EXHIBIT 10.1
SEVERANCE AND NON-COMPETITION AGREEMENT
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Agreement made as of the 8th day of September 2004, between Maritrans
General Partner Inc., a Delaware corporation (the "Company"), and Xxxxxxxxxxx X.
Xxxxxxxx (the "Employee").
WHEREAS, the Employee is currently employed by the Company in an
important executive position;
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;
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 General
Partner 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 three month period, but the ultimate ruling by the
Board shall be considered final.
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(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.
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(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).
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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 10 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), and in lieu
of, or reduced by, as applicable any payment under subsection (a)
above, a single sum in cash equal to 1.99 times the Employee's
Base Salary.
(c) As additional consideration for the non-competition and
non-solicitation covenants contained in Sections 12 and 13, (i) if
payments are made under subsection (a) above, an amount equal to
his Base Salary, subject to customary employment taxes and
deductions, payable bi-weekly for 12 months following his
Termination Date, or (ii) if payments are made under subsections
(b) above, the Employee will receive a single cash payment, within
30 days after the effective date of the Termination of Employment,
equal to his Base Salary.
(d) In the event the Employee's Normal Retirement Date would occur
prior to 24 months after the Termination Date, the aggregate cash
amount determined as set forth in (b) 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 Section 3(b) hereof within
the time period 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
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remaining unpaid from the date payment is required under Section
3(b), 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,
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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.
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(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 16 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 12 hereof after expiration
of the time period set forth therein.
14. Term of Agreement. The term of this Agreement shall be for three 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
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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:
Xxxxxxxxxxx X Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxx 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.
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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.
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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.
MARITRANS GENERAL PARTNER INC.
Attest:
Xxxxxx X. Xxxxxx By Xxxxxxxx Xxxxxxxxx
-------------------- ------------------------------
Secretary Name: Xxxxxxxx Xxxxxxxxx
Title: President
Witness:
Xxxxxxx Xxxxxxx Xxxxxxxxxxx X. Xxxxxxxx
-------------------- -------------------------------
Xxxxxxxxxxx X. Xxxxxxxx
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