AGREEMENT
Agreement made as of the 1st day of December, 1998, between Maritrans
General Partner Inc., a Delaware corporation (the "Company"), and Xxxxxx X.
Xxxxxxx (the "Employee").
WHEREAS, the Employee is employed by the Company as its Director of
Finance;
WHEREAS, the Company is a subsidiary of Maritrans Inc., a publicly
traded corporation ("Maritrans");
WHEREAS, the board of directors of the Company recognizes that, as is
the case with many publicly held corporations, the possibility of a change in
control of Maritrans and the Company exists and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment of the
Company;
WHEREAS, the board of directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of key members of the Company's management to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company; and
WHEREAS, in order to induce the Employee to remain in the employ of the
Company, 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 subsequent to a "Change of Control" (as defined in Section 1 hereof)
of the Company;
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:
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 Compensation" 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, the Employee's annual bonus as paid for the year prior to
the Termination Date and, if applicable, any payment received under the
Company's Performance Unit Plan in the year prior to the year in which the
Termination Date occurs, 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.
(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 the Company.
(e) "Cause" shall mean 1) misappropriation of funds, 2) habitual
insobriety or substance abuse, 3) conviction of a crime involving moral
turpitude, 4) 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.
(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.
(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 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 or officer positions 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; or
(E) a transfer of the Employee, without his express written consent, to
a location that is outside the metropolitan Philadelphia area (fifty
miles surrounding the Company's principal location as of the date
hereof), or the general area in which his principal place of business
immediately preceding the Change of Control may be located at such time
if other than metropolitan Philadelphia.
2. Notice of Termination. Any Termination of Employment shall be
communicated by a otice of Termination to the other party hereto given in
accordance with Section 14 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) Subject to the provisions of Section 11 hereof, in the event of the
Employee's Termination following a Change of Control, the Company shall pay to
the Employee, within fifteen 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), an amount in cash equal to 1.5 times the Employee's
Base Compensation.
(b) Subject to the provisions of Section 11 hereof, in the event of
that a Change of Control occurs within six months after an involuntary
Termination of Employment for reasons other than Cause, the Company shall pay to
the Employee, within fifteen days after the Change of Control (or as soon as
possible thereafter in the event that the procedures set forth in Section 11(b)
hereof cannot be completed), an amount in cash equal to 1.5 times the Employee's
Base Compensation.
(c) 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 (a) or (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 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.
(b) It is the intent of the parties that the Employee not be required
to incur any expenses associated with the enforcement of his rights under
Section 3(b) of this Agreement by arbitration, litigation or other legal action
because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Employee hereunder. Accordingly, the
Company shall pay the Employee on demand the amount necessary to reimburse the
Employee in full for all expenses (including all attorneys' fees and legal
expenses) incurred by the Employee in enforcing any of the obligations of the
Company under this Agreement.
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. Certain Reduction of Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for the benefit of the Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would constitute an "excess parachute payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and that it would be economically advantageous to the Employee to
reduce the Payment to avoid or reduce the taxation of excess parachute payments
under Section 4999 of the Code, the aggregate present value of amounts payable
or distributable to or for the benefit of the Employee pursuant to this
Agreement (such payments or distributions pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be reduced (but not below
zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value of Agreement
Payments without causing any Payment to be subject to the taxation under Section
4999 of the Code. For purposes of this Section 11, present value shall be
determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 11 shall be made
by Ernst & Young (or the Company's independent public accountant immediately
prior to the Change of Control if other than Ernst & Young (the "Accounting
Firm")), which firm shall provide its determinations and any supporting
calculations both to the Company and the Employee within 10 days of the
Termination Date. Any such determination by the Accounting Firm shall be binding
upon the Company and the Employee. Within five days after this determination,
the Company shall pay (or cause to be paid) or distribute (or cause to be
distributed) to or for the benefit of the Employee such amounts as are then due
to the Employee under this Agreement.
(c) As a result of the uncertainty in the application of Section 280G
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Agreement Payments, as the case may be, will have
been made by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. Within two years after the Termination of
Employment, the Accounting Firm shall review the determination made by it
pursuant to the preceding paragraph. In the event that the Accounting Firm
determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Employee which the Employee shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); provided,
however, that no amount shall be payable by the Employee to the Company if and
to the extent such payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Employee together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses resulting
from or relating to its determinations pursuant to subsections (b) and (c)
above, except for claims, damages or expenses resulting from the gross
negligence or willful misconduct of the Accounting Firm.
12. 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 or any of its Subsidiaries, as the case may be,
shall terminate for any reason, or the Employee shall cease to be an Employee.
13. 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.
14. 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 Inc.
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Corporate Secretary
If to the Employee, to:
Xxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, 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.
15. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.
16. 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.
17. 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.
18. 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.
19. 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]
By /s/ Xxxxxx X. Xxxxxxxxx
----------------------- ---------------------------
Secretary
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxxxx
----------------------- ---------------------
Witness Xxxxxx X. Xxxxxxx
