, including, without limitation, information
and knowledge pertaining to products and services offered, innovations,
designs, ideas, plans, trade secrets, proprietary information,
distribution and sales methods and systems, sales and profit figures,
customer and client lists, and relationships between the Company and
its affiliates and other distributors, customers, clients, suppliers
and others who have business dealings with the Company and its
affiliates ("Confidential Information"). The Employee acknowledges that
such Confidential Information is a valuable and unique asset and
covenants that he will not, either during or after his employment by
the Company, disclose any such Confidential Information to any person
for any reason whatsoever without the prior written authorization of
the Board, unless such information is in the public domain through no
fault of the Employee or except as may be required by law.
12. Non-Competition.
(a) During his employment by the Company and for a period of one
year thereafter, the Employee will not, unless acting with
the prior written consent of the Board, directly or
indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control
or financing of, or be connected as an officer, director,
employee, partner, principal, agent, representative,
consultant or otherwise with or use or permit his name to be
used in connection with, any business or enterprise engaged
in a geographic area in which the Company or any of its
affiliates is operating either during his employment by the
Company or on the Termination Date, as applicable, presently
on the East Coast of the United States or at any port in the
Gulf of Mexico (whether or not such business is physically
located within those areas) (the "Geographic Area"), in any
business that is a customer of, competitive to, a business
from which the Company or any of its affiliates derive at
least five percent of its respective gross revenues either
during his employment by the Company or on the Termination
Date, as applicable. It is recognized by the Employee that
the business of the Company and its affiliates and the
Employee's connection therewith is or will be involved in
activity throughout the Geographic Area, and that more
limited geographical limitations on this non-competition
covenant are therefore not appropriate. The Employee also
shall not, directly or indirectly, during such one-year
period (a) solicit or divert business from, or attempt to
convert any client, account or customer of the Company or
any of its affiliates, whether existing at the date hereof
or acquired during Employee's employment nor (b) following
Employee's employment, solicit, hire or attempt to hire any
then employee of the Employer or of any of its affiliates.
(b) The foregoing restriction shall not be construed to prohibit
the ownership by the Employee of less than one percent (1%)
of any class of securities of any corporation which is
engaged in any of the foregoing businesses having a class of
securities registered pursuant to the Securities Exchange
Act of 1934, provided that such ownership represents a
passive investment and that neither the Employee nor any
group of persons including Employee in any way, either
directly or indirectly, manages or exercises control of any
such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business, other
than exercising his rights as a shareholder, or seeks to do
any of the foregoing.
13. Equitable Relief.
(a) Employee acknowledges that the restrictions contained in
Sections 12 and 13 hereof are reasonable and necessary to
protect the legitimate interests of the Company and its
affiliates, that the Company would not have entered into
this Agreement in the absence of such restrictions, and that
any violation of any provision of those Sections will result
in irreparable injury to the Company. The Employee
represents that his experience and capabilities are such
that the restrictions contained in Section 13 hereof will
not prevent the Employee from obtaining employment or
otherwise earning a living at the same general level of
economic benefit as anticipated by this Agreement. The
Employee further represents and acknowledges that (i) he has
been advised by the Company to consult his own legal counsel
in respect of this Agreement, and (ii) that he has had full
opportunity, prior to execution of this Agreement, to review
thoroughly this Agreement with his counsel.
(b) The Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the
necessity of proving actual damages or posting a bond as
well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 11 or
12 hereof, which rights shall be cumulative and in addition
to any other rights or remedies to which the Company may be
entitled. In the event that any of the provisions of
Sections 11 or 12 hereof should ever be adjudicated to
exceed the time, geographic, service, or other limitations
permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to
the maximum time, geographic, service, or other limitations
permitted by applicable law.
(c) The Employee irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of
Section 11 or 12 hereof, including without limitation, any
action commenced by the Company for preliminary and
permanent injunctive relief or other equitable relief, may
be brought in the United States District Court for the
District of Florida, or if such court does not have
jurisdiction or will not accept jurisdiction, in any court
of general jurisdiction in Tampa, Florida, (ii) consents to
the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection
which Employee may have to the laying of venue of any such
suit, action or proceeding in any such court. Employee also
irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 17 hereof. In
the event of a lawsuit by either party to enforce the
provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable costs, expenses and
attorney's fees from the other party.
(d) Employee agrees that he will provide, and that the Company
may similarly provide, a copy of Sections 11 and 12 hereof
to any business or enterprise (i) which he may directly or
indirectly own, manage, operate, finance, join, control or
participate in the ownership, management, operation,
financing, control or control of, or (ii) with which he may
be connected with as an officer, director, employee,
partner, principal, agent, representative, consultant or
otherwise, or in connection with which he may use or permit
his name to be used; provided, however, that this provision
shall not apply in respect of Section 3 hereof after
expiration of the time period set forth therein.
14. Term of Agreement. The term of this Agreement shall be for two years
from the date hereof and shall be automatically renewed for successive
one-year periods unless the Company notifies the Employee in writing
that this Agreement will not be renewed at least sixty days prior to
the end of the current term; provided, however, that (i) after a Change
of Control during the term of this Agreement, this Agreement shall
remain in effect until all of the obligations of the parties hereunder
are satisfied or have expired, and (ii) this Agreement shall terminate
if, prior to a Change of Control, the employment of the Employee with
the Company, Maritrans or any of Subsidiaries of the latter , as the
case may be, shall terminate for any reason, or the Employee shall
cease to be an Employee, except as provided in Section 1(l).
15. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance
satisfactory to the Employee, to acknowledge expressly that this
Agreement is binding upon and enforceable against the Company in
accordance with the terms hereof, and to become jointly and severally
obligated with the Company to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform if
no such succession or successions had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement. As used in this
Agreement, the Company shall mean the Company as hereinbefore defined
and any such successor or successors to its business and/or assets,
jointly and severally.
16. Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in
writing and shall be delivered personally or mailed by registered or
certified mail, return receipt requested, or by overnight express
courier service, as follows:
If to the Company, to:
Maritrans General Partner Inc.
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attention: Corporate Secretary
If to the Employee, to:
Xxxxx Xxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
or to such other names or addresses as the Company or the Employee, as
the case may be, shall designate by notice to the other party hereto in
the manner specified in this Section; provided, however, that if no
such notice is given by the Company following a Change of Control,
notice at the last address of the Company or to any successor pursuant
to Section 16 hereof shall be deemed sufficient for the purposes
hereof. Any such notice shall be deemed delivered and effective when
received in the case of personal delivery, five days after deposit,
postage prepaid, with the U.S. Postal Service in the case of registered
or certified mail, or on the next business day in the case of overnight
express courier service.
17. Governing Law. This Agreement shall be governed by and interpreted
under the state of Florida without giving effect to any conflict of
laws provisions.
18. Contents of Agreement, Amendment and Assignment.
(a) This Agreement supersedes all prior agreements, sets forth
the entire understanding between the parties hereto with
respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written
amendment executed by the Employee and approved by the Board
and executed on the Company's behalf by a duly authorized
officer. The provisions of this Agreement may provide for
payments to the Employee under certain compensation or bonus
plans under circumstances where such plans would not provide
for payment thereof. It is the specific intention of the
parties that the provisions of this Agreement shall
supersede any provisions to the contrary in such plans, and
such plans shall be deemed to have been amended to
correspond with this Agreement without further action by the
Company or the Board.
(b) Nothing in this Agreement shall be construed as giving the
Employee any right to be retained in the employ of the
Company.
(c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable
by the respective heirs, representatives, successors and
assigns of the parties hereto, except that the duties and
responsibilities of the Employee and the Company hereunder
shall not be assignable in whole or in part by the Company.
19. Severability. If any provision of this Agreement or application thereof
to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect
any other provisions or applications of this Agreement which can be
given effect without the invalid or unenforceable provision or
application.
20. Remedies Cumulative; No Waiver. No right conferred upon the Employee by
this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and
shall be in addition to any other right or remedy given hereunder or
now or hereafter existing at law or in equity. No delay or omission by
the Employee in exercising any right, remedy or power hereunder or
existing at law or in equity shall be construed as a waiver thereof,
including, without limitation, any delay by the Employee in delivering
a Notice of Termination pursuant to Section 2 hereof after an event has
occurred which would, if the Employee had resigned, have constituted a
Termination following a Change of Control pursuant to Section 1(l)(ii)
of this Agreement.
21. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this Agreement
or any counterpart hereof to produce or account for any of the other
counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
Attest: MARITRANS GENERAL PARTNER INC.
[Seal]
/s/ X.X. Xxx Xxxx /s/ Xxxxxx X. Xxxxxxx
---------------------------- By______________________________
Secretary
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxx
---------------------------- --------------------------------
Witness Xxxxx Xxxxxxx
