Exhibit 10.7
EMPLOYMENT AGREEMENT
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Maritrans Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇.
▇▇▇ ▇▇▇▇ ("Employee") entered into an Employment Agreement (the "Agreement") in
October, 1993, which was amended and restated effective as of April 1, 2001 and
continues in full force and effect. Employee is presently employed by the
Company as its Chairman and Chief Executive Officer. Both parties wish to update
the Agreement to reflect Employee's voluntary relinquishments of his position of
Chief Executive Officer, effective as of April 1, 2003, and the compensation and
benefit arrangements that will be in effect while employed by the Company as its
Chairman and to make other desirable and conforming changes. The Agreement is
hereby amended and restated, effective as of April 1, 2003;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. The Company hereby continues the employment of Employee,
and Employee hereby accepts such employment and agrees to perform his duties and
responsibilities hereunder, in accordance with the terms and conditions
hereinafter set forth.
1.1. Employment Term. The term of this Agreement (the "Employment
Term") shall commence on April 1, 2003 and shall continue for an indefinite
period until terminated in accordance with Section 5 or Section 6 hereof.
1.2. Duties and Responsibilities. During the Employment Term,
Employee shall serve as the Chairman of the Company and shall perform all duties
and accept all responsibilities incident to such position or as otherwise may be
assigned to him by the Company's Board of Directors (the "Board") and agreed to
by Employee.
1.3. Extent of Service. During the Employment Term, Employee agrees
to use his best efforts to carry out his duties and responsibilities under
Section 1.2 hereof and, consistent with the other provisions of this Agreement,
to devote such attention and energy thereto as is required by his position;
provided, however, that Employee shall not be required to transfer to a location
outside the metropolitan Tampa area (fifty miles surrounding the Company's
principal location as of the date hereof) without Employee's prior written
consent. Except as provided in Section 3 hereof, the foregoing shall not be
construed as preventing Employee from making minority investments in other
businesses or enterprises provided that Employee agrees not to become engaged in
any other business activity which may interfere with his ability to discharge
his duties and responsibilities to the Company. Except with respect to current
engagements, Employee further agrees not to work either on a part time or
independent contracting basis for any other business or enterprise during the
Employment Term without the prior written consent of the Board.
1.4. Base Salary.
(a) For all the services rendered by Employee hereunder, the Company
shall pay Employee the basic annual rate of compensation being paid to Employee
as of the date hereof for each full year of the Employment Term ("Base Salary"),
payable in installments at such times as the Company customarily pays its other
senior executives (but in any event no less often than monthly). Employee's Base
Salary shall be subject to review and adjustment from time to time, to reflect
Employee's then contribution to the Company, by the Board's Compensation
Committee pursuant to its normal performance review policies for senior
executives but shall not be reduced without Employee's consent. The Company
shall be entitled to make proper withholdings from Employee's Base Salary (and
all other payments of compensation under this Agreement) as required by law.
(b) During the Employment Term, Employee shall also be (i) entitled
to participate in such retirement, profit sharing, equity compensation, group
insurance, medical and other fringe benefit plans, if any, as may be authorized
from time to time by the Board in its sole discretion for any other senior
executive of the Company, (ii) provided with reimbursement of expenses related
to his employment by the Company on a basis similar to that which may be
authorized from time to time by the Board in its sole discretion for senior
executives of the Company generally, (iii) entitled to vacation and holidays
during the Employment Term in accordance with the Company's normal policy, and
(iv) entitled to financial and tax consulting services and an automobile
allowance of $750 per month.
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1.5 Incentive Compensation. Employee shall not participate in any
Company annual bonus plan or equity compensation plan but shall be entitled to
participate in the Company's cash long-term incentive compensation plan, if any,
for senior executives generally. The terms and provisions of such incentive
compensation plan shall be determined in the sole discretion of the Board.
1.6 Special Retirement Benefit. Notwithstanding anything herein to
the contrary, Employee's retirement benefit under the Company's defined benefit
retirement plans, equal to the sum under both the Company's "qualified" plan
(the "Retirement Plan") and non-qualified plan (the "Excess Benefit Plan") shall
not be less than $300,000, on a pre-tax basis, in the normal form provided under
the Retirement Plan, but payable in any actuarially equivalent form permitted
under the Retirement Plan, in the event that Employee remains employed at least
through his 63rd birthday, except as provided in Sections 5.1 or 5.4(d)(F), and
the cost of any additional benefit to be provided, in excess of that otherwise
provided by the Retirement Plan, shall be paid by the Company from its general
assets, not from the assets of the Retirement Plan, the present value of which
shall be contributed, within thirty days after Employee's termination of
employment, to the trust maintained for Employee under the Company's Excess
Benefit Plan, to the extent the assets of the trust are not then sufficient to
provide such additional benefit.
2. Confidential Information. Employee recognizes and acknowledges that
by reason of his employment by and service to the Company (both during the
Employment Term and before or after it), 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"). Employee acknowledges that such Confidential Information is a
valuable and unique asset and covenants that he will not, either during or after
the Employment Term, 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 Employee or
except as may be required by law.
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3. Non-Competition.
(a) During the Employment Term and for a period of two years
thereafter, Employee will not, unless acting pursuant hereto or 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 the Employment Term or on the date Employee's employment
terminates, 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
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 the
Employment Term or on the date Employee's employment terminates, as applicable.
It is recognized by Employee that the business of the Company and its affiliates
and 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. In addition,
Employee agrees that he will not, for a period of two years after the expiration
or termination of the Employee's employment with the Company, unless such
termination follows a Change of Control, as defined below, without the prior
written consent of the Company, whether directly or indirectly, employ, whether
as an employee, officer, director, agent, consultant or independent contractor,
or solicit the employment of, any managerial or higher level person who is or at
any time during the previous twelve months was an employee, representative,
officer or director of the Company or any of its affiliates.
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(b) The foregoing restriction shall not be construed to prohibit the
ownership by Employee of less than five percent (5%) 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
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.
4. Equitable Relief.
(a) Employee acknowledges that the restrictions contained in
Sections 2 and 3 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. Employee represents that his experience and capabilities are
such that the restrictions contained in Section 3 hereof will not prevent
Employee from obtaining employment or otherwise earning a living at the same
general level of economic benefit as anticipated by this Agreement. 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) Employee agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of Sections 2 or 3 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 2 or 3 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.
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(c) Employee irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Section 2 or 3 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 in 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 10
hereof.
(d) Employee agrees that he will provide, and that the Company may
similarly provide, a copy of Sections 2 and 3 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.
5. Termination. The Employment Term shall terminate upon the occurrence
of any one of the following events:
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5.1. Disability. The Company may terminate the Employment Term if
Employee is unable fully to perform his duties and responsibilities hereunder to
the full extent required by the Board by reason of illness, injury or incapacity
for six consecutive months, or for more than six months in the aggregate during
any period of twelve calendar months. In such event, the Company shall have no
further liability or obligation to Employee under this Agreement; provided,
however, that Employee shall continue to receive his Base Salary and a
continuation of all welfare and pension and profit sharing benefits for twenty
four months thereafter, less the payments prescribed under any disability
benefit plan which may be in effect for senior officers of the Company and in
which he participated, plus his incentive compensation, as referred to in
Section 1.5 hereof, for such twenty-four month period at the target percentage
level in effect for the year during which Employee first became disabled and
entitlement to the Special Retirement Benefit under Section 1.6, if not
otherwise already eligible, beginning at age 63; and provided, further, that if
the amount that actually would have been earned under the Company's cash
long-term incentive compensation plan in any of the relevant fiscal years of the
Company is less than the full target then the amount due hereunder shall be
reduced to such amount. Employee agrees, in the event of any dispute under this
Section 5.1, to submit to a physical examination by a licensed physician
selected by the Board.
5.2. Death. The Employment Term shall terminate in the event of
Employee's death. In such event, the Company shall pay to Employee's executors,
legal representatives or administrators, as applicable, an amount equal to the
installment of his Base Salary set forth in Section 1.4 hereof for the month in
which he dies, and, thereafter, the Company shall have no further liability or
obligation under this Agreement to his executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
him; provided, however, that Employee's estate or designated beneficiaries shall
be entitled to receive (i) the payments prescribed for such recipients under any
death benefit plan which may be in effect for executives of the Company,
generally, (ii) a life insurance benefit in an amount equal to $2.0 million, and
(iii) a pro rata portion of the cash long-term incentive compensation, if any,
as referred to in Section 1.5 hereof, in respect of the year during which
Employee died.
5.3. Cause. The Company may terminate the Employment Term, at any
time, for "cause" upon thirty days' written notice, in which event all
liabilities and obligations of the Company under this Agreement shall cease,
except for payment of Base Salary to the extent already accrued. For purposes of
this Agreement, Employee's employment may be terminated for "cause" if he
engages in gross misconduct, material dishonesty, deliberate and premeditated
acts against the interest of the Company, which has a material and adverse
effect on the Company's business, materially fails to perform or observe any of
the terms or provisions of this Agreement or is convicted of a felony.
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5.4. Other Terminations.
(a) Employee may terminate the Employment Term upon thirty days
prior written notice to the Company if the Company fails to fulfill any of the
material terms and provisions hereof including the failure to pay Employee any
amounts payable hereunder within ten business days after the same shall be due
and payable (and has not cured any such failure by the end of the notice period)
including the transfer of Employee to a location outside of the metropolitan
Tampa area without his consent. In any such case, the Employment Term shall end
immediately and Employee retains all rights to enforce this Agreement.
(b) The Company may remove Employee without cause from the position
in which he is employed hereunder at any time upon written notice in which case
the Employment Term shall end immediately upon the giving of such notice.
(c) Upon any such termination or removal under either clause (a) or
(b), Employee shall be entitled to receive, as liquidated damages for the
failure of the Company to continue to employ Employee, only the amount due to
Employee under the Company's then severance pay plan for employees. No other
payments or benefits shall be due under this Agreement to Employee and the
Company shall have no further liability or obligation.
(d) Notwithstanding subparagraph (c), in the event that Employee
executes a written release, substantially in the form attached hereto as Exhibit
A, but subject to such reasonable changes as counsel to the Company may
recommend from time to time that are approved by Employee, such approval not to
be unreasonably withheld, of any and all claims against the Company and all
related parties with respect to all matters arising out of Employee's employment
by the Company (other than his entitlement under any employee benefit plan or
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program sponsored by the Company in which he participated and under which he has
accrued a benefit), and the termination thereof, Employee shall receive, in lieu
of the payment described in subparagraph (c) hereof, which Employee agrees to
waive, (i) a lump sum payment equal to twelve months of Employee's Base Salary,
(ii) a lump sum payment equal to the cash long-term incentive compensation, as
referred to in Section 1.5 hereof, for such twelve month period at the target
percentage level in effect for the year during which Employee terminates this
Agreement in accordance herewith or is removed, and (iii)(A) appropriate senior
executive level outplacement services for 18 months or until Employee secures
and accepts a new position, if sooner, (B) service credit, for purposes of
determining the vesting of any cash long-term incentive compensation cycles then
in effect, for an additional thirty-six months, (C) a lump sum payment equal to
the amount of benefits he would have received under the Company's profit sharing
and savings plan for such thirty-six month period, (D) a monthly amount
(together with a tax equalization payment) for thirty six months equal to the
premium due under the Company's health benefit plan, (E) continuation of death
and disability benefits for thirty six months at the level in effect at the time
of such termination or removal (or a cash payment sufficient to replace such
benefits), (F) treated as if he had continued in employment until, and were
then, age 63 under the Retirement Plan (but such additional benefit, if any, to
be provided by the Company from its general assets, not from the assets of the
Retirement Plan, and contributed, within thirty days after Employee's
termination, to the trust maintained for Employee under the Excess Benefit
Plan); and (G) in exchange for Employee's undertakings under Section 3 hereof,
(i) a lump sum payment equal to twenty-four months of Employee's Base Salary,
and (ii) a lump sum payment equal to the cash long-term incentive compensation,
as referred to in Section 1.5 hereof, for such twenty-four month period at the
target percentage level in effect for the year during which Employee terminates
this Agreement in accordance herewith or is removed. No other payments or
benefits shall be due under this Agreement to Employee and the Company shall
have no further liability or obligation. All monies due Employee shall be paid
to Employee within thirty days after his termination or removal.
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(e) Employee may voluntarily terminate the Employment Term upon
thirty days' prior written notice for any reason; provided, however, that no
further payments or benefits shall be due under this Agreement to Employee in
that event and the Company shall have no further liability or obligation except
for Employee's rights under those retirement benefit plans (pension, profit
sharing, etc) maintained by the Company and in which Employee participated and
is owed a benefit.
5.5 No Mitigation. Employee shall not be required to mitigate the
amount of any payment or benefit provided for in this Section 5 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.
6. Payments Upon a Change in Control.
6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 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 average of Employee's Base
Salary for the three completed fiscal years of the Company ending immediately
prior to the Change of Control.
(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; 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;
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(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 (c) 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.
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(d) "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 then
outstanding of Maritrans Inc.); 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 Maritrans Inc. then outstanding or to solicit proxies, (ii) the Company
sells substantially all of its assets or the Company's stockholders approve its
liquidation, or (iii) during any twenty-four month period, individuals who at
the beginning of such period constituted the Board of Directors of Maritrans
Inc. cease for any reason to constitute a majority thereof, unless the election,
or the nomination for election by the shareholders of Maritrans Inc., 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.
(e) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following Employee's 68th birthday.
(f) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(g) "Termination Date" shall mean the date of receipt of a Notice of
Termination of this Agreement or any later date specified therein, as the case
may be.
(h) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.
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(i) "Termination upon a Change of Control" shall mean a Termination
of Employment upon or within two years after a Change of Control or six months
prior to a Change of Control, and it is reasonably demonstrated by Employee that
such Termination of Employment was the result of the request of a third party
who has taken steps reasonably calculated to effect the Change of Control or
otherwise arose in connection with or in anticipation of the Change of Control,
either:
(i) initiated by the Company for any reason other than (x) the
Employee's disability, as described in Section 5.1 hereof, (y) death,
or (z) for "cause," as described in Section 5.3 hereof, or
(ii) initiated by the Employee upon any of the following
occurrences:
(A) a transfer of Employee, without his express written
consent, to a location that is outside the metropolitan Tampa area (as
defined in Section 1.3 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 Tampa;
(B) any failure of the Company to comply with and satisfy
any of the terms of this Agreement;
(C) any significant reduction by the Company of the
authority, duties or responsibilities of Employee;
(D) any removal by the Company of Employee from the
employment grade, compensation level or officer or director positions
which he holds as of the effective date hereof;
(E) the requirement that Employee undertake business travel
to an extent substantially greater than is reasonable and customary for
the position he holds pursuant hereto; or
(F) the good faith determination by Employee that due to
any change in circumstances with the Company that directly or
indirectly affect Employee's position, duties or responsibilities or
status as in effect immediately preceding his Termination Date he is no
longer able effectively to discharge his duties and responsibilities.
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6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) briefly summarizes the
facts and circumstances deemed to provide a basis for a Termination of
Employment and the applicable provision hereof, 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).
6.3. Severance Compensation upon Termination.
(a) Subject to adjustment as provided in paragraph (b) below,
in the event of Employee's Termination upon a Change of Control, in the event
that Employee executes a written release, substantially in the form attached
hereto as Exhibit A, but subject to such reasonable changes as counsel to the
Company may recommend from time to time and approved by Employee, such approval
not to be unreasonably withheld, of any and all claims against the Company and
all related parties with respect to all matters arising out of Employee's
employment by the Company (other than his entitlement under any employee benefit
plan or program sponsored by the Company in which he participated and under
which he has accrued a benefit), and the termination thereof, Employee shall
receive all amounts and benefits provided by Section 5.4(d), in accordance with
the terms and conditions of that Section, based upon (i) Employee's Base
Compensation instead of Employee's Base Salary and (ii) pre-Change of Control
benefits, if those benefits were more favorable to Employee.
(b) In the event Employee's Normal Retirement Date would occur
prior to twenty-four 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 Employee's Normal Retirement Date and the denominator of
which shall be 730.
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6.4. Other Payments. In the event of Employee's Termination upon a
Change of Control, the Company shall also pay to Employee within fifteen days
after the Termination Date, to the extent not theretofore paid, Employee's Base
Salary through the Termination Date and a further amount equal to Employee's
Base Salary in lieu of his unused vacation pay, if any, both calculated at the
rate in effect on the Termination Date or, if higher, at the highest rate in
effect at any time within the 90-day period preceding the Termination Date;
6.5. Enforcement.
(a) In the event that the Company shall fail or refuse to make
payment of any amounts due Employee hereunder within the appropriate time
period, the Company shall pay to 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 until paid to 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 Employee not be
required to incur any expenses associated with the enforcement of his rights
under 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 Employee hereunder. Accordingly, the Company shall
pay Employee on demand the amount necessary to reimburse Employee in full for
all expenses (including all attorneys' fees and legal expenses) incurred by
Employee in enforcing any of the obligations of the Company under this Section.
6.6. No Mitigation. 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.
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6.7. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit 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 Affiliate and for which Employee may qualify; provided, however,
that if Employee becomes entitled to and receives all of the payments provided
for in this Agreement, Employee agrees to waive his right to receive payments
under any severance plan or similar program applicable to all employees of the
Company.
6.8. No Set-Off. The Company's obligation to make the payments
provided for in this Section 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 Employee or others.
6.9. Certain Increases 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 Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"), would constitute an "excess parachute payment "
within the meaning of Section 280G of the Code, Employee shall be paid an
additional amount (the "Gross-Up Payment") such that the net amount retained by
Employee after deduction of any excise tax imposed under Section 4999 of the
Code, and any federal, state and local income and employment tax and excise tax
imposed upon the Gross-Up Payment shall be equal to the Payment. For purposes of
determining the amount of the Gross-Up Payment, Employee shall be deemed to pay
federal income tax and employment taxes at the highest marginal rate of federal
income and employment taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Employee's residence (or, if
greater, the state and locality in which Employee is required to file a
nonresident income tax return with respect to the Payment) on the Termination
Date, net of the maximum reduction in federal income taxes that may be obtained
from the deduction of such state and local taxes.
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(b) All determinations to be made under this Section 6.9 shall
be made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and Employee
within 10 days of the Termination Date. Any such determination by the Accounting
Firm shall be binding upon the Company and Employee. Within five days after the
Accounting Firm's determination, the Company shall pay (or cause to be paid) or
distribute (or cause to be distributed) to or for the benefit of Employee such
amounts as are then due to Employee under this Agreement.
(c) Employee shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after Employee knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Employee shall not pay such claim
prior to the expiration of the thirty day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
Employee in writing prior to the expiration of such period that it desires to
contest such claim, Employee shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
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(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an
after-tax basis, for any Excise Tax, income tax or employment tax, including
interest and penalties, with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 6.9, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearing and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct Employee to pay the tax claimed and ▇▇▇ for a refund
or contest the claim in any permissible manner, and Employee agrees to prosecute
such contest to a termination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, however, that if the Company directs Employee to
pay such claim and ▇▇▇ for a refund the Company shall advance the amount of such
payment to Employee, on an interest-free basis and shall indemnify and hold
Employee harmless, on an after-tax basis, from any Excise Tax, income tax or
employment tax, including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and provided further that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Employee with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.(d) If, after the receipt by Employee of an amount advanced by the
Company pursuant to this Section, Employee becomes entitled to receive any
refund with respect to such claim, Employee shall (subject to the Company's
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complying with the requirements of this Section) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by Employee of an amount
advanced by the Company pursuant to this Section, a determination is made that
Employee shall not be entitled to any refund with respect to such claim and the
Company does not notify Employee in writing of its intent to contest such denial
of refund prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
(e) 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.
(f) Following a Change of Control and for a period of not less
than three years after the Date of Termination, Employee shall be entitled to
indemnification and, to the extent available on commercially reasonable terms,
insurance coverage therefore, with respect to the various liabilities as to
which Employee has been customarily indemnified prior to the Change of Control.
6.10. Settlement of All Disputes.
(a) The Company and Employee mutually consent to the
resolution by arbitration, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association, to be
held in Tampa, Florida, of all claims or controversies arising out of Employee's
employment (or its termination) that the Company may have against Employee or
that Employee may have against the Company or against its officers, directors,
shareholders, employees or agents in their capacity as such other than a claim
which is primarily for an injunction or other equitable relief. The Company
shall pay the fees and costs of the arbitrator and all other costs in connection
with any arbitration, including reasonable legal fee and expenses.
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(b) The party or parties challenging the right of Employee to
the benefits of this Agreement shall in all circumstances have the burden of
proof.
6.11. Successor Company. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation,
exchange or otherwise) to all or substantially all of the business or assets of
the Company or its Affiliates as of the date hereof, by agreement in form and
substance satisfactory to 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 the Agreement. As used
in this Agreement, the Company shall mean the Company as hereinbefore defined
and any such successor or successors to its business or assets (or that of its
Affiliates as of the date hereof), jointly and severally.
7. Survival. Notwithstanding the termination of the Employment Term or
this Agreement, Employee's obligations under Sections 2 and 3 hereof shall,
except to the extent otherwise provided herein, survive and remain in full force
and effect for the periods therein provided, and the provisions for equitable
relief against Employee in Section 4 hereof shall continue in force.
8. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the state of Florida without giving effect to any conflict of
laws provisions.
9. Litigation Expenses. Except as provided in Section 6.5 above, 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.
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10. Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):
If to the Company, to:
----------------------
Maritrans Inc.
Two Harbour Place
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a required copy to:
------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esquire
If to Employee, to:
-------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇, ▇▇▇▇▇
or to such other names or addresses as the Company or Employee, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
-----------------------------------------------
(a) This Agreement supersedes all prior agreements and sets forth
the entire understanding among the parties hereto with respect to the subject
matter hereof and cannot be changed, modified, extended or terminated except
upon written amendment approved by the Board and executed on its behalf by a
duly authorized officer.
(b) Employee acknowledges that from time to time, the Company may
establish, maintain and distribute employee manuals or handbooks or personnel
policy manuals, and officers or other representatives of the Company may make
written or oral statements relating to personnel policies and procedures. Such
manuals, handbooks and statements are intended only for general guidance. No
policies, procedures or statements of any nature by or on behalf of the Company
(whether written or oral, and whether or not contained in any employee manual or
handbook or personnel policy manual), and no acts or practices of any nature,
shall be construed to modify this Agreement or to create express or implied
obligations of any nature to Employee.
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(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, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Employee
hereunder are of a personal nature and shall not be assignable or delegatable in
whole or in part by Employee.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction.
13. Remedies Cumulative; No Waiver. No remedy conferred upon the
Company by this Agreement is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition to any
other remedy given hereunder or now or hereafter existing at law or in equity.
No delay or omission by the Company in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the Company
from time to time and as often as may be deemed expedient or necessary by the
Company in its sole discretion.
14. 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 marking proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement on the date first above written.
MARITRANS INC.
Attest:
[SEAL]
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------- ----------------------
Asst. Secretary Name: ▇. ▇▇▇▇▇▇▇▇▇
Title: VP & CFO
Witness:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇
23