Exhibit 10.6
SEVERANCE AND NON-COMPETITION AGREEMENT
Agreement made as of the 30th of July 2003, between Maritrans General
Partner Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx (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 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 three 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:
Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxxx, XX 00000-0000
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/ XXXXXX X. XXX XXXX By Xxxx Xxxxxx
--------------------------------- ------------------------------------
Secretary
/s/ XXXXX X. XXXXXXXX /s/ XXXXXXX X. XXXXXX
--------------------------------- ------------------------------------
Witness Xxxxxxx X. Xxxxxx
