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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
(Mark One)
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the Fiscal Year Ended December 31, 1993
or
/ / Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the Transition Period from to
Commission File Number 1-9063
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MARITRANS INC.*
(Exact name of registrant as specified in its charter)
DELAWARE 51-0343903
(State or other jurisdiction of (Identification No.
incorporation or organization) I.R.S. Employer)
ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 864-1200
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, Par Value $.01 Per Share New York Stock Exchange
Preferred Stock, Par Value $.01 Per Share None
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. /X/
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such requirements for the past 90 days.
Yes /X/ No / /
As of March 14, 1994, the aggregate market value of the voting stock held
by non-affiliates of the registrant was $63,005,515. As of March 14, 1994,
Maritrans Inc. had 12,523,000 shares of common stock outstanding.
Documents Incorporated By Reference
Part III incorporates information by reference from the Proxy Statement
for Annual Meeting of Stockholders to be held on May 12, 1994.
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* Successor to Maritrans Partners L.P.
Exhibit Index is located on page 34.
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FORM 10-K
MARITRANS INC.
TABLE OF CONTENTS
PART I
Page
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Item 1. Business ............................................... 1
Item 2. Properties ............................................. 10
Item 3. Legal Proceedings....................................... 11
Item 4. Submission of Matters to a Vote of Security Holders..... 12
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters..................................... 13
Item 6. Selected Financial Data................................. 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 14
Item 8. Financial Statements and Supplementary Data............. 18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..................... 30
PART III
Item 10. Directors and Executive Officers of the Registrant...... 30
Item 11. Executive Compensation.................................. 32
Item 12. Security Ownership of Certain Beneficial Owners and
Management.............................................. 32
Item 13. Certain Relationships and Related Transactions.......... 32
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................ 33
Signatures ........................................................ 36
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PART I
Item 1. BUSINESS
General
Maritrans Inc. (the "Corporation" or the "Registrant"), together
with its predecessor, Maritrans Partners L.P. (the "Partnership"),
herein called "Maritrans," has historically served the petroleum and
petroleum product distribution industry by providing marine transportation
services along the East and Gulf Coasts of the United States utilizing its
barges and tugboats. Maritrans has recently broadened its participation in
distribution services by adding marine terminal facilities, distribution
coordination and oil spill contingency management services.
Structure
The Registrant is a Delaware corporation whose common stock ("Common
Stock") is publicly traded. The Registrant conducts most of its marine
transportation business activities through Maritrans Operating Partners
L.P. and Maritrans General Partner Inc., wholly owned subsidiaries of the
Registrant. Most of the Registrant's terminalling, spill contingency and
ancillary services are conducted through subsidiaries of Maritrans
Holdings Inc., a wholly owned subsidiary of the Registrant.
Direct and indirect subsidiaries of the Registrant include:
Maritrans Operating Partners L.P. (the "Operating Partnership")
Maritrans General Partner Inc.
Maritrans Holdings Inc.
Response Members Inc.
Maritrans Capital Corp.
Response Services Inc.
CCF Acquisition Corp.
Maritank Philadelphia Inc.
Inter-Cities Navigation (Texas) Corp.
Maritank Maryland Inc.
Interstate Towing (Texas) Co.
Marispond Inc.
Maritrans Eastern Inc.
Maritrans Inland Inc.
Maritrans Gulf Inc.
Based on its internal research regarding Maritrans' competition,
Maritrans believes that it is one of the largest United States marine
transporters of petroleum and petroleum products in the U.S. Coastwise
trade (i.e. from port to port within the United States), excluding
affiliates of integrated oil companies, and that it owns one of the
largest domestic fleets of U.S. flag oceangoing tank barges. Founded in
the 1850's and incorporated in 1928 under the name Interstate Oil
Transport Company, Maritrans' predecessor was one of the first tank barge
operators in the United States, with a fleet which increased in size and
capacity as United States consumption of petroleum products increased. On
December 31, 1980, Maritrans' predecessor operations and its tugboat and
barge affiliates were acquired by Sonat Inc. ("Sonat"). On April 14,
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1987, Maritrans acquired the tug and barge business and related assets of
the tug and barge affiliates of Sonat. Since 1981, Maritrans and its
predecessors have transported annually over 200 million barrels of crude
oil and refined petroleum products.
On March 31, 1993, the limited partners of the Partnership voted on a
proposal to convert the Partnership to corporate form (the
"Conversion"). The proposal was approved, and on April 1, 1993,
Maritrans Inc., then a newly-formed Delaware corporation, succeeded to all
assets and liabilities of the Partnership. The holders of general and
limited partnership interests in the Partnership and in the Operating
Partnership were issued shares of Common Stock, par value $.01 per share,
of the Corporation, representing substantially the same percentage equity
interest in the Corporation as they had in the Partnership, directly or
indirectly, in exchange for their partnership interest. Each previously
held Unit of Limited Partnership Interest in the Partnership was exchanged
for one share of Common Stock of the Corporation. For financial accounting
purposes, the conversion to corporate form has been treated as a
reorganization of affiliated entities, with the assets and liabilities
recorded at their historical costs. In addition, the Partnership
recognized a net deferred income tax liability for temporary differences
in accordance with Statement of Financial Accounting Standard ("FAS")
No. 109, Accounting for Income Taxes, which resulted in a one-time charge
to earnings of $16.6 million in the first quarter of 1993.
Maritrans' present business plan for complying with the Oil Pollution
Act of 1990, (the "OPA"), includes the implementation of an on-going,
company-wide Quality Improvement Program, which focuses on improving each
area of vessel operations in order to eliminate oil spills, increased
training and awareness of marine personnel (including recertification of
masters and mates, watchstanding procedures and cargo transfer
operations), improved vessel maintenance procedures to address repairs
before an accident occurs, maintaining a comprehensive risk- management
program, including $700 million in oil spill pollution liability insurance
coverage on its fleet of petroleum barges, the maximum amount of such
coverage generally carried at commercial rates, and implementing an
in-house oil pollution regulatory program designed to keep management and
operating personnel knowledgeable about all pertinent developments in
regulations promulgated under the OPA and in state oil pollution laws and
regulations.
Since the double-hull requirements of the OPA do not begin to impact
materially on Maritrans' present barge fleet until January 1, 2005, it is
difficult to say precisely how Maritrans will finance the conversion of
its fleet to double-hull vessels. However, Maritrans expects that, where
economically feasible, it will take steps to construct new, double-hulled
vessels and/or convert its present single-hull vessels. The timing of the
construction or conversion of such vessels will depend in large measure on
market conditions, particularly demand for double-hulled vessels and the
rates which petroleum shippers are willing to pay to use such vessels.
Maritrans expects to finance such construction or conversion primarily
from internally generated funds and outside sources, including the equity
market, borrowing from conventional sources such as banks and insurance
companies and U.S. Government- guaranteed ship financing, if available,
and financial leases. There is no assurance that such financing will be
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available in the amounts and at interest rates which will allow Maritrans
to replace its current single-hull barge fleet. For a further description
of Maritrans' present business plan for complying with the OPA, see
"Regulation - Oil Pollution Legislation."
In January 1992, Maritrans restructured its marine operations into
three divisions - Eastern, Inland and Gulf, supported by executive and
service units. The three divisions also provide marketing, logistical, and
operational support for Maritrans' vessels, which are assigned to
divisions based on market conditions. This divisional restructuring was
designed to move Maritrans closer to its markets and customers, improve
productivity and efficiency in operations and permit more rapid decisions
and responses to changing conditions.
The Gulf Division, headquartered in Tampa, Florida, provides marine
transportation services for petroleum products from refineries located in
Texas, Louisiana and Mississippi to distribution points along the Gulf and
Atlantic Coasts generally south of Cape Hatteras, North Carolina and
particularly into Florida. The Eastern Division, supported by a major
fleet center in Philadelphia, Pennsylvania, transports petroleum products
from East Coast refineries (primarily located in and near Philadelphia)
and pipeline terminals located in the New York Harbor area to distribution
terminals primarily located along the Eastern Seaboard between the
Canadian Maritime Provinces and Cape Hatteras, North Carolina. Maritrans
also provides, as part of its Eastern Division, lightering services for
large tank ships (a process of off-loading crude oil or petroleum products
from an inbound tanker into barges, thereby enabling the tanker to
navigate draft-restricted rivers and ports to discharge cargo at a
refinery or storage and distribution terminal). The Inland Division is
also supported by fleet center operations in Philadelphia, Pennsylvania,
and transports petroleum products and chemicals between refineries and
distribution points along the Delaware River and in the Chesapeake Bay. In
1993, the Inland Division and Maritank Maryland Inc., which owns a marine
terminal in Salisbury, Maryland, began to deliver distribution services
through petroleum exchange agreements with customers requiring both marine
transportation and terminalling services. The petroleum exchange
agreements are structured so that Maritrans bears none of the exposure to
fluctuations in inventory price movements.
Maritrans operates a fleet of tank barges and tugboats. Its largest
barge has a capacity of approximately 400,000 barrels, and its current
operating barge fleet capacity aggregates approximately 4 million barrels.
Demand for Maritrans' services is dependent primarily upon general
demand for petroleum and petroleum products in the geographic areas served
by its vessels. Management believes that United States petroleum
consumption, and particularly consumption in New England and Florida, are
significant indicators of demand for Maritrans' services. Increases in
product consumption generally increase demand for Maritrans' services;
conversely, decreases in consumption generally lessen demand for
Maritrans' services.
Management further believes that the level of domestic consumption of
imported product is also significant to Maritrans' business. Imported
petroleum products generally can be shipped on foreign-flag vessels
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directly into United States ports for storage, distribution and eventual
consumption. These shipments reduce the need for domestic marine
transportation service providers such as Maritrans to carry products from
United States refineries to such ports. While Maritrans does benefit
somewhat from the increase in demand for domestic redistribution services
that results from the delivery of excess product to terminals by
foreign-flag vessels, the overall effect of refined product imports on the
demand for Maritrans' services is generally negative.
In June 1991, Maritrans, through a subsidiary, Maritank Philadelphia
Inc., acquired a one-million barrel, deepwater marine terminal located in
Philadelphia. This facility is a full-service petroleum product terminal
able to receive, store and subsequently redistribute product by pipeline,
marine vessel and truck. This facility is also capable of performing
cleaning of Maritrans' petroleum carrying vessels. Under current law, a
vessel owner is jointly and severally liable with the barge cleaning
contractor and the waste disposal contractor in the event that either such
contractor improperly disposes of any portion of tank cleaning residues
from the vessel which is hazardous. Not only have the tank cleaning rates
paid by Maritrans to third parties been increasing substantially, but, in
addition, Maritrans believes that at least some of these sources for tank
cleaning will not be available in the near future. Management believes the
ability to control the cleaning of its vessels will lessen its
environmental exposure, as discussed above, since it can then control this
activity. Maritrans also believes that this facility will provide it with
a long-term strategic advantage since it will be able to assure itself of
the availability of these services at a reasonable cost and, by
controlling the facility, it will be able to ensure that it can manage
vessel turn-around time, thereby increasing vessel availability, and that
the facility is run in an environmentally sound manner.
In early 1993, Maritank Maryland Inc. ("MMI") and Marispond Inc.
("Marispond") were established as indirect subsidiaries of the
Registrant. MMI provides marine terminalling and, together with the Inland
Division, distribution services in Salisbury, Maryland. Marispond provides
a series of services, most of which arise from requirements of the OPA.
These services include oil spill contingency planning, response management
and other services on a contract basis to Maritrans and other vessel
owners from around the world whose vessels call on United States ports.
Maritrans also established an office in Houston, Texas in 1993 in
conjunction with efforts it is undertaking to expand its distribution
services.
Sales and Marketing
Maritrans provides marine transportation, storage, and distribution
coordination services primarily to integrated oil companies, independent
oil companies, and petroleum distributors in the southern and eastern
United States. Maritrans relies primarily on direct sales efforts,
minimizing its use of chartering brokers. Maritrans monitors the supply
and distribution patterns of its actual and prospective customers and
focuses its efforts on providing services that are responsive to the
current and future needs of these customers.
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Maritrans does business on a spot market basis, a term contract basis
and, more recently, on a product exchange basis. Maritrans strives to
maintain an appropriate mix of contracted business, based on current
market conditions.
In light of the potential liabilities of oil companies and other
shippers of petroleum products under the OPA and analogous state laws,
management believes that some shippers have begun to select transporters
in larger measure than in the past on the basis of a demonstrated record
of safe operations. Therefore, Maritrans has implemented a number of
measures in order to promote higher quality operations and continues to
stress its longstanding commitment to safe transportation of petroleum
products in its marketing efforts.
In 1993, approximately 71% of Maritrans' revenues were generated from
ten customers. In 1993, contracts with Chevron U.S.A., Inc. (including
affiliates, "Chevron"), and British Petroleum Corp. (including
affiliates) accounted in the aggregate for approximately 17% and 15%,
respectively, of Maritrans' revenues. There could be a material adverse
effect on Maritrans if either of these customers were to cancel or
terminate their various agreements with Maritrans. Management believes
that cancellation or termination of all of its business with any of its
larger customers is unlikely. In February 1994, Chevron announced a
tentative agreement to sell its refinery along the Delaware River in
Philadelphia, Pennsylvania, to Sun Company, Inc., a Maritrans customer.
Based on public announcements by the prospective buyer, Maritrans believes
such a sale would not have a material adverse effect on its business.
Competition and Competitive Factors
Overview. The maritime petroleum transportation industry is highly
competitive. The Jones Act, a federal law, restricts United States
port-to-port maritime shipping to vessels built in the United States,
owned by U.S. citizens and manned by U.S. crews. In Maritrans' market
areas, its primary direct competitors are the operators of U.S. flag
oceangoing barges and U.S. flag tankers. In the Gulf market, the primary
competitors are the fleets of both other independent petroleum
transporters and integrated oil companies. In the Eastern and Inland
market, management believes, based on its extensive knowledge and
experience in the industry, that Maritrans primarily competes with other
independent oceangoing barge operators and with the captive fleets of
integrated oil companies and, in lightering operations, has competed with
foreign-flag operators which lighter offshore. Some of the integrated oil
company fleets with which Maritrans competes are larger than Maritrans'
fleet. Additionally, in certain geographic areas and in certain business
activities, Maritrans competes with the operators of petroleum product
pipelines. Competitive factors which also affect Maritrans include the
output of United States refineries and the importation of petroleum
products.
The primary competition for Maritrans' marine terminals is proprietary
storage capacity of integrated oil companies, merchant refiners, and
independent marine terminal operators.
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U.S. Flag Barges and Tankers. Maritrans' most direct competitors are
the other operators of U.S. flag oceangoing barges and tankers. Because of
the restrictions imposed by the Jones Act, there is a finite number of
vessels that are currently eligible to engage in U.S. maritime petroleum
transport. Therefore, the size and capacity of Maritrans' fleet relative
to those of others in the industry is an important factor in competing for
business on the basis of safety and service. The number of vessels
eligible to engage in Jones Act trade has declined significantly over the
past several years. The gradual implementation of regulations requiring
significant capital modifications and in some cases loss of vessel
capacity, as well as a decrease in the number of new vessels constructed
since 1982, have been the major causes of this decline. Competition in the
industry is based upon price and service (including vessel availability)
and is intense.
Maritrans is engaged in several different market activities. A
significant portion of its revenues in 1993 was generated in the coastal
transportation of petroleum products from refineries or pipeline terminals
in the Gulf of Mexico to ports which are not served by pipelines.
Management believes that the optimal vessel size suited to serve these
ports is between 20,000 deadweight tons ("DWT") (approximately 160,000
barrels) and 40,000 DWT (approximately 320,000 barrels). Maritrans
currently operates six barges in this size range in this market, which
comprises a significant number of the vessels able to compete in this
market. The relatively large size of Maritrans' fleet generally provides
greater flexibility in meeting customers' needs.
Maritrans competes with operators of generally smaller vessels in its
Inland and Eastern transportation activities. In this activity Maritrans
is competing primarily with other barge operators. This is a diverse
market allowing a broader size range of vessels to participate than in the
Gulf of Mexico.
Management believes that, for the most part, Maritrans' independent
competitors do not provide the same level of service, quality performance,
or attention to safe operations as Maritrans due to its fleet size,
maintenance and training programs, and spill record.
General Agreement on Trade in Services ("GATS") and North American
Free Trade Agreement ("NAFTA").
The possible inclusion of maritime services within the scope of the
GATS and the NAFTA was the subject of discussion in the recently concluded
Uruguay Round of GATS negotiations and NAFTA negotiations. If maritime
services were deemed to include cabotage and were included in either of
these multi-national trade agreements, the result would have been to open
the Jones Act trade, (i.e., transportation of maritime cargo between U.S.
ports in which Maritrans and other U.S. vessel owners operate) to
foreign-flag vessels which would operate at lower costs. Maritrans
understands that cabotage (vessel trade or marine transportation between
two points within the same country) will not be included in the GATS and
the NAFTA in the foreseeable future; however, the possibility exists that
cabotage could be included in either the GATS or the NAFTA, or both, in
the future. In the meantime, Maritrans and the maritime industry will
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continue to resist vigorously the inclusion of cabotage in the GATS and
the NAFTA.
Refined Product Pipelines. Existing refined product pipelines
generally are the lowest incremental cost method for the long-haul
movement of petroleum and refined petroleum products. Other than the
Colonial Pipeline system, which originates in Texas and terminates at New
York Harbor, and smaller regional pipelines between Philadelphia and New
York, there are no pipelines carrying refined petroleum products to the
major storage and distribution facilities currently served by Maritrans.
While the Colonial Pipeline system reduces the amount of refined product
transported into the New York area by ship, it provides an origination
point for Maritrans' business of transporting such products from New York
Harbor to New England ports. Management believes that high capital costs,
tariff regulation and environmental considerations make it unlikely that a
new refined product pipeline system which would have a material adverse
effect on Maritrans' business will be built in its market areas in the
foreseeable future. It is possible, however, that, as noted above, new
pipeline segments (including pipeline segments that connect with existing
pipeline systems) could be built or that existing pipelines could be
converted to carry refined petroleum products, either of which could
effectively compete with Maritrans in particular locations.
Natural Gas Pipelines. In December 1991, a 370 mile natural gas
pipeline from the Canadian border to the northeastern United States
markets was completed. The operation of this pipeline increases the amount
of natural gas supplied to the northeastern United States, thus
potentially reducing the demand for residual fuel for power generation and
ultimately reducing the demand for marine transportation of residual fuel
and other petroleum products to and within the area. Whether this
reduction occurs will depend on the relative prices between residual fuel
and natural gas, including transportation costs, in the future. If these
pipelines cause a reduction in demand for marine transportation of
petroleum products, Maritrans and other carriers active in the trade would
suffer negative effects to their business in this market area.
Imported Refined Petroleum Products. A significant factor affecting
the level of Maritrans' business operations is the level of refined
petroleum product imports, particularly in Florida and New England.
Imported refined petroleum products may be transported on foreign-flag
vessels, which are generally less costly to operate than U.S. flag
vessels. To the extent that there is an increase in the importation of
refined petroleum products to any of the markets served by Maritrans,
there could be a decrease in the demand for the transportation of refined
products from United States refineries, which would likely have an adverse
impact upon Maritrans. One possible outcome of the Clean Air Act could be
the importing of more refined product from outside the United States in
order to avoid the expense of upgrading United States refineries to comply
with such Act. In this case, while there would still be a need for marine
petroleum transportation, the demand would decrease, thereby possibly
materially adversely affecting the coastwise business of Maritrans and its
competitors. On the other hand, this development could prove beneficial to
Maritrans' terminalling business, due to the likely increased demand for
storage capacity for the imported refined product.
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Delaware River Channel Depth. Legislation has been approved by the
United States Congress which authorizes the U.S. Army Corps of Engineers
to deepen the channel of the Delaware River between the river's mouth and
Philadelphia from forty to forty-five feet late in the 1990's. If further
legislation appropriating the funds for this project should become law and
this project is implemented and used by vessels calling on the Delaware
Valley refineries, it would have a material adverse effect on Maritrans'
lightering business which currently transports crude oil which is
off-loaded from deeply laden tankers from the mouth of the Delaware Bay up
the Delaware River to the Delaware Valley refineries.
Employees and Employee Relations
At December 31, 1993, Maritrans and its subsidiaries employed a total
of 605 persons. Of these employees, 100 are employed at the Philadelphia,
Pennsylvania headquarters of the Registrant or at the Philadelphia and
Tampa fleet centers, 465 are seagoing employees who work aboard the tugs
and barges, and 40 are employed by Maritrans' non-marine affiliates.
Maritrans and its predecessors have had collective bargaining agreements
with the Seafarers' International Union of North America, Atlantic, Gulf
and Inland District, AFL-CIO ("SIU"), and with American Maritime
Officers ("AMO"), formerly District 2 Marine Engineers Beneficial
Association, Associated Maritime Officers, AFL-CIO, for approximately 31
years. Approximately one-half of the total number of seagoing employees
employed are supervisors and, hence, as part of management, are not
represented by maritime unions. The collective bargaining agreement with
the SIU covers approximately 194 employees. The collective bargaining
agreement with the AMO covers approximately 44 employees. Each expires on
May 31, 1996. The employees of the subsidiaries of Maritrans Holdings Inc.
are not covered by any collective bargaining agreement.
Management believes that the seagoing supervisory and non-supervisory
personnel contribute significantly to responsive customer service.
Maritrans maintains a policy of seeking to promote from within, where
possible, and generally seeks to draw from its union and non-union
personnel to fill supervisory and other management positions as vacancies
occur.
Management believes that an extensive training program and operational
audit program (performed by Tidewater School of Navigation, Inc.) is
essential to insure that its employees are knowledgeable and highly
skilled in the performance of their duties as well as in their
preparedness for any unforeseen emergency situations that may arise.
Consequently, various training sessions and additional skill improvement
seminars are held throughout the year on subjects including deck officer
training, tankerman training, substance abuse awareness, fire fighting,
emergency response and personal professional development. In 1991,
Maritrans introduced its Quality Improvement Program. All employees
participate in quality training seminars in addition to the skills
improvement training mentioned above.
Regulation
Marine Transportation - General. The Interstate Commerce Act exempts
from economic regulation the water transportation of petroleum cargos in
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bulk. Accordingly, Maritrans' transportation rates, which are negotiated
with its customers, are not subject to special rate regulation under the
provisions of such act or otherwise. The operation of tugboats and barges
is subject to regulation under various federal laws and international
conventions, as interpreted and implemented by the United States Coast
Guard, as well as certain state and local laws. Tugboats and barges are
required to meet construction and repair standards established by the
American Bureau of Shipping, a private organization, and the United States
Coast Guard and to meet operational and safety standards presently
established by the United States Coast Guard. Maritrans' seagoing
supervisory personnel are licensed by the United States Coast Guard.
Seamen and tankermen are certificated by the United States Coast Guard.
Jones Act. The Jones Act, a federal law, restricts maritime
transportation between United States points to vessels built and
registered in the United States and owned by United States citizens. The
entities in the Maritrans organizational structure engaged in maritime
transportation between United States points are subject to the provisions
of the law. Therefore, it is the responsibility of Maritrans to monitor
ownership of these entities and take any remedial action necessary to
insure that no violation of the Jones Act occurs. In addition, the Jones
Act requires that all United States flag vessels be manned by United
States citizens, which significantly increases the labor and certain other
operating costs of United States flag vessel operations compared to
foreign-flag vessel operations. Foreign-flag seamen generally receive
lower wages and benefits than those received by United States citizen
seamen. In addition, a significant number of foreign governments
subsidize, at least to some extent, the wages and/or benefits received by
the seamen of those nations. Furthermore, certain of these foreign
governments subsidize those nations' shipyards, resulting in lower
shipyard costs both for new vessels and repairs than those paid by United
States-flag vessel owners such as Maritrans to United States shipyards.
Finally, the United States Coast Guard and American Bureau of Shipping
maintain the most stringent regime of vessel inspection in the world,
which tends to result in higher regulatory compliance costs for United
States-flag operators than those paid by owners of vessels registered
under foreign flags of convenience. Because Maritrans transports petroleum
and petroleum products between United States ports, most of its business
depends upon the Jones Act remaining in effect. There have been various
unsuccessful attempts in the past by foreign governments and companies to
gain access to the Jones Act trade. Management expects that efforts of
this type will continue.
Environmental Matters. Maritrans is subject to various legislation and
regulations enacted to protect the environment.
Marine Storage Terminal Regulation. Maritrans marine terminal
subsidiaries are subject to various federal, state and local environmental
laws and regulations, particularly with respect to air quality, the
handling of materials removed from the tanks of vessels which are cleaned,
and any spillage of petroleum products on or adjoining marine terminal
premises. Management believes that this regulatory scheme will become
progressively stricter in the future, resulting in greater capital
expenditures by Maritrans for environmentally related equipment. Also,
there are significant fines and penalties for any violations of this
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scheme. Management intends to reflect any such additional expenditures, to
the extent they are able, in the rates which are charged to customers from
time to time for services.
Oil Pollution Legislation. Many of the states in which Maritrans does
business have enacted laws providing for strict, unlimited liability for
vessel owners in the event of an oil spill. In addition, numerous states
have enacted or are considering legislation or regulations involving at
least some of the following provisions: tank- vessel-free zones,
contingency planning, state inspection of vessels, additional operating,
maintenance and safety requirements, and state financial responsibility
requirements. As a result of this legislation and regulation, Maritrans
has curtailed its carriage of persistent oils, primarily crude and #6 oil,
to or through portions of several of these states. Persistent oils are
those which continue to exist longer in the water when spilled, thus
making them more difficult to clean up.
In August 1990, the OPA became law. The OPA substantially changes the
liability exposure of owners and operators of vessels, oil terminals and
pipelines from that imposed under prior law. Under the OPA, each
responsible party for a vessel or facility from which oil is discharged
will be jointly, strictly and severally liable for all oil spill
containment and clean-up costs and certain other damages arising from the
discharge. These other damages are defined broadly to include (i) natural
resource damage (recoverable only by government entities), (ii) real and
personal property damage, (iii) net loss of taxes, royalties, rents, fees
and other lost revenues (recoverable only by government entities), (iv)
lost profits or impairment of earning capacity due to property or natural
resource damage, and (v) net cost of public services necessitated by a
spill response, such as protection from fire, safety or health hazards.
The owner or operator of a vessel from which oil is discharged will be
liable under the OPA unless it can be demonstrated that the spill was
caused solely by an act of God, an act of war, or the act or omission of a
third party unrelated by contract to the responsible party. Even if the
spill is caused solely by a third party, the owner or operator must pay
all removal cost and damage claims and then seek reimbursement from the
third party or the trust fund established under the OPA.
The OPA establishes a federal limit of liability of the greater of
$1,200 per gross ton or $10 million per tank vessel. A vessel owner's
liability is not limited, however, if the spill results from a violation
of federal safety, construction or operating regulations. In addition, the
OPA does not preclude states from adopting their own liability laws.
Numerous states in which Maritrans operates have adopted legislation
imposing unlimited strict liability for vessel owners and operators.
Management believes that the liability provisions of the OPA and similar
state laws have greatly expanded Maritrans' potential liability in the
event of an oil spill, even where Maritrans is not at fault.
The OPA requires all vessels to maintain a certificate of financial
responsibility for oil pollution in an amount equal to the greater of
$1,200 per gross ton per vessel, or $10 million per vessel in conformance
with regulations that have not been promulgated in final form by the U.S.
Coast Guard. Additional financial responsibility in the amount of $300 per
10
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<PAGE> 13
gross ton will be required under regulations to be promulgated by the U.S.
Coast Guard under the Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA"), the federal Superfund law. The previous
requirement was $150 per gross ton per vessel, or $250,000, whichever is
larger. Owners of more than one tank vessel, such as Maritrans, however,
will only be required to demonstrate financial responsibility in an amount
equal to cover the vessel having the greatest maximum liability
(approximately $40 million in Maritrans' case). It is uncertain, however,
whether Maritrans or other vessel operators will be able to acquire such
certificates through existing international insurance underwriters or any
other source. This uncertainty is due to the fact that the final federal
financial responsibility regulations have not been issued by the U.S.
Coast Guard, and if such regulations require the international insurance
underwriters to in effect guarantee the payment of clean-up costs and
damages up to the OPA statutory limit, they have stated that they are
going to refuse to do so. Since the final regulations have not been
issued, this position threatened by the international insurance
underwriters has not been taken. The operation of tank vessels in marine
transportation of oil and petroleum products without such certificates is
unlawful and such unlawful operation would not be conducted by Maritrans.
This could result in materially adverse effects on Maritrans.
The OPA requires all newly constructed petroleum tank vessels engaged
in marine transportation of oil and petroleum products in the U.S. to be
double-hulled and all such existing single-hulled vessels to be
retrofitted with double hulls or phased out of the industry beginning
January 1, 1995, in order to comply with new standards for such vessels.
Because of the age and size of Maritrans' individual barges, the first of
its operating vessels will be required to be retired or retrofitted by
January 1, 2003, and most of its large ocean-going, single-hulled vessels
will be similarly affected on January 1, 2005. As a result of this
legislation, the expected lives of some of Maritrans' barges have been
shortened, thus forcing Maritrans to accelerate the depreciation of these
vessels. This change in depreciation calculation began in September 1990
and caused an increase of Maritrans' annual depreciation expense by
approximately $1.4 million.
The OPA directs the Coast Guard to develop interim measures for single
hull tank vessels over 5,000 gross tons "that provide as substantial
protection to the environment as is economically and technologically
feasible." The Coast Guard issued a Notice of Proposed Rulemaking which
proposed the adoption of several alternative structural measures to meet
this requirement. The regulation would have required substantial
modification of 14 of Maritrans' largest barges, with a significant cost
impact. However, in response to comments from industry, the Coast Guard is
reexamining these structural proposals, and further action on structural
requirements has been deferred. In the meantime, the Coast Guard is
expected to adopt a series of operational measures which, while increasing
current standards, should not have an appreciable effect on Maritrans.
The double-hulled or double-bottomed tank barges currently owned by
Maritrans account for approximately 15% of its fleet capacity. None of
these vessels, however, comply with the current regulations promulgated
under the OPA for double-hulled vessels, although it is possible that some
of these vessels may be grandfathered under changes in these regulations
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<PAGE> 14
which may be adopted in the future. Management believes that it would, for
example, cost approximately $20 million to build a 20,000 DWT
double-hulled barge. The cost of retrofitting an existing 20,000 DWT barge
with a double hull may be somewhat less than the cost of a new barge, but
the retrofitting cost would depend upon a variety of construction and
engineering factors. Therefore, retrofitting may not be a viable economic
alternative to the purchase of a new double-hulled barge. The prices of
retrofitting and constructing new vessels may increase materially as a
result of increased demand for shipyard capacity arising from the OPA.
The OPA further required all tank vessel operators to submit, by
February 18, 1993, for federal approval, detailed vessel oil spill
contingency plans setting forth their capacity to respond to a worst case
spill situation. Maritrans filed its plans prior to that deadline. Several
states have similar contingency or response plan requirements. Because of
the large number of ports served by Maritrans, the cost of compliance may
be substantial, and, while Maritrans is presently in compliance, there is
no assurance that Maritrans will be able to remain in compliance with all
the federal requirements or those of one or more states.
The OPA is expected to have a continuing adverse effect on the entire
U.S. oil and petroleum marine transportation industry, including
Maritrans. The effects on the industry could include, among others, (i)
increased requirements for capital expenditures, which the independent
marine transporters of petroleum may not be able to finance, to fund the
cost of double-hulled vessels, (ii) increased maintenance, training,
insurance and other operating costs, (iii) civil penalties and liability,
(iv) decreased operating revenues as a result of a further reduction of
volumes transported by vessels and (v) increased difficulty in obtaining
sufficient insurance, particularly oil pollution coverage. These effects
could adversely affect Maritrans' profitability and liquidity.
The following table sets forth Maritrans' quantifiable oil spill
record for the period January 1, 1988 through December 31, 1993:
<TABLE>
<CAPTION>
Gallons Spilled
No. of No. of No. of Per Million
Period Gals. Carried Spills Gals. Spilled Gals. Carried
- ------------------------------------------------------------------------------------------------
(000) (000)
<S> <C> <C> <C> <C>
1/1/1988 - 12/31/1988 10,954,000 7 17.55 1.601
1/1/1989 - 12/31/1989 11,315,000 15 11.26 .995
1/1/1990 - 12/31/1990 12,222,000 20 189.37 15.494
1/1/1991 - 12/31/1991 10,710,000 18 1.28 .119
1/1/1992 - 12/31/1992 10,272,000 8 .02 .002
1/1/1993 - 12/31/1993* 10,433,000 4 .02 .002
</TABLE>
----------
* Results for 1993 exclude the product lost, mostly burned, in the
collision of Maritrans' barge, the OCEAN 255, with vessels owned by
others off the coast of Florida in August 1993. Management believes that
Maritrans was not at fault in this incident.
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<PAGE> 15
Maritrans believes that its spill ratio compares favorably with the
other independent, coastwise operators in the Jones Act trade.
Water Pollution Regulations. The Federal Water Pollution Control Act
of 1972 ("FWPCA"), as amended by the Clean Water Act of 1977, imposes
strict prohibitions against the discharge of oil (and its derivatives) and
hazardous substances into navigable waters of the United States. FWPCA
provides civil and criminal penalties for any discharge of petroleum
products in harmful quantities and imposes substantial liability for the
clean-up costs of removing an oil spill. State laws for the control of
water pollution also provide varying civil and criminal penalties and
clean-up cost liabilities in the case of a release of petroleum or its
derivatives into surface waters. In the course of its vessel operations,
Maritrans engages contractors in addition to Maritank Philadelphia Inc. to
remove and dispose of waste material, including tank residue. In the event
that any of such waste is deemed "hazardous," as defined in FWPCA or the
Resource Conservation and Recovery Act, and is disposed of in violation of
applicable law, Maritrans could be jointly and severally liable with the
disposal contractor for the clean-up costs and any resulting damages. The
United States Environmental Protection Agency ("EPA") previously
determined not to classify most common types of "used oil" as a
"hazardous waste," provided that certain recycling standards are met,
but has since decided to review this issue again. While it is unlikely
that used oil will be classified as hazardous, the management of used oil
under EPA's proposed regulations will increase the cost of disposing of or
recycling used oil from Maritrans' vessels. Some states in which Maritrans
operates, however, have classified "used oil" as hazardous. Maritrans
has found it increasingly expensive to manage the wastes generated in its
operations.
Air Pollution Regulations. The 1990 amendments to the Clean Air Act
give the EPA and the states the authority to regulate emissions of
volatile organic compounds ("VOCs") and any other air pollutant from
tank vessels in all ports served by Maritrans. Several states with ports
served by Maritrans already have established regulations to require the
installation of vapor recovery equipment on petroleum-carrying vessels to
reduce the emissions of VOCs. Compliance with these federal and state
regulations has required material capital expenditures for the
retrofitting of Maritrans' barges and has increased operating costs. The
EPA also has the authority to regulate emissions from marine vessel
engines; however, with the possible exception of the use of low sulfur
fuels, direct regulation of marine engine emissions is not likely in the
near future in ports served by Maritrans. However, it is possible that the
EPA and/or various state environmental agencies ultimately may require
that additional air pollution abatement equipment be installed in tug
boats, including those owned by Maritrans. Such a requirement could result
in a material expenditure by Maritrans, which could have an adverse effect
on Maritrans' profitability if it is not able to recoup these costs
through increased charter rates.
Port and Tanker Safety Act; Interim Measures. The Port and Tanker
Safety Act of 1978 ("PTSA") required certain oil-carrying tankships to
be fitted with segregated ballast tanks. PTSA required self-propelled
vessels to be retrofitted to meet these standards. Barges were not
generally affected by such requirements. However, if the environmental
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standards of PTSA were to be made applicable to the large barges operated
by Maritrans, Maritrans would be required to make significant capital
expenditures to retrofit such barges, and the cargo-carrying capacity of
such barges would also be decreased. There have been no recent regulatory
efforts to apply the PTSA standards to large barges such as those operated
by Maritrans.
User Fees and Taxes. The Water Resources Development Act of 1986
permits local non-federal entities to recover a portion of the costs of
new port and harbor improvements from vessel operators with vessels
benefitting from such improvements. Management does not believe that
Maritrans' vessels currently benefit from such improvements. However,
there can be no assurance that such entities will not seek to recover a
portion of such costs from Maritrans. Federal legislation has been enacted
imposing user fees on vessel operators such as Maritrans to help fund the
United States Coast Guard's regulatory activities. Other federal, state
and local agencies or authorities could also seek to impose additional
user fees or taxes on vessel operators or their vessels. The approved U.S.
budget for its 1992 fiscal year directs the Coast Guard to collect fees
for vessel inspection and documentation, licensing and tank vessel
examinations. Maritrans does not expect that initially these fees will be
material to it. There can be no assurance that user fees, which could have
a material adverse effect upon the financial condition and results of
operations of Maritrans, will not be imposed in the future.
Item 2. PROPERTIES
Vessels. The Operating Partnership owned, at December 31, 1993, a
fleet of 67 vessels, of which 39 are barges and 28 are tugboats. Two
additional tugs are operated under long-term leases.
The barge fleet consists of a variety of vessels falling within six
different barge classifications. The largest vessels in the fleet are the
14 superbarges ranging in capacity from 188,065 to 400,000 barrels. The
oldest vessel in that class is the OCEAN 250 which was constructed in
1970, while the largest and most recently reconstructed vessel is the
OCEAN 400, for which modifications were completed as recently as 1990. For
the most part, however, the bulk of the superbarge fleet was constructed
during the 1970's and early 1980's.
The fleet's next ten largest barges range in capacity from 61,638
barrels to 165,881 barrels and were constructed or substantially renovated
between 1967 and 1981. The fleet also includes two specially equipped
chemical barges. The remainder of the barge fleet is comprised of three
vessels falling in the 50,000 barrel class, seven vessels in the 30,000
barrel class and three vessels in the small barge classification. The
majority of these vessels were constructed between 1961 and 1977.
The Operating Partnership's tugboat fleet is comprised of one 11,000
horsepower class vessel, eleven 5,600 horsepower class vessels, four 4,000
horsepower class vessels, five 3,200 horsepower class vessels, six 2,200
horsepower class vessels and two pusher class vessels. One of the 4,000
horsepower class vessels was sold in January 1994. The year of
construction or substantial renovation of these vessels ranges from 1962
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<PAGE> 17
to 1990 with the bulk of the tugboats having been constructed sometime
between 1967 and 1981.
Substantially all of the vessels in the fleet are subject to first
preferred ship mortgages to secure payment of the notes of the Operating
Partnership. These mortgages require the Operating Partnership to maintain
the vessels at a high standard and continue a life-extension program for
certain of its larger barges. At December 31, 1993 Maritrans is not in
violation of the Operating Partnership's mortgage covenants. At December
31, 1993 Maritrans owns ten barges and one tugboat which were not in a
state of operational readiness. Most of these vessels were too small to
achieve satisfactory returns in current market conditions, or were
purchased as non-operating hulls for potential refurbishment in the event
market conditions were to improve sufficiently to merit additional
expenditures. Maritrans does not believe market conditions in 1994 will
merit such refurbishments.
Marine Terminals. MPI owns 35 acres on the west bank of the Schuylkill
River in Philadelphia where twelve storage tanks with a total capacity of
1,040,000 barrels, truck loading racks, office space and related equipment
used in MPI's marine terminal and tank cleaning operations are located. In
early 1993, MMI acquired 25 acres on the Wicomico River in Salisbury,
Maryland where fourteen storage tanks with a total capacity of 170,000
barrels, office space and related equipment used in MMI's marine terminal
operations are located.
Other Real Property. The Registrant's operations are headquartered in
Philadelphia, Pennsylvania, where it leases office space, expiring in
1998. Eastern fleet operations are located on the west bank of the
Schuylkill River in Philadelphia, Pennsylvania where the Operating
Partnership owns approximately six acres of improved land. In addition, it
also leases a bulkhead of approximately 430 feet from the federal
government for purposes of mooring vessels adjacent to the owned land.
This lease was renewed in 1993 and expires in 1998. The Inland Division
leases space from MPI. In the Philadelphia area, the Operating Partnership
has several short term (one year or less) leases for nearby pier space for
the purpose of mooring vessels and warehouse space for the purpose of
storage and shop facilities. The Operating Partnership also leases four
acres of Port Authority land in Tampa, Florida for use as its Gulf
Division fleet center, which lease expires in 2004, with three renewal
options of ten years each and a limited amount of office space in
Wilmington, Delaware for itself and its affiliated entities. The Operating
Partnership also has an office space agreement in Houston, Texas for its
distribution services business.
Item 3. LEGAL PROCEEDINGS
Maritrans is a party to routine, marine-related lawsuits and labor
arbitrations arising in the ordinary course of its business. The claims
made in connection with Maritrans' marine operations are covered by marine
insurance, subject to applicable policy deductibles which are not material
as to any type of insurance coverage. Management believes, based on its
current knowledge, that such lawsuits and claims, even if the outcomes
were to be adverse, would not have a material adverse effect on Maritrans'
financial condition.
15
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In connection with the sale of Main Iron Works, Inc. ("MIW"),
Maritrans' predecessor agreed to reimburse MIW for certain ongoing
workmen's compensation claims arising prior to the sale of MIW, and
retained an assignment of the shipyard's rights against its former
workmen's compensation insurance carrier, which has been in liquidation
proceedings. Due to the size and complexity of the liquidation proceeding,
it is unlikely that this matter will be resolved for several years.
Maritrans assumed its predecessor's reimbursement obligations to MIW and
obtained an assignment of the predecessor's rights against the workmen's
compensation insurance carrier. Maritrans' predecessor originally accrued
a liability of $1.3 million for claim payments pursuant to such
reimbursement agreement with MIW. Management believes, based on its
current knowledge, that such accrual will be adequate. However, there is a
possibility that future claims could exceed such amount. Management
believes, based on its current knowledge, that the ultimate resolution of
these claims, even if in excess of the amount accrued, would not have a
material adverse effect on Maritrans' financial condition.
Maritrans' predecessor was sued in the U.S. District Court in Ohio by
nine individuals, eight who at most worked briefly for such predecessor
and a ninth who still works for Maritrans, alleging unspecified damages
for exposure to asbestos. Maritrans has been sued in a similar suit in New
Orleans by a plaintiff and Philadelphia by two plaintiffs with whom
Maritrans has no employment records, and in Philadelphia by an employee of
Maritrans' predecessor which suit was settled by a payment of $4,000 by
Maritrans. Although Maritrans believes these claims are without merit, it
is impossible at this juncture to express a definitive opinion on the
final outcome of any such suit. Management believes that any liability
would not have a material adverse effect as it is adequately covered by
applicable insurance.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Registrant's security
holders, through the solicitation of proxies or otherwise, during the last
quarter of the year ended December 31, 1993.
16
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<PAGE> 19
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information and Holders
Maritrans Inc. Common Shares (and prior to April 1, 1993, Maritrans
Partners L.P. Depositary Units) trade on the New York Stock Exchange under
the symbol "TUG." The following table sets forth, for the periods
indicated, the high and low sales prices per share/unit as reported by the
New York Stock Exchange.
QUARTERS ENDING IN 1993: HIGH LOW
----------------------- ---------------
March 31, 1993 $4.125 $2.500
June 30, 1993 4.250 3.375
September 30, 1993 4.250 3.250
December 31, 1993 4.250 3.625
QUARTERS ENDING IN 1992: HIGH LOW
----------------------- ----------------
March 31, 1992 $4.875 $ 3.625
June 30, 1992 4.000 2.750
September 30, 1992 3.375 2.500
December 31, 1992 2.750 1.750
As of January 31, 1994, the Registrant had 12,523,000 Common Shares
outstanding and approximately 1,212 shareholders of record.
Dividends and Distributions
For the period April 1, 1993 to December 31, 1993, Maritrans Inc. paid
no dividends to stockholders. While dividend policy is determined at the
discretion of the Board of Directors of Maritrans Inc., management
believes that it is not likely Maritrans will pay any dividends in the
near future.
For the period January 1, 1992 to March 31, 1993, Maritrans Partners
L.P. paid the following cash distributions to the unitholders:
PAYMENTS IN 1992: PER UNIT
---------------- --------
February 24, 1992 $ .2875
May 26, 1992 .2875
--------
TOTAL $ .5750
========
Maritrans Partners L.P. cash distributions should not be compared with
dividends paid on common stock by corporations. Dividends paid by
corporations are taxable as ordinary income, while distributions from
partnerships may be treated partially or fully as a nontaxable return of
capital.
17
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Item 6. SELECTED FINANCIAL DATA ($000)
<TABLE>
<CAPTION>
MARITRANS INC.
--------------------------------------------------------
JANUARY 1 TO DECEMBER 31
1993 1992 1991 1990 1989
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues ..................................... $132,539 $133,051 $146,560 $152,368 $135,592
Operating income before depreciation and
amortization ............................... 24,509 25,576 23,394 31,725 31,983
Depreciation and amortization ................ 15,868 15,578 15,962 13,747 12,261
Operating income (excludes interest expense).. 8,641 9,998 7,432 17,978 19,722
Interest expense, net ........................ 10,373 10,958 10,890 10,299 10,088
Income (loss) before income taxes and
extraordinary item ......................... 5,186 3,419 (1,576) 10,031 12,584
Provision for income taxes ................... 16,975(1) - - - -
Extraordinary item ........................... - - - 1,784 -
Net income (loss) ............................ (11,789)(1) 3,419 (1,576) 11,815 12,584
CONSOLIDATED BALANCE SHEET DATA (at period end):
Total assets ................................. $253,038 $251,344 $258,957 $258,481 $259,649
Long-term debt ............................... 110,556 116,866 120,423 114,000 115,500
Partnership equity ........................... - 86,571 90,339 106,290 108,850
Stockholders' equity ......................... 74,874 - - - -
</TABLE>
----------
(1) Maritrans Inc., the successor to Maritrans Partners L.P. effective
April 1, 1993, is subject to income taxation. See note 1 and 4 to
Financial Statements.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the consolidated financial condition
and results of operations of Maritrans Inc. (the "Corporation"), and,
together with its subsidiaries and Maritrans Partners L.P.(the
"Partnership"), herein called "Maritrans."
Overview
Historically, Maritrans has served the petroleum and petroleum product
distribution industry by providing marine transportation services along
the East and Gulf Coasts of the United States utilizing its barges and
tugboats. Maritrans has recently broadened its participation in
distribution services by adding marine terminal facilities and oil spill
contingency management services.
Over the last several years, Maritrans has been implementing steps to
become more competitive and more customer-oriented. In the fourth quarter
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<PAGE> 21
of 1993, Maritrans announced a corporate streamlining which is expected to
lower its costs by $5 million in 1994 as compared to 1993. This
streamlining resulted in a $2 million charge in the fourth quarter of
1993, with $1 million being charged to general and administrative costs
and $1 million charged to operation expense. Most of these charges related
to severance costs and other continuation benefits for the terminating and
retiring employees.
Increased United States oil consumption, as well as a shortening of
average voyage length, contributed to Maritrans transporting an increasing
number of barrels from 1988 through 1990. Volumes transported by Maritrans
declined approximately 14% in 1991 and were relatively stable in 1992 and
1993, declining less than 3% in 1992 and increasing less than 2% in 1993.
Maritrans increased vessel capacity from 1988 to 1990, particularly by
placing in service the OCEAN 400, Maritrans' largest barge, in May 1990.
In 1993, Maritrans reduced owned capacity through the disposal of vessels
excess to its long-term business needs. In addition, a barge involved in a
collision off the coast of Florida in August 1993 was declared a
constructive total loss. During most of 1993, Maritrans had one or more
large barges out of service for vessel performance improvements, resulting
in Maritrans utilizing, to a greater extent than in 1992, vessels
chartered from third parties.
Operating income declined in 1989 and 1990 from previous levels as
increased costs, particularly in maintenance and insurance, could not be
fully offset by rate increases. Lower business activity levels in 1991
through 1993 exacerbated this effect. Maintenance costs had increased
markedly in 1989 through 1991 due to three factors: (1) response to the
Oil Pollution Act of 1990 (the "OPA"), through management's proactive
stepping up of maintenance to achieve even higher quality operations than
existed previously, as measured by less work time lost due to critical
equipment malfunctions; (2) additions to the fleet in that period; and (3)
the effects of inflation and an aging fleet. Lower activity levels and
improved maintenance processes lowered maintenance expense levels in 1992
and 1993. Costs related to measures taken to reduce the risk of oil
spills, as well as inflation, have also reduced operating income in the
years 1990 through 1993.
In June 1991, Maritrans purchased a one-million barrel, deepwater
marine terminal facility located on the Schuylkill River in Philadelphia,
which provides terminalling services to outside customers and
vessel-cleaning services for Maritrans. The facility was purchased for $12
million, mainly with the proceeds of a bank loan. In 1992, more than $2
million was spent to increase vessel cleaning capability.
In February 1993, Maritrans purchased adjoining terminals in
Salisbury, Maryland, with storage capacity totalling 170,000 barrels, to
provide marine terminalling services. The facilities were purchased for
less than $2 million, and Maritrans now operates the merged facilities as
a single terminal and has distribution service agreements with the former
owners.
Factors that will affect future results of Maritrans include: overall
U.S. oil consumption, particularly oil consumption in Florida and the
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Northeastern United States, environmental laws and regulations, oil
companies' operating and sourcing decisions, competition and labor costs,
training costs, liability insurance costs, and Maritrans' recent
broadening of its participation in petroleum distribution services.
Legislation
The enactment of the OPA in 1990 significantly increased the liability
exposure of marine transporters of petroleum in the event of an oil spill.
In addition, most states in which Maritrans operates have enacted (and the
others in which it operates may enact) legislation increasing the
liability for oil spills in their waters. Maritrans maintains oil
pollution liability insurance of $700 million on its vessels which is
generally the maximum amount of oil spill liability insurance carried by
marine transporters of petroleum. There can be no assurance that such
insurance will be adequate to cover potential liabilities in the event of
a catastrophic spill, that additional premium costs will be recoverable
through increased rates, or that such insurance will continue to be
available in satisfactory amounts.
Moreover, this legislation has increased other operating costs as
Maritrans has taken steps to minimize the risk of potential spills, such
as costs for additional training, safety and contingency programs that
have not yet been fully recovered through increased rates. Additionally,
management believes that the legislation has had the effect of reducing
the total volume of waterborne petroleum transportation as shippers of
petroleum have attempted to reduce their exposure to the impact of the
OPA. Therefore, although management cannot predict the continuing adverse
impact of this legislation on Maritrans, the legislation has had a
material adverse effect on Maritrans' operations and financial results,
including an increase in depreciation expense due to the shortening of
expected lives of some of Maritrans' barges as a result of the OPA.
The OPA is expected to have a continuing adverse effect on the entire
U.S. oil and petroleum marine transportation industry, including
Maritrans. The effects on the industry could include, among others, (i)
increased requirements for capital expenditures, which the independent
marine transporters of petroleum may not be able to finance, to fund the
cost of double-hulled vessels, (ii) increased maintenance, training,
insurance and other operating costs, (iii) civil penalties and liability,
(iv) decreased operating revenues as a result of a further reduction of
volumes transported on vessels and (v) increased difficulty in obtaining
sufficient insurance, particularly oil pollution coverage. These effects
could adversely affect Maritrans' profitability and liquidity.
The OPA requires the retirement or retrofitting of most of Maritrans'
existing barges beginning in 2003 through 2005. Some of Maritrans' barges
are not scheduled for retirement until 2015. A small number of barges may
be treated as meeting the double-hull requirements and, therefore, be
allowed to continue operating without modification. If Maritrans were to
rebuild its entire barge capacity with double-hulls, the estimated cost
would be approximately $500 million. This estimate could be higher as
shipyard costs increase.
20
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An investment banking firm was retained in 1991 to assist in
evaluating Maritrans' ongoing financial strategies and company structural
issues in light of strategic considerations at that time. In April 1992,
the Board of Directors of the managing general partner of the Partnership,
a master limited partnership, decided to seek unitholder approval to
convert from the master limited partnership form to corporate form. On
April 1, 1993, after a vote of the unitholders, the Partnership was
converted to Maritrans Inc., a corporation.
Results of Operations
1993 Compared With 1992
Revenues of $132.5 million for the year ended December 31, 1993
decreased by $0.6 million, or less than one percent, from $133.1 million
for the year ended December 31, 1992. Barrels of cargo transported
increased by 3.8 million barrels, from 244.6 million to 248.4 million,
respectively. Severe price competition for oil transportation services has
existed in the markets served by Maritrans in recent years, and is
expected to continue. In 1993, more barrels were transported shorter
distances, lowering the fleet's average revenue per barrel. Revenue from
sources other than marine transportation increased from 2.8% of total
revenue in 1992 to 4.9% in 1993, due to additional terminalling
operations, contingency management activities, and other services supplied
to third-party vessel owners.
Operating expenses of $123.9 million for the year ended December 31,
1993, increased by $0.8 million, or less than one percent, from operating
expenses of $123.1 million for the year ended December 31, 1992. Lower
vessel activity levels, due in part to time out of service for vessel
improvements, and improvements in maintenance processes have decreased
operation and maintenance expense levels. During most of 1993, Maritrans
utilized vessels chartered from others while one or more of its large
barges were out of service for vessel performance improvements and
maintenance. Crew costs were lower as a result of lower activity levels,
including shipyarding periods, and the previously described disposal of
equipment throughout the year. Fuel expense decreased due to a decline in
price per gallon and fewer gallons consumed. General and administrative
costs decreased from the comparable prior period when general and
administrative costs included the early termination of a lease for office
space and costs related to the transaction to convert from partnership to
corporate form. In 1993, general and administrative costs and operation
expense each included a charge of $1 million (for a total of $2 million)
for corporate streamlining costs, most of which relates to severance costs
and other continuation benefits for terminating and retiring employees. A
charge of $0.6 million was recorded in 1992 for workforce reduction
related costs.
In 1993, Maritrans recorded $5.9 million in gains on the sales and
liquidation of fixed assets as part of other income. In 1992, $3 million
was recorded in other income as a result of a settlement of outstanding
litigation, discussed further below in "1992 Compared With 1991."
The adoption of FAS No. 109, Accounting for Income Taxes, caused the
Partnership to recognize a net deferred income tax provision of $16.6
21
<PAGE>
<PAGE> 24
million in the first quarter of 1993. The adoption of this accounting rule
was prescribed by the conversion of the Partnership to corporate status,
which occurred April 1, 1993.
The net loss for the year ended December 31, 1993, was $11.8 million
as compared with net income of $3.4 million for the year ended December
31, 1992. The loss was the result of the previously noted provision of
$16.6 million for income taxes. Income before income taxes for the period
increased to $5.2 million from $3.4 million in the comparable period in
1992. While the change in operating income reflected the small decline in
revenues and small increase in operating expenses, the most significant
factors affecting income before income taxes were the gains on
sales/liquidation of vessels in 1993 and the settlement receipts from
litigation in 1992.
1992 Compared With 1991
Revenues of $133.1 million for the year ended December 31, 1992
decreased by $13.5 million, or 9%, from $146.6 million for the year ended
December 31, 1991. Barrels of cargo transported decreased by 5.8 million
barrels, from 250.4 million to 244.6 million, respectively. Lower revenue
levels resulted from lower average daily charter rates and decreased
volumes. The continuing period of lower oil consumption has caused severe
price competition for oil transportation services.
Operating expenses of $123.0 million for the year ended December 31,
1992, decreased by $16.1 million, or 12%, from operating expenses of
$139.1 million for the year ended December 31, 1991. Lower activity levels
and improvements in maintenance processes have lowered maintenance expense
levels. Management believes that these practices have not caused the
condition of vessels to deteriorate. Personnel training costs were higher
in 1991 due to the initiation and implementation of comprehensive training
programs. Crew costs were lower as a result of lower utilization of marine
personnel. Fuel expense decreased due to a decline in price per gallon and
fewer gallons consumed. General and administrative costs increased due to
the early termination of a lease for office space and costs related to the
potential transaction to convert to corporate form. A charge of $0.6
million was recorded in the third quarter for workforce reduction related
costs.
In November, 1992, the Partnership dismissed its suit against its
former law firm and a partner of that firm pursuant to a settlement
agreement among the parties. As part of the settlement the Partnership
received a payment of $3 million, and the trial court dissolved the
preliminary injunction which previously barred the defendants from
representing certain of Maritrans' economic competitors in labor
negotiations. The payment received is reflected in other income for the
year ended December 31, 1992.
Net income of $3.4 million for the year ended December 31, 1992,
increased by $5.0 million from a net loss of $1.6 million for the year
ended December 31, 1991. While revenues have declined from levels in the
comparable period in 1991, larger declines in operating expenses and the
settlement of litigation mentioned above in the same period have caused
the improvement in results.
22
<PAGE>
<PAGE> 25
Liquidity and Capital Resources
In 1993, funds provided by investing and operating activities were
sufficient to fully meet debt service obligations and loan agreement
restrictions. The total of $19.3 million in proceeds from the disposal of
equipment was generated by the sale of non-strategic assets and from the
insurance proceeds for the constructive total loss of a barge involved in
a collision. The net funds provided by operating activities of $3.5
million included $16.6 million from the provision for deferred income
taxes recorded for the Conversion in conjunction with the adoption of FAS
No. 109 Accounting for Income Taxes. The primary uses of funds were $17.5
million in capital expenditures, principally for vessel improvements and
marine terminal purchases, and $6.0 million in long-term debt repayment.
Maritrans believes that in 1994 funds provided by operating
activities, augmented by financing transactions and investing activities,
will be sufficient to provide the funds necessary for operations,
anticipated capital expenditures, lease payments and required debt
repayments. No dividends are expected to be made in 1994.
Maritrans believes capital expenditures in 1994 for improvements to
its currently operating vessels and existing marine terminals will be
approximately $3 million. However, Maritrans will continue to evaluate the
potential purchase of marine storage terminal and other investments
consistent with its long-term strategic interests, and the potential
sources of funds for those potential investments. No material commitments
existed at December 31, 1993, for capital expenditures.
Working Capital and Other Balance Sheet Changes
Working capital increased approximately $13.0 million from December
31, 1992 to December 31, 1993. Current assets increased $14.0 million from
the prior comparable period. These increases were largest in other
accounts receivable, due to increases in outstanding insurance claims
receivable. Maritrans expects these claims to be fully recoverable from
insurance underwriters. Additionally, the current benefit of deferred
income taxes recognized on temporary differences are shown on the
financial statements for December 31, 1993 but were not included in the
financial statements for December 31, 1992, because of the then current
partnership status of Maritrans. Prepaid expenses also increased due to an
increase in advance payments to shipyards for their services and a change
in the timing of payments for certain insurance premiums. Current
liabilities increased approximately $1 million. The ratio of current
assets to current liabilities increased to 1.94 at December 31, 1993 from
1.54 at December 31, 1992.
Debt Obligations and Borrowing Facility
At December 31, 1993, Maritrans had $116.9 million in total
outstanding debt, secured by mortgages on substantially all of the fixed
assets of the subsidiaries of the Corporation. The current portion of this
debt at December 31, 1993, is $6.3 million. Maritrans has a $10 million
working capital facility, secured by its marine receivables and
inventories, which expires June 30, 1994 and which it expects to renew.
23
<PAGE>
<PAGE> 26
Item 8. FINANCIAL STATEMENTS & SUPPLEMENTAL DATA
Report of Independent Auditors
Stockholders and Board of Directors
Maritrans Inc.
We have audited the accompanying consolidated balance sheets of Maritrans
Inc. as of December 31, 1993 and 1992, and the related consolidated
statements of income and cash flows for each of the three years in the
period ended December 31, 1993. Our audits also included the financial
statement schedules listed in the Index at Item 14(A). These financial
statements and schedules are the responsibility of the management of
Maritrans Inc. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Maritrans
Inc. at December 31, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the information
set forth therein.
ERNST & YOUNG
Philadelphia, Pennsylvania
January 25, 1994
24
<PAGE>
<PAGE> 27
MARITRANS INC.
CONSOLIDATED BALANCE SHEETS
($000)
<TABLE>
<CAPTION>
December 31,
--------------------
1993 1992
--------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................ $ 22,422 $ 23,174
Trade accounts receivable (net of allowance for doubtful accounts of
$605 and $541, respectively) ....................................... 14,094 13,431
Other accounts receivable ............................................ 9,748 3,146
Inventories .......................................................... 4,968 4,467
Deferred income tax benefit .......................................... 3,396 -
Prepaid expenses ..................................................... 6,061 2,513
--------------------
Total current assets ........................................... 60,689 46,731
Marine vessels and equipment ........................................... 262,176 264,160
Less accumulated depreciation ........................................ 78,966 69,727
--------------------
Net marine vessels and equipment ............................... 183,210 194,433
Other .................................................................. 9,139 10,180
--------------------
Total assets ................................................... $253,038 $251,344
====================
LIABILITIES AND EQUITY
Current liabilities:
Debt due within one year ............................................. $ 6,311 $ 6,033
Trade accounts payable ............................................... 3,492 1,718
Accrued interest ..................................................... 2,382 2,470
Accrued shipyard costs ............................................... 6,562 9,385
Accrued wages and benefits............................................ 5,649 5,244
Other accrued liabilities............................................. 6,954 5,536
--------------------
Total current liabilities....................................... 31,350 30,386
Long-term debt ......................................................... 110,556 116,866
Deferred shipyard costs ................................................ 9,843 10,272
Other liabilities ...................................................... 5,353 7,249
Deferred income taxes .................................................. 21,062 -
Equity:
Partnership equity:
General partners ..................................................... (379)
Limited partners (12,250,000 authorized and outstanding units) ....... 86,950
--------------------
Total partnership equity ....................................... 86,571
--------------------
Stockholders' equity:
Preferred stock, $.01 par value, authorized 5,000,000 shares; none
issued ............................................................. -
Common stock, $.01 par value, authorized 30,000,000 shares; issued:
12,523,000.......................................................... 125
Capital in excess of par value ....................................... 74,315
Retained earnings .................................................... 434
--------
Total stockholders' equity ..................................... 74,874
--------
Total liabilities and equity ................................... $253,038 $251,344
====================
</TABLE>
See accompanying notes.
25
<PAGE>
<PAGE> 28
MARITRANS INC.
CONSOLIDATED STATEMENTS OF INCOME
($000 except per share/unit amounts)
<TABLE>
<CAPTION>
January 1 to December 31,
-----------------------------------------
1993 1992 1991
-----------------------------------------
<S> <C> <C> <C>
Revenues ................................................... $ 132,539 $ 133,051 $ 146,560
Costs and expenses:
Operation expense ........................................ 75,196 70,485 80,458
Maintenance expense ...................................... 21,062 23,662 30,755
General and administrative ............................... 11,772 13,328 11,953
Depreciation and amortization ............................ 15,868 15,578 15,962
-----------------------------------------
123,898 123,053 139,128
-----------------------------------------
Operating income ........................................... 8,641 9,998 7,432
Interest expense ........................................... (10,373) (10,958) (10,890)
Other income, net .......................................... 6,918 4,379 1,882
-----------------------------------------
Income (loss) before income taxes .......................... 5,186 3,419 (1,576)
Income tax provision ..................................... 407 - -
Deferred income taxes-resulting from Conversion .......... 16,568 - -
-----------------------------------------
Net income (loss) .......................................... $ (11,789) $ 3,419 $ (1,576)
=========================================
Net income (loss) allocated to General Partners ............ n/a 69 (32)
Net income (loss) allocated to Limited Partners ............ n/a 3,350 (1,544)
Net income (loss) allocated to Limited Partners per Limited
Partner unit ............................................. n/a .27 (.13)
Pro forma (loss) per share ................................. (.94) n/a n/a
Average common shares/Limited Partner units outstanding..... 12,523,000 12,250,000 12,250,000
</TABLE>
See accompanying notes.
26
<PAGE>
<PAGE> 29
MARITRANS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
($000)
<TABLE>
<CAPTION>
January 1 to December 31,
--------------------------------
1993 1992 1991
--------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ........................................ $(11,789) $ 3,419 $ (1,576)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization .......................... 15,868 15,578 15,962
Deferred income taxes .................................. 16,975 - -
Changes in receivables, inventories and prepaid expenses (11,314) 900 2,690
Changes in current liabilities other than debt ......... 686 (178) (669)
Non-current changes, net ............................... (982) 4,531 1,351
(Gain) loss on sale of equipment ....................... (5,910) (694) (123)
--------------------------------
Total adjustments to net income (loss)...................... 15,323 20,137 19,211
--------------------------------
Net cash provided by (used in) operating activities ...... 3,534 23,556 17,635
Cash flows from investing activities:
Cash proceeds from sale of marine vessels and equipment... 19,287 1,803 9,275
Non-current changes related to investing activities ...... - - (2,138)
Purchase of marine vessels and equipment ................. (17,541) (10,120) (22,514)
--------------------------------
Net cash provided by (used in) investing activities .... 1,746 (8,317) (15,377)
Cash flows from financing activities:
Proceeds from issuance of long-term debt ................. - 2,000 10,000
Payment of long-term debt ................................ (6,032) (3,100) (1,500)
Proceeds from issuance of short-term debt ................ - 5,500 7,000
Payment of short-term debt ............................... - (12,500) -
Distributions declared and paid .......................... - (7,187) (14,375)
--------------------------------
Net cash provided by (used in) financing activities .... (6,032) (15,287) 1,125
Net increase (decrease) in cash and cash equivalents ....... (752) (48) 3,383
Cash and cash equivalents at beginning of period ........... 23,174 23,222 19,839
--------------------------------
Cash and cash equivalents at end of period ................. $ 22,422 $ 23,174 $ 23,222
================================
Supplemental Disclosure of Cash Flow Information:
Interest paid .............................................. $ 10,355 $ 10,888 $ 10,763
Income taxes paid .......................................... $ 300 $ - $ -
</TABLE>
See accompanying notes.
27
<PAGE>
<PAGE> 30
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies
Organization
At December 31, 1993, Martrans Inc. owns Maritrans Operating Partners
L.P. (the "Operating Partnership") and Maritrans Holdings Inc.
(collectively, the "Company"). These subsidiaries, directly and
indirectly, own and operate tugs and barges principally used in the
transportation of oil and related products, and own and operate petroleum
storage facilities.
On March 31, 1993, the limited partners of Maritrans Partners L.P.
(the "Partnership") voted on a proposal to convert the Partnership to
corporate form (the "Conversion"). The proposal was approved, and on
April 1, 1993, Maritrans Inc., then a newly-formed Delaware corporation
(the "Corporation") succeeded to all assets and liabilities of the
Partnership. The holders of general and limited partnership interests in
the Partnership and the Operating Partnership were issued shares of common
stock, par value $.01 per share ("Common Stock"), of the Corporation,
representing substantially the same percentage equity interest in the
Corporation as they had in the Partnership, directly or indirectly, in
exchange for their partnership interest. Each previously held unit of
limited partnership interest in the Partnership was exchanged for one
share of Common Stock of the Corporation. For financial accounting
purposes, the conversion to corporate form has been treated as a
reorganization of affiliated entities, with the assets and liabilities
recorded at their historical costs. In addition, the Partnership
recognized a net deferred income tax liability for temporary differences
in accordance with Statement of Financial Accounting Standard ("FAS")
No. 109, Accounting for Income Taxes, which resulted in a one-time charge
to earnings of $16.6 million in the first quarter of 1993.
Principles of Consolidation
The consolidated financial statements include the accounts of
Maritrans Inc. and subsidiaries, all of which are wholly owned. Prior to
the Conversion, the financial statements included the accounts of the
Partnership, the Operating Partnership and subsidiaries. All significant
intercompany transactions and accounts have been eliminated in
consolidation.
Marine Vessels and Equipment
Equipment, which is carried at cost, is depreciated using the
straight-line method. Vessels are depreciated over a period of up to 30
years. Certain electronic equipment is depreciated over periods of 7 to 10
years. Petroleum storage tanks are depreciated over periods of up to 25
years. Other equipment is depreciated over periods ranging from 3 to 20
years. Gains or losses on dispositions of fixed assets are included in
other income in the accompanying consolidated statements of income. During
the year ended December 31, 1991, two vessels were sold and subsequently
leased back. The resulting deferred gain is included in the consolidated
28
<PAGE>
<PAGE> 31
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
1. Organization and Significant Accounting Policies -- (Continued)
statement of cash flows as non-current changes related to investing
activities and is being amortized into income over the life of the related
leases.
The Oil Pollution Act, passed in 1990, requires all newly constructed
petroleum tank vessels engaged in marine transportation of oil and
petroleum products in the U.S. to be double hulled and all such existing
single-hulled vessels to be retrofitted with double hulls or phased out of
the industry beginning January 1, 1995. Because of the age and size of
Maritrans' individual barges, the first of its operating vessels will be
required to be retired or retrofitted by January 2003, and most of its
large oceangoing, single-hulled vessels will be similarly affected on
January 1, 2005. During 1990, the depreciable lives of certain marine
vessels and equipment were revised to reflect more closely expected
remaining lives.
Maintenance and Repairs
Provision is made for the cost of upcoming major periodic overhauls of
vessels and equipment in advance of performing the related maintenance and
repairs. The current portion of this estimated cost is included in accrued
shipyard costs while the portion of this estimated cost not expected to be
incurred within one year is classified as long-term. Both the provisions
for major periodic overhauls as well as non-overhaul maintenance and
repairs are expensed as incurred.
Inventories
Inventories, consisting of materials, supplies and fuel, are carried
at specific cost which does not exceed net realizable value.
Income Taxes
Deferred income taxes reflect the net tax effects of temporary
differences between the amount of assets and liabilities for financial
reporting purposes and the amount used for income tax purposes.
Significant Customers
During the years ended December 31, 1993, 1992 and 1991, the Company
derived revenues of $22,232,000, $24,169,000 and $27,219,000 from one
customer aggregating 17%, 18% and 19% of total revenues, respectively.
Also during 1993, 1992 and 1991, the Company derived revenues of
$19,720,000, $19,855,000 and $16,691,000 from another customer aggregating
15%, 15% and 11% of total revenues. Credit is extended to various
companies in the petroleum industry in the normal course of business. This
concentration of credit risk within this industry may be affected by
changes in economic or other conditions and may, accordingly, affect
overall credit risk of the Company.
29
<PAGE>
<PAGE> 32
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
1. Organization and Significant Accounting Policies -- (Continued)
Related Parties
The Company obtained protection and indemnity insurance coverage from
a mutual insurance association, whose chairman is also the chairman of
Maritrans Inc. The related insurance expense was $2,472,000, $3,365,000
and $3,034,000 for the years ended December 31, 1993, 1992 and 1991,
respectively.
Earnings per common share/Limited Partner unit
Earnings per common share/Limited Partner unit are based on the
average number of common shares or Limited Partner units outstanding. The
potential effect of outstanding stock options is not dilutive.
2. Cash and Cash Equivalents
Cash and cash equivalents at December 31, 1993, and 1992 consisted of
cash and commercial paper, the carrying value of which approximates fair
value. For purposes of the consolidated statements of cash flows,
short-term highly liquid debt instruments with maturities of three months
or less are considered to be cash equivalents.
3. Partnership and Stockholders' Equity
Changes in partnership equity prior to the Conversion are summarized
below:
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
--------------------------------
($000 except per unit amounts)
<S> <C> <C> <C>
Balance at January 1, 1991 ................................. $ 16 $106,274 $106,290
Net (loss), January 1, 1991 to December 31, 1991 ........... (32) (1,544) (1,576)
Distributions declared and paid ($1.15 per Limited Partner
unit)..................................................... (288) (14,087) (14,375)
-------------------------------
Balance at December 31, 1991................................ (304) 90,643 90,339
Net income, January 1, 1992 to December 31, 1992 ........... 69 3,350 3,419
Distributions declared and paid ($0.575 per Limited Partner
unit)..................................................... (144) (7,043) (7,187)
-------------------------------
Balance at December 31, 1992 ............................... (379) 86,950 86,571
Net (loss), January 1, 1993 to March 31, 1993 .............. (244) (11,979) (12,223)
-------------------------------
Balance at March 31, 1993 .................................. $(623) $ 74,971 $ 74,348
===============================
</TABLE>
30
<PAGE>
<PAGE> 33
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
3. Partnership and Stockholders' Equity -- (Continued)
Consolidated income statement data for the period January 1 to March
31, 1993 (prior to the Conversion) and for the period April 1 to December
31, 1993 (after the Conversion) is as follows:
<TABLE>
<CAPTION>
Maritrans Partners L.P. Maritrans Inc.
January 1, 1993 April 1, 1993 to
to March 31, 1993 December 31, 1993
--------------------------------------------
($000)
<S> <C> <C>
Revenues ............................... $ 32,217 $100,322
Costs and expenses:
Operation expense .................. 17,968 57,228
Maintenance expense ................ 4,964 16,098
General and administrative ......... 2,609 9,163
Depreciation and amortization ...... 3,954 11,914
-------------------------------------
29,495 94,403
-------------------------------------
Operating income ....................... 2,722 5,919
Interest expense ....................... (2,672) (7,701)
Other income, net ...................... 4,295 2,623
-------------------------------------
Income before income taxes ............. 4,345 841
Income tax provision ................. - 407
Deferred income taxes-resulting from
Conversion............................ 16,568 -
-------------------------------------
Net income (loss) ...................... $(12,223) $ 434
=====================================
</TABLE>
31
<PAGE>
<PAGE> 34
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
3. Partnership and Stockholders' Equity -- (Continued)
Changes in stockholders' equity since the Conversion are summarized
below:
<TABLE>
<CAPTION>
Common Capital in
Stock, $.01 excess of Retained
Par Value Par Value Earnings Total
------------------------------------------------
($000)
<S> <C> <C> <C> <C>
April 1, 1993, Conversion to Corporate Form. $125 $74,315(1) - $74,440
Net income, April 1, 1993 to December 31,
1993 ..................................... - - $434 434
---------------------------------------------
Balance at December 31, 1993................ $125 $74,315 $434 $74,874
=============================================
</TABLE>
----------
(1) Includes $92,000 related to grant of shares.
Maritrans Inc. established a stock incentive plan (the "Plan")
concurrent with the Conversion whereby key employees may be granted stock,
stock options and, in certain cases receive cash under the Plan. Any
outstanding options granted under the Plan are exercisable at a price not
less than market value on the date of grant. There are 1,250,000 shares of
Common Stock authorized for issuance under the Plan, of which 23,000
shares were issued in 1993. Compensation expense equal to the fair market
value on the date of the grant is included in general and administrative
expense in the consolidated statement of income. At December 31, 1993,
803,597 remaining shares were reserved for grant.
Information on stock options for 1993 follows:
Exercise Number of
Price Shares
------------------------
Outstanding at beginning of year........ - -
Granted................................. $4.00 476,074
Exercised .............................. - -
Cancelled .............................. $4.00 52,671
Outstanding at end of year ............. $4.00 423,403
Exercisable at end of year ............. - -
Outstanding options are exercisable in installments over two to four
years and expire in 2002.
4. INCOME TAXES
In connection with the Conversion to corporate form, the Partnership
recognized a net deferred income tax liability for temporary differences
32
<PAGE>
<PAGE> 35
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
4. INCOME TAXES -- (Continued)
in accordance with Statement of Financial Accounting Standards ("FAS")
No. 109, Accounting for Income Taxes, which resulted in a one-time charge
to earnings of $16.6 million in the first quarter of 1993. Prior to the
Conversion, Maritrans Partners L.P. and Maritrans Operating Partners L.P.,
as partnerships, were not subject to income taxation at the partnership
level. However, income taxes, which were not significant, were provided
for the incorporated subsidiaries of the partnerships prior to the
Conversion.
The income tax provision consists of:
1993
--------
($000)
Current:
Federal ................................................ -
State .................................................. -
Deferred ................................................... $ 407
Deferred-resulting from Conversion ......................... 16,568
--------
$16,975
========
The differences between the federal income tax rate of 34% and the
effective tax rate was as follows:
1993
--------
($000)
Statutory federal tax provision ............................ $ 1,764
State income taxes, net of federal income tax benefit ...... 116
Partnership income for the first quarter, not subject to
income tax ............................................... (1,388)
Recognition of tax liability for cumulative temporary
differences .............................................. 16,568
Other ...................................................... (85)
-------
$16,975
=======
33
<PAGE>
<PAGE> 36
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
4. INCOME TAXES -- (Continued)
Principal items comprising deferred income tax liabilities and assets
as of December 31, 1993 are:
1993
--------
($000)
Deferred tax liabilities:
Tax over book depreciation ............................. $28,519
Other .................................................. 1,203
-------
29,722
-------
Deferred tax assets:
Reserves and accruals .................................. 8,092
Net operating loss carryforwards ....................... 3,116
Other .................................................. 848
-------
12,056
-------
Net deferred tax liabilities ............................... $17,666
=======
At December 31, 1993, Maritrans Inc. has net operating loss carry
forwards of approximately $9.2 million for income tax purposes which
expire in the year 2005 and thereafter.
5. Retirement Plans
Most of the shoreside employees and substantially all of the seagoing
supervisors participate in a qualified defined benefit retirement plan of
Maritrans Inc. Net periodic pension costs were $1,232,000, $1,400,000 and
$1,529,000 for the years ended December 31, 1993, 1992 and 1991,
respectively, and were determined under the projected unit credit
actuarial method. Pension benefits are primarily based on years of service
and begin to vest after two years. Employees covered by collective
bargaining agreements and employees of Maritrans Holdings Inc. or its
subsidiaries are not eligible to participate in the qualified defined
benefit retirement plan of Maritrans Inc.
The weighted average discount rate, used to determine the actuarial
present value of the projected benefit obligation, and the expected
long-term rate of return on plan assets for the period were each 7%. The
weighted average assumed rate of compensation increase used to determine
the actuarial present value of the projected benefit obligation was 5%.
34
<PAGE>
<PAGE> 37
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
5. Retirement Plans -- (Continued)
Net periodic pension costs included the following components for the
respective periods:
<TABLE>
<CAPTION>
1/1 to 1/1 to 1/1 to
12/31/93 12/31/92 12/31/91
--------------------------------
($000)
<S> <C> <C> <C>
Service cost of current period ............................. $ 1,625 $1,628 $ 1,675
Interest cost on projected benefit obligation .............. 906 887 772
Actual (gain) loss on plan assets .......................... (1,165) (938) (2,403)
Net (amortization) and deferral ............................ (134) (177) 1,485
--------------------------------
Net pension cost ........................................... $ 1,232 $1,400 $ 1,529
================================
</TABLE>
The following table sets forth the plan's funded status at December
31, 1993 and 1992:
December 31,
------------------
1993 1992
------------------
($000)
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $10,449 and $9,675, respectively ... $11,534 $ 9,801
Projected benefit obligation for service rendered
to date ........................................ 3,851 4,895
------------------
Projected benefit obligation ..................... 15,385 14,696
Plan assets at fair value, primarily publicly
traded stocks and bonds ........................ 16,110 13,718
------------------
Plan assets greater than (less than) projected
benefit obligation ............................. 725 (978)
Unrecognized net gain on plan's assets ........... 2,723 997
Net assets being amortized over 15 years ......... 1,616 1,818
------------------
Accrued pension cost recognized in the financial
statements ..................................... $ 3,614 $ 3,793
==================
Substantially all of the shoreside employees and seagoing supervisors
also participate in a qualified defined contribution plan. Contributions
under the plan are determined annually by the Board of Directors of
35
<PAGE>
<PAGE> 38
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
5. Retirement Plans -- (Continued)
Maritrans Inc. The cost of the plan was $685,000, $609,000 and $61,000 for
the years ended December 31, 1993, 1992 and 1991, respectively.
Contributions to industry-wide, multi-employer seamen's pension plans
which cover substantially all seagoing personnel covered under collective
bargaining agreements were approximately $423,000, $515,000 and $1,016,000
for the years ended December 31, 1993, 1992 and 1991, respectively. These
contributions include funding for current service costs and amortization
of prior service costs of the various plans over periods of 30 to 40
years. The pension trusts and union agreements provide that contributions
be made at a contractually determined rate per man-day worked. Maritrans
Inc. and its subsidiaries are not administrators of the multi-employer
seamen's pension plans.
6. Debt
At December 31, 1993, total outstanding debt of the subsidiaries of
Maritrans Inc. is $116.9 million, $110.6 million of which is long-term. At
December 31, 1992, total outstanding debt was $122.9 million, $116.9
million of which was long-term. The debt is secured by mortgages on
substantially all of the fixed assets of those subsidiaries. The debt
consists of $1.7 million maturing through 1995, $35.2 million maturing
through 1997, and $80 million maturing from 1998 through 2007. The
weighted average interest rate on this indebtedness is 8.63%. Terms of the
indebtedness require the subsidiaries to maintain their properties in a
specific manner, maintain specified insurance on their properties and
business, and abide by other covenants which are customary with respect to
such borrowings. At December 31, 1992, the total outstanding debt
consisted of $2.5 million maturing through 1995, $40.4 million maturing
through 1997, and $80 million maturing from 1998 through 2007.
The Operating Partnership has a $10 million working capital facility
secured by its receivables and inventories. There were no borrowings under
this facility during fiscal 1993.
Based on the borrowing rates currently available for loans with
similar terms and maturities, the fair value of long term debt was $122.1
million and $121.8 million at December 31, 1993 and 1992, respectively.
The maturity schedule for outstanding indebtedness under existing debt
agreements at December 31, 1993, is as follows:
36
<PAGE>
<PAGE> 39
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
6. Debt -- (Continued)
($000)
--------
1994 ................................... $ 6,311
1995 ................................... 7,256
1996 ................................... 8,200
1997 ................................... 15,100
1998 ................................... 8,000
1999 - 2007 ............................ 72,000
--------
$116,867
========
7. Commitments and Contingencies
Minimum future rental payments under noncancelable operating leases at
December 31, 1993, are as follows:
($000)
-------
1994.................................... $ 1,200
1995.................................... 1,200
1996.................................... 1,200
1997 ................................... 1,200
1998 ................................... 1,117
1999 - 2005 ............................ 7,544
-------
$13,461
=======
The indenture governing the Operating Partnership's long-term debt
permits cash distributions by Maritrans Operating Partners L.P. to
Maritrans Inc. so long as no default exists under the indenture and
provided that such distributions do not exceed contractually prescribed
amounts.
On August 10, 1993, one of the Company's tug/barge units was involved
in a collision off the coast of Florida. Claims resulting from this
incident have been and are expected to be covered by insurance. In 1993,
Maritrans received insurance proceeds in excess of the barge's net book
value for the constructive total loss of the barge.
In November 1992, the Partnership dismissed its suit against its
former law firm and a partner of that firm pursuant to a settlement
agreement among the parties. As part of the settlement, the Partnership
received a payment of $3 million and the trial court dissolved the
preliminary injunction which previously barred the defendants from
representing certain of Maritrans' economic competitors in labor
37
<PAGE>
<PAGE> 40
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
7. Commitments and Contingencies -- (Continued)
negotiations. The payment received is reflected in other income for the
year ended December 31, 1992.
In the ordinary course of its business, claims are filed against the
Company for alleged damages in connection with its operations Management
is of the opinion that the ultimate outcome of such claims at December 31,
1993, will not have a material adverse effect on the consolidated
financial statements.
8. Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
-----------------------------------------------------
($000, except per share/unit amounts)
<S> <C> <C> <C> <C> <C>
1993
Revenues ........................... $ 32,217 $33,603 $31,044 $35,675 $132,539
Operating income ................... 2,722 2,572 1,222 2,125 8,641
Provision for (benefit from) income
taxes ............................ 16,568 533 14 (140) 16,975
Net income (loss)................... $(12,223) $ 639 $ 24 $ (229) $(11,789)
Per unit effect of income tax
provision-resulting from
Conversion........................ $ (1.32) n/a n/a n/a $ (1.32)
Income (loss) per share/unit........ $ (0.98) $ 0.05 $ 0.00 $ (0.02) $ (0.94)
1992
Revenue ............................ $ 33,973 $32,268 $32,186 $34,624 $133,051
Operating income ................... 2,691 2,353 2,204 2,750 $ 9,998
Net income (loss)................... $ 74 $ 350 $ (343) $ 3,338 $ 3,419
Income (loss) allocated to Limited
Partners per Limited Partner Unit. $ 0.01 $ 0.03 $ (0.03) $ 0.27 $ 0.27
</TABLE>
38
<PAGE>
<PAGE> 41
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with respect to directors of the Registrant, and
information with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934, is incorporated herein by reference to
the Registrant's definitive Proxy Statement to be filed with the
Securities and Exchange Commission not later than 120 days after the close
of the year ended December 31, 1993, under the captions "Information
Regarding Nominees For Election As Directors And Regarding Continuing
Directors" and "Section 16 Requirements."
The individuals listed below are directors and executive officers of
Maritrans Inc. or its subsidiaries.
39
<PAGE>
<PAGE> 42
<TABLE>
<CAPTION>
Name Age(1) Position
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Stephen A. Van Dyck (4) .................. 50 Chairman of the Board of Directors and
Chief Executive Officer
Dr. Robert E. Boni (2)(3)(4) ............. 66 Director
Dr. Craig E. Dorman (3) .................. 53 Director
Craig N. Johnson ......................... 52 Director
Bruce C. Lindsay (2)(3)(4) ............... 52 Director
James H. Sanborn ......................... 56 Director
Edward R. Sheridan........................ 55 President, Distribution Services
Division - Operating Partnership
Brian J. Telford ......................... 47 President, Gulf Division - Operating
Partnership
John C. Newcomb .......................... 55 Vice President, General Counsel and
Secretary
Gary L. Schaefer.......................... 44 Vice President, Chief Financial Officer
and Treasurer
Edward J. Flood........................... 42 Chairman of the Board of Maritrans
Holdings Inc.
Charles R. Ward........................... 42 President, Eastern Division - Operating
Partnership
Robert B. York............................ 38 President, Inland Division - Operating
Partnership
Gerard T. Gillon.......................... 51 Chairman of the Board of Marispond Inc.
Walter T. Bromfield....................... 38 Controller
</TABLE>
----------
(1) As of March 1, 1994
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
(4) Member of the Finance Committee
Mr. Van Dyck has been Chairman of the Board and Chief Executive
Officer of the Company and its predecessor since April 1987. For the
previous year, he was a Senior Vice President - Oil Services, of Sonat
Inc. and Chairman of the Boards of the Sonat Marine Group, another
predecessor, and Sonat Offshore Drilling Inc. For more than five years
prior to April 1986, Mr. Van Dyck was the President and a director of the
40
<PAGE>
<PAGE> 43
Sonat Marine Group and Vice President of Sonat Inc. Mr. Van Dyck is also
the Chairman of the Board and a director of the West of England Ship
Owners Mutual Insurance Association (Luxembourg), a mutual insurance
association. He is a member of the Company's Finance Committee of the
Board of Directors. See "Certain Transactions."
Dr. Boni retired as Chairman of Armco Inc., a steel, oil field
equipment and insurance corporation on November 30, 1990. Dr. Boni became
Chief Executive Officer of Armco Inc. in 1985 and Chairman in 1986. He
became Non-Executive Chairman of the Board of Alexander & Alexander
Services Inc., an insurances services company, in January 1994. He is a
member of the Company's Compensation (Chairman), Audit and Finance
Committees of the Board of Directors.
Dr. Dorman is serving as Deputy Director Defense Research and
Engineering for Laboratory Management, U.S. Department of Defense on an
Intergovernmental Personnel Act assignment from the Woods Hole
Oceanographic Institution. He was Director and Chief Executive Officer of
Woods Hole Oceanographic Institution from 1989 until 1993. From 1962 to
1989, Dr. Dorman was an officer in the U.S. Navy, most recently Rear
Admiral and Program Director for Anti-Submarine Warfare. He is a member of
the Company's Audit Committee of the Board of Directors.
Mr. Johnson recently became Managing Director of Glenthorne Capital
Inc., investment bankers. He was President and Chief Operating Officer of
the Company and its predecessor from February 1, 1990 until December 17,
1993. For the four years prior to joining Maritrans, Mr. Johnson was
President of Lavino Shipping Company, a terminalling and stevedoring
corporation. Neither Lavino nor any of the companies invested in by
Glenthorne Capital Inc. compete with Maritrans. He is a director of
several closely-held companies.
Mr. Lindsay has been Managing Director of Brind-Lindsay & Co. Inc., an
investment corporation, since 1986. From 1983 through 1986, Mr. Lindsay
was Group Vice President, Industrial Services, of Sun Company, Inc., an
integrated oil corporation. During that time, he also served as a director
and officer of various subsidiaries of Sun Company, Inc. He is a director
of several closely-held corporations. He is a member of the Company's
Audit (Chairman), Finance (Chairman) and Compensation Committees of the
Board of Directors.
Mr. Sanborn was Executive Vice President of the Company and its
predecessor since April 1987, until his retirement in December 1993. Prior
to April 1987, he was President of the Sonat Marine Group, another
predecessor, a position he held since April 1986. Prior to this position,
he served as Vice President-Operations and Vice President - East Coast
Group of the Sonat Marine Group. Mr. Sanborn was employed in various
capacities by the Company and its predecessors since 1978.
Mr. Sheridan was named President of the Distribution Services Division
of the Operating Partnership in February 1993. He previously held various
positions with Star Enterprise and Texaco since 1963.
41
<PAGE>
<PAGE> 44
Mr. Telford was named President of the Gulf Division of the Operating
Partnership in September 1992. He previously held various positions with
Stolt-Nielson Inc. from 1988 to 1992.
Mr. Newcomb has been Vice President, General Counsel and Secretary of
Maritrans Inc. since April 1993, and previously held these titles with
Maritrans GP Inc. since 1987. He held a similar position with the Sonat
Marine Group since 1983. Mr. Newcomb has been employed in various
capacities by Maritrans or its predecessors since 1975.
Mr. Schaefer has been Vice President, Chief Financial Officer and
Treasurer of Maritrans Inc. since April 1993, and previously held these
titles with Maritrans GP Inc. since January 1990. Previously, Mr. Schaefer
was Vice President, Controller and Treasurer. He held a similar position
with the Sonat Marine Group since 1986. Prior to this position, Mr.
Schaefer was Assistant Vice President and Controller. Mr. Schaefer has
been employed in various capacities by Maritrans or its predecessors since
1976.
Mr. Flood has been Chairman of Maritrans Holdings Inc. since February
4, 1991. Mr. Flood is also Chairman of MPI and MMI. Previously, Mr. Flood
was Vice President of Maritrans GP Inc. from October 1990 to February
1991. Prior to October 1990, he was President and Chief Operating Officer
of Unitank, a Philadelphia-based terminal company, which was sold and
merged with GATX, which does not compete with Maritrans.
Mr. Ward was named President of the Eastern Division of the Operating
Partnershp in May 1993. Previously, Mr. Ward was President of the Inland
Division of the Operating Partnership since February 1992 and prior to
that was Manager, Traffic, a position he held since September 1990. Mr.
Ward was East Coast Chartering Manager from June 1989 to September 1990.
Prior to that position, Mr. Ward was Traffic Manager - Black Oil. He held
a similar position with the Sonat Marine Group. Mr. Ward has been employed
in various capacities by Maritrans or its predecessors since 1975.
Mr. York was named President of the Inland Division of the Operating
Partnership in May 1993. Previously, Mr. York was continuously employed
since 1985 by the Company or its predecessors in various capacities
including Manager, Market Planning; Manager, Corporate Planning; and
Business Leader (Information Services).
Mr. Gillon was named Chairman of the Board of Marispond Inc. in
February 1993. Previously, Mr. Gillon was a consultant to the Company
since November 1992. Prior to that, he was President, Chief Executive
Officer and a Director of Wescol Shipping Inc. from July 1990. From April
1980 until July 1989, he was President of Lavino Agency Group, and served
as a Director of Lavino Shipping Company.
Mr. Bromfield has been Controller of Maritrans Inc. since April 1993,
and previously held that title with Maritrans GP Inc. since February 1992.
Previously, Mr. Bromfield was Assistant Controller. He held a similar
position with the Sonat Marine Group since October 1986. Mr. Bromfield has
been employed in various capacities by Maritrans or its predecessors since
1981.
42
<PAGE>
<PAGE> 45
Items 11, 12 and 13.
The information required by Item 11, Executive Compensation, by Item
12, Security Ownership of Certain Beneficial Owners and Management, and by
Item 13, Certain Relationships and Related Transactions, is incorporated
herein by reference to the Company's definitive Proxy Statement to be
filed with the Commission not later than 120 days after the close of the
fiscal year ended December 31, 1993, under the headings "Compensation of
Directors and Executive Officers", "Security Ownership of Certain
Beneficial Owners and Management" and "Certain Transactions".
PART IV
<TABLE>
<CAPTION>
Page
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Item 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Report of Independent Auditors 18
Maritrans Inc. Consolidated Balance Sheets at December 31, 1993, and December 31,
1992. 19
Maritrans Inc. Consolidated Statements of Income for the years ending December 31,
1993, 1992, and 1991. 20
Maritrans Inc. Consolidated Statements of Cash Flows for the years ending December 31,
1993, 1992, and 1991. 21
Notes to the Consolidated Financial Statements. 22
(2) Financial Statement Schedules
Schedule V Maritrans Inc. Property, Plant and Equipment for the years ended
December 31, 1993, 1992, and 1991. 37
Schedule VI Maritrans Inc. Accumulated Depreciation for the years ended December 31,
1993, 1992, and 1991. 38
Schedule VIII Maritrans Inc. Valuation Account for the years ended December 31, 1993,
1992, and 1991. 39
All other schedules called for under Regulation S-X are not submitted because they are not
applicable, not required, or because the required information is not material, or is included in
the financial statements or notes thereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1993.
</TABLE>
(c) Exhibits
43
<PAGE>
<PAGE> 46
<TABLE>
<CAPTION>
Exhibit Index Page
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.1# Certificate of Incorporation of the Registrant, as amended.
3.2# By Laws of the Registrant.
4.1 Certain instruments with respect to long-term debt of the Registrant or Maritrans
Operating Partners L.P. which relate to debt that does not exceed 10% of the total assets
of the Registrant are omitted pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K.
Maritrans hereby agrees to furnish supplementally to the Securities and Exchange
Commission a copy of each such instrument upon request.
10.1* Amended and Restated Agreement of Limited Partnership of Maritrans Operating Partners
L.P., dated as of April 14, 1987 (Exhibit 3.2).
10.2+ Certificate of Limited Partnership of Maritrans Operating Partners L.P., dated January 29,
1987 (Exhibit 3.4).
10.3* Form of Maritrans Capital Corporation Note Purchase Agreement, dated as of March 15, 1987
(Exhibit 10.6).
10.3(a)* Indenture of Trust and Security Agreement, dated as of March 15, 1987 from Maritrans
Operating Partners L.P. and Maritrans Capital Corporation to The Wilmington Trust Company
(Exhibit 10.6(a)).
10.3(b)* Form of First Preferred Ship Mortgage, dated April 14, 1987 from Maritrans Operating
Partners L.P., mortgagor, to The Wilmington Trust Company, mortgagee (Exhibit 10.6(b)).
10.3(c)* Guaranty Agreement by Maritrans Operating Partners L.P. regarding $35,000,000 Series A
Notes Due April 1, 1997 and $80,000,000 Series B Notes Due April 1, 2007 of Maritrans
Capital Corporation (Exhibit 10.6(c)).
Executive Compensation Plans and Arrangements
10.4 Agreement, dated October 4, 1993 between Maritrans Inc. and John C. Newcomb.
10.5 Agreement, dated October 4, 1993 between Maritrans Inc. and Gary L. Schaefer.
10.6 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Stephen A. Van Dyck.
10.7 Mutual Separation Agreement and General Release, dated November 22, 1993 between Maritrans
Inc. and Craig N. Johnson.
10.8 Retirement Agreement, dated November 22, 1993 between Maritrans Inc. and James H. Sanborn.
10.9 Employment Agreement, dated November 15, 1993 between Maritrans Holdings Inc. and Edward
J. Flood.
10.10 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Charles R. Ward.
</TABLE>
44
<PAGE>
<PAGE> 47
<TABLE>
<CAPTION>
Exhibit Index Page
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.11 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Brian J. Telford.
10.12 Employment Agreement, dated October 5, 1993 between Maritrans General Partner Inc. and
Edward R. Sheridan.
10.13 Profit Sharing and Savings Plan of Maritrans Inc. as amended and restated effective
November 1, 1993.
10.14@ Executive Award Plan of Maritrans GP Inc. (Exhibit 10.31).
10.15@ Excess Benefit Plan of Maritrans GP Inc. as amended and restated effective January 1, 1988
(Exhibit 10.32).
10.16@ Retirement Plan of Maritrans GP Inc. as amended and restated effective January 1, 1989
(Exhibit 10.33).
10.17 Performance Unit Plan of Maritrans Inc. effective April 1, 1993
10.18& Executive Compensation Plan as amended and restated effective January 27, 1994.
11.1 Computation of Earnings Per Share.
21.1 Subsidiaries of Maritrans Inc. 1
</TABLE>
* Incorporated by reference herein to the Exhibit number in parentheses
filed on March 24, 1988 as Amendment No. 1 to Maritrans Partners L. P.
Form 10-K Annual Report, dated March 3, 1988, for the fiscal year ended
December 31, 1987.
+ Incorporated by reference herein to the Exhibit number in parentheses
filed with Maritrans Partners L. P. Form S-1 Registration Statement No.
33-11652 dated January 30, 1987 or Amendment No. 1 thereto dated March
20, 1987.
# Incorporated by reference herein to the Exhibit of the same number filed
with the Registrant's Post-Effective Amendment No. 1 to Form S-4
Registration Statement No. 33-57378 dated January 26, 1993.
& Incorporated by reference herein to Exhibit A of the Registrant's
definitive Proxy Statement to be filed with the Commission not later
than 120 days after the close of the fiscal year ended December 31,
1993.
@ Incorporated by reference herein to the Exhibit number in parentheses
filed with Maritrans Partners L. P. Form 10-K Annual Report, dated March
29, 1993 for the fiscal year ended December 31, 1992.
45
<PAGE>
<PAGE> 48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MARITRANS INC.
(Registrant)
By: /s/ Stephen A. Van Dyck
------------------------
Stephen A. Van Dyck
Chairman of the Board
Dated: March 30 , 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
By: /s/ Stephen A. Van Dyck Chairman of the Board Dated: March 30, 1994
-------------------------------- and Chief Executive Officer
Stephen A. Van Dyck (Principal Executive Officer)
By: /s/ Dr. Robert E. Boni Director Dated: March 30, 1994
--------------------------------
Dr. Robert E. Boni
By: /s/ Dr. Craig E. Dorman Director Dated: March 30, 1994
--------------------------------
Dr. Craig E. Dorman
By: /s/ Craig N. Johnson Director Dated: March 30, 1994
--------------------------------
Craig N. Johnson
By: /s/ Bruce C. Lindsay Director Dated: March 30, 1994
--------------------------------
Bruce C. Lindsay
By: /s/ James H. Sanborn Director Dated: March 30, 1994
--------------------------------
James H. Sanborn
By: /s/ Gary L. Schaefer Vice President, Chief Dated: March 30, 1994
-------------------------------- Financial Officer and
Gary L. Schaefer Treasurer (Principal
Financial Officer)
By: /s/ Walter T. Bromfield Controller (Principal Dated: March 30, 1994
-------------------------------- Accounting Officer)
Walter T. Bromfield
</TABLE>
46
<PAGE>
<PAGE> 49
MARITRANS INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
($000)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS
BEGINNING AND TRANSFERS RETIREMENTS OTHER CHANGES BALANCE AT
DESCRIPTION OF PERIOD AT COST OR SALES ADD (DEDUCT) END OF PERIOD
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JANUARY 1 TO
DECEMBER 31, 1991
Land.......................... $ 350 $ 976 $ - $ - $ 1,326
Marine vessels and equipment.. 242,989 13,462 (9,658) - 246,793
Construction in progress...... 1,430 8,076 - - 9,506
---------------------------------------------------------------------------
Total....................... $244,769 $22,514 $ (9,658) $ - $257,625
===========================================================================
JANUARY 1 TO
DECEMBER 31, 1992
Land.......................... $ 1,326 $ - $ - $ - $ 1,326
Marine vessels and equipment.. 246,793 11,046 (3,585) - 254,254
Construction in progress...... 9,506 (926) - - 8,580
---------------------------------------------------------------------------
Total....................... $257,625 $10,120 $ (3,585) $ - $264,160
===========================================================================
JANUARY 1 TO
DECEMBER 31, 1993
Land.......................... $ 1,326 $ 360 $ - $ - $ 1,686
Marine vessels and equipment.. 254,254 18,366 (19,525) - 253,095
Construction in progress...... 8,580 (1,185) - - 7,395
---------------------------------------------------------------------------
Total....................... $264,160 $17,541 $(19,525) $ - $262,176
===========================================================================
</TABLE>
47
<PAGE>
<PAGE> 50
MARITRANS INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION
($000)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS
BEGINNING AND TRANSFERS RETIREMENTS OTHER CHANGES BALANCE AT
DESCRIPTION OF PERIOD AT COST OR SALES ADD (DEDUCT) END OF PERIOD
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JANUARY 1 TO
DECEMBER 31, 1991
Marine vessels and equipment.. $44,084 $15,574 $(2,644) $ - $57,014
===========================================================================================
JANUARY 1 TO
DECEMBER 31, 1992
Marine vessels and equipment.. $57,014 $15,190 $(2,477) $ - $69,727
===========================================================================================
JANUARY 1 TO
DECEMBER 31, 1993
Marine vessels and equipment.. $69,727 $15,387 $(6,148) $ - $78,966
===========================================================================================
</TABLE>
49
<PAGE>
<PAGE> 51
MARITRANS INC.
SCHEDULE VIII - VALUATION ACCOUNT
($000)
<TABLE>
<CAPTION>
CHARGED
BALANCE AT TO COSTS BALANCE
BEGINNING AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
-------------------------------------------------
<S> <C> <C> <C> <C>
JANUARY 1 TO DECEMBER 31, 1991
Allowance for doubtful accounts............. $1,030 $160 $488(a) $702
===============================================
JANUARY 1 TO DECEMBER 31, 1992
Allowance for doubtful accounts............. $ 702 $ 60 $221(a) $541
===============================================
JANUARY 1 TO DECEMBER 31, 1993
Allowance for doubtful accounts............. $ 541 $136 $ 72(a) $605
===============================================
</TABLE>
----------
(a) Deductions are a result of write-offs of uncollectible accounts
receivable for which allowances were previously provided.
50
<PAGE>
<PAGE> 52
EXHIBIT 10.4
AGREEMENT
Agreement made as of the 4th day of October, 1993,
between Maritrans Inc., a Delaware corporation (the
"Company"), and John C. Newcomb (the "Employee").
WHEREAS, the Employee is presently employed by the
Company as its Vice President, General Counsel and Secretary;
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 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
<PAGE>
<PAGE> 53
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:
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 average of
the total cash remuneration received by the Employee in all
capacities with the Company, and its Subsidiaries or
Affiliates, as reported for Federal income tax purposes on
Form W-2, 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 for the most recent full calendar
year immediately preceding the calendar year in which occurs
a Change of Control or the Employee's Termination Date,
whichever is higher.
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<PAGE> 54
(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;
(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
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<PAGE> 55
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.
(d) "Board" shall mean the board of directors of
the Company.
(e) "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
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<PAGE> 56
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 the Company
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, or (ii)
during any twenty-four month period, individuals who at the
beginning of such period constituted the Board cease for any
reason to constitute a majority thereof, unless the election,
or the nomination for election by the Company's 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.
(f) "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.
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<PAGE> 57
(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," which shall mean misappropriation of funds, habitual
insobriety, substance abuse, conviction of a crime involving
moral turpitude, or 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
(ii) initiated by the Employee upon one or more of
the following occurrences:
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(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.
2. Notice of Termination. Any Termination
following a Change of Control shall be communicated by a
Notice 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 termination provision in
this Agreement relied upon, (ii) briefly summarizes the facts
and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so
indicated, and (iii) if the Termination Date is other than
the date of receipt of such notice, specifies the Termination
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<PAGE> 59
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 within 15
days), an amount in cash equal to 1.5 times the Employee's
Base Compensation.
(b) 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) 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
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<PAGE> 60
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 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 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 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)
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<PAGE> 61
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
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<PAGE> 62
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"), 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
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<PAGE> 63
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
<PAGE>
<PAGE> 64
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
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<PAGE> 65
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
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<PAGE> 66
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.
2600 One Logan Square
Philadelphia, PA 19103
Attention: Corporate Secretary
If to the Employee, to:
John C. Newcomb
7725 St. Martin Lane
Philadelphia, PA 19118
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 13 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.
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<PAGE> 67
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
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<PAGE> 68
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
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<PAGE> 69
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 INC.
[Seal]
/s/ John C. Newcomb By /s/ Craig N. Johnson
------------------------- -------------------------
Secretary
/s/ Anna Richmond /s/ John C. Newcomb
------------------------- -------------------------
Witness John C. Newcomb
<PAGE>
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<PAGE> 70
EXHIBIT 10.5
AGREEMENT
Agreement made as of the 4th day of October, 1993,
between Maritrans Inc., a Delaware corporation (the
"Company"), and Gary L. Schaefer (the "Employee").
WHEREAS, the Employee is presently employed by the
Company as its Vice President, Chief Financial Officer;
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 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
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<PAGE> 71
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:
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 average of
the total cash remuneration received by the Employee in all
capacities with the Company, and its Subsidiaries or
Affiliates, as reported for Federal income tax purposes on
Form W-2, 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 for the most recent full calendar
year immediately preceding the calendar year in which occurs
a Change of Control or the Employee's Termination Date,
whichever is higher.
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<PAGE> 72
(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;
(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
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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.
(d) "Board" shall mean the board of directors of
the Company.
(e) "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
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<PAGE> 74
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 the Company
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, or (ii)
during any twenty-four month period, individuals who at the
beginning of such period constituted the Board cease for any
reason to constitute a majority thereof, unless the election,
or the nomination for election by the Company's 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.
(f) "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.
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<PAGE> 75
(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," which shall mean misappropriation of funds, habitual
insobriety, substance abuse, conviction of a crime involving
moral turpitude, or 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
(ii) initiated by the Employee upon one or more of
the following occurrences:
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<PAGE> 76
(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.
2. Notice of Termination. Any Termination
following a Change of Control shall be communicated by a
Notice 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 termination provision in
this Agreement relied upon, (ii) briefly summarizes the facts
and circumstances deemed to provide a basis for termination
of the Employee's employment under the provision so
indicated, and (iii) if the Termination Date is other than
the date of receipt of such notice, specifies the Termination
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<PAGE> 77
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 within 15
days), an amount in cash equal to 1.5 times the Employee's
Base Compensation.
(b) 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) 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
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<PAGE> 78
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 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 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 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)
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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
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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"), 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
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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
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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
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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
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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.
2600 One Logan Square
Philadelphia, PA 19103
Attention: Corporate Secretary
If to the Employee, to:
Gary L. Schaefer
37 Austin Circle
Lower Gwynedd, PA 19002
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 13 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.
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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
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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
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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 INC.
[Seal]
/s/ John C. Newcomb By /s/ Craig N. Johnson
-------------------------- --------------------------
Secretary
/s/ John C. Newcomb /s/ Gary L. Schaefer
-------------------------- --------------------------
Witness Gary L. Schaefer
<PAGE>
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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into on
October 5, 1993, by and between Maritrans Inc., a Delaware
corporation (the "Company"), and Stephen A. Van Dyck
("Employee").
WHEREAS, Employee is presently employed by the Company as
its Chairman and Chief Executive Officer; and
WHEREAS, the Company and Employee desire to enter into a new
agreement to provide for Employee's continued employment by the
Company, upon the terms and conditions set forth herein,
beginning as of April 1, 1993, the date of Employee's appointment
to his current position;
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. This Agreement shall supersede and
replace the agreement entered into between Employee and Maritrans
GP Inc., a predecessor of the Company, as of December 20, 1991,
which shall be void as of the date hereof.
1.1. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on April 1, 1993 and shall
continue for an indefinite period until terminated in accordance
with Section 5 or Section 6 hereof.
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1.2. Duties and Responsibilities. During the Employment
Term, Employee shall serve as the Chairman and Chief Executive
Officer 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 his full
time, attention and energy thereto; provided, however, that
Employee shall not be required to transfer to a location outside
the metropolitan Philadelphia 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
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<PAGE> 90
each full year of the Employment Term ("Base Salary"), payable in
installments at such times as the Company customarily pays its
other executives (but in any event no less often than monthly).
Employee's Base Salary shall be subject to review and adjustment
by the Company pursuant to its normal performance review policies
for executives. 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 or
agreed to by Employee.
(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 executives 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 executives of the Company generally, and (iii) entitled to
vacation and holidays during the Employment Term in accordance
with the Company's normal policy.
1.5. Incentive Compensation. In addition to the Base
Salary set forth in Section 1.4 hereof, Employee shall
participate in the Company's Executive Award Plan and such other
annual or long-term incentive compensation plans (including stock
option and stock grant plans), if any, for executives generally,
as may be established from time to time by the Board in its sole
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<PAGE> 91
discretion. The terms and provisions of any such incentive
compensation plan shall be determined in the sole discretion of
the Board.
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.
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,
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<PAGE> 92
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.
(b) The foregoing restriction shall not be construed to
prohibit the ownership by 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 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
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<PAGE> 93
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,
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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) 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
for the Eastern District of Pennsylvania, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in Philadelphia County, Pennsylvania, (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
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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:
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 for twenty four months thereafter, less the
payments prescribed under any disability benefit plan which may be
in effect for employees 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 provided, further, that if the amount that actually
would have been earned under the Company's incentive compensation
plan or plans in any of the relevant fiscal years of the Company is
less than the full target then the amount due hereunder shall b e
reduced to such amount. Employee agrees, in the event of any
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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) an amount equal to one year of Employee's
Base Salary at the time of his death, and (iii) a pro rata portion
of the 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, dishonesty, mismanagement, deliberate and premeditated
acts against the interest of the Company, materially fails to
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perform or observe any of the terms or provisions of this Agreement
or is convicted of a felony.
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). In
addition, 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. Upon any such termination or removal,
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.
(b) Notwithstanding the foregoing, in the event that Employee
executes a written release, substantially in the form attached
hereto as Exhibit A, but subject to such changes as counsel to the
Company may recommend, 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),
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and the termination thereof, Employee shall receive, in lieu of the
payment described in subsection (a) hereof, which Employee agrees to
waive, (i) a lump sum payment equal to thirty six months of
Employee's Base Salary, (ii) a lump sum payment equal to incentive
compensation, as referred to in Section 1.5 hereof, for such thirty-
six 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) outplacement services, (B)
service credit, for purposes of determining the vesting of any stock
options, performance units or other grants under any long term
incentive plan of the Company, 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 pension, profit sharing and savings
plans 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 and
(E) continuation of life insurance and long term disability benefits
for thirty six months at the level in effect at the time of such
termination or removal. No other payments or benefits shall be due
under this Agreement to Employee and the Company shall have no
further liability or obligation.
(c) 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.
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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 the total
cash remuneration received by Employee in all capacities with the
Company, and its Affiliates, as reported for Federal income tax
purposes on Form W-2, and 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 Employee, for the five calendar years (or such number of actual
full calendar years of employment, if less than five) immediately
preceding the calendar year in which occurs a 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,
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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;
(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
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(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.
(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., the parent of the Company); provided,
however, that no "Change of Control" shall be deemed to
occur during any period in which any such Person, and its
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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, or
(ii) 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 65th
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 other.
(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 one year after a 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 Philadelphia 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 Philadelphia;
(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
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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.
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, the
Company shall pay to Employee, within fifteen days after the
Termination Date (or as soon as practicable thereafter in the event
that the procedures set forth in Section 6.10(b) hereof cannot be
completed within 15 days), in lieu of any other payments required
under any other Section of this Agreement, an amount in cash equal
to 2.99 multiplied by his Base Compensation.
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(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.
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. Termination of Non-Competition Requirements. In the event
of a Termination upon a Change of Control, any non-competition
agreements hereunder or otherwise executed by Employee, or any non-
competition provisions binding on Employee in connection with any
employee bonus, benefit, incentive or other plan or program provided
by the Company or any Affiliate, shall immediately terminate;
provided, however, that this provision shall not terminate or
otherwise modify the confidentiality provisions contained in Section
2 hereof.
6.6. 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
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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.
6.7. 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.
6.8. 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
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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.
6.9. 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.
6.10. 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
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 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 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
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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 6, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 6 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 Employee within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the
Company and Employee. Employee shall in his sole discretion
determine which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this
Section 6. Within five days after Employee'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) 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
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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 Employee which 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 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 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.
6.11. Settlement of All Disputes.
(a) In the event of any dispute, controversy or claim arising
out of or relating to any provision of this Section 6 or Employee's
Termination upon a Change in Control, the Company shall appoint as
the sole and exclusive arbiter of such dispute, controversy or
claim, a committee composed of two persons who were members of the
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Board at any time within five years prior to the Change of Control
(which persons may, but need not be, directors of the Company at the
time of such dispute, controversy or claim); provided, however, that
no person shall be eligible to serve thereon who (i) is at the
Termination Date, or shall have been at any time within one year
prior thereto, an executive officer of the Company, or (ii) shall be
or have been at any time related in any manner to or otherwise
affiliated with, or was first nominated by, the corporation, Person
or group whose acquisition of shares of Common Stock of the Company
has given rise to a Change of Control. The decision of such
committee and the award of any monetary judgment or other relief by
such committee shall be final and binding upon Employee and the
Company, and shall not be subject to appeal. Judgment may be
entered upon the decision and award of such committee by Employee or
the Company in any court of competent jurisdiction. The Company
shall pay the persons selected pursuant to this subsection a
reasonable fee for their services, and shall reimburse such persons
for their expenses incurred in this capacity. In addition, the
Company shall, to the maximum extent permitted by law, indemnify and
hold harmless such persons of and from any and all claims, damages
or expenses of any nature whatsoever relating to or arising from
their activities in this capacity.
(b) In the event that the Company shall be unable to appoint
the committee referred to in (a) above after good faith efforts to
do so, or in the event that such committee cannot reach a unanimous
agreement, any remaining dispute, controversy or claim arising out
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of or relating to any provision of this Agreement or Employee's
Termination upon a Change of Control shall be settled by arbitration
in the City of Philadelphia, Pennsylvania, in accordance with the
commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and Employee, respectively,
and the third of whom shall be selected by the other two
arbitrators. Each arbitrator selected as provided herein is
required to be or have been a director or an executive officer of a
corporation whose shares of common stock were listed during at least
one year of such service on the New York Stock Exchange or the
American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. Any award entered
by the arbitrators shall be final, binding and nonappealable and
judgment may be entered thereon by any party in accordance with
applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The fees
of the American Arbitration Association and the arbitrators and any
expenses relating to the conduct of the arbitration shall be paid by
the Company.
(c) The party or parties challenging the right of Employee to
the benefits of this Agreement shall in all circumstances have the
burden of proof.
6.12. Successor Company. The Company shall require any
successor or successors (whether direct or indirect, by purchase,
merger, consolidation, exchange or otherwise) to all or
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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 Commonwealth of Pennsylvania
without giving effect to any conflict of laws provisions.
9. Litigation Expenses. Except as provided in Section 6.6
above, in the event of a lawsuit by either party to enforce the
provisions of this Agreement, the prevailing party shall be entitled
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to recover reasonable costs, expenses and attorney's fees from the
other party.
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:
2600 One Logan Square
Philadelphia, PA 19103
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Employee, to:
Stephen A. Van Dyck
217 Spruce Street
Philadelphia, PA 19106
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.
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<PAGE> 114
(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.
(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.
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<PAGE> 115
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.
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/ John C. Newcomb By /s/ Craig N. Johnson
------------------------------ ----------------------------
Secretary Name: Craig N. Johnson
Title: President
Witness:
/s/ Eileen Carr /s/ Steven A. Van Dyck
------------------------------ ----------------------------
STEPHEN A. VAN DYCK
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EXHIBIT 10-7
MUTUAL SEPARATION AGREEMENT
AND GENERAL RELEASE
THIS AGREEMENT, made and entered into on this 22nd
day of November, 1993 by and between Maritrans Inc., a
Delaware corporation, with principal offices at Philadelphia,
Pennsylvania (hereinafter referred to as the "Company"), and
Craig N. Johnson, an individual residing at 515 Auburn Avenue
Wyndmoor, PA 19118 (hereinafter referred to as "Johnson").
W I T N E S S E T H:
WHEREAS, the Company has heretofore employed
Johnson under an Employment Agreement entered into as of
April 1, 1993 (the "Employment Agreement"); and
WHEREAS, Johnson has decided to resign from the
Company's employ and terminate the Employment Agreement on
December 17, 1993 and the Company believes that these actions
are in its best interest; and
WHEREAS, the Company and Johnson wish to enter into
an agreement to clearly set forth certain payments to be made
and actions to be taken by reason of Johnson's resignation
and the termination of the Employment Agreement and to
provide for a mutual release as to any claims either party
might have against the other including, without limitation,
claims that might be asserted by Johnson under the Employment
Agreement and the Age Discrimination in Employment Act, as
further described herein; and
WHEREAS, the Employment Agreement shall be and is
superseded by this Agreement except as to the obligations
imposed, and the rights provided, by sections 2, 3 and 4 (and
section 6 to the extent provided by Section 3 below) of the
Employment Agreement, which shall remain in full force and
effect consistent with the terms of this Agreement and the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual
promises contained herein, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Johnson hereby confirms his resignation from
the employ of the Company , which is to become effective on
December 17, 1993. Johnson's term as a director of the
Company (which expires at the annual meeting of the
shareholders of the Company to be held in 1996) is not
subject to this Agreement.
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2. The Company shall pay to Johnson, subject to
applicable employment and income tax withholdings and
deductions, (i) his normal base salary through December 31,
1993, (ii) the sum of $500,000, payable $250,000 on or before
December 31, 1993 and $250,000 on January 4, 1994, and (iii)
commencing January 1, 1994, a monthly sum equal to the COBRA
premium (plus a tax equalization amount) due under the
Company's Health Plan, and continuing until December 31, 1995
(notwithstanding the fact that COBRA eligibility will end on
June 30, 1995).
3. Notwithstanding Johnson's resignation, (i) the
Company will treat as nonforfeitable Johnson's rights under
the stock option granted to him on April 1, 1993, under the
Company's Equity Compensation Plan, but only as to the
purchase of 50,000 shares of the common stock of the Company
and such option shall be exercisable only on or before
December 31, 1996, at which time the portion of the stock
option treated as nonforfeitable hereunder shall expire, and
(ii) in the event that the there is a Change of Control of
the Company, as defined in section 6 of the Employment
Agreement, and the transaction pursuant to which that Change
of Control occurs is publicly announced by the Company or the
subject of an executed letter of intent, in either event on
or before May 1, 1994, section 6 of the Employment Agreement
shall continue to apply; provided, however, that (iii) any
payments made under Section 2 of this Agreement shall serve
as an offset to any amounts due under such section 6 and (iv)
any such payments made under Section 2 of this Agreement
shall not be taken into account in determining "Base
Compensation" for the purpose of calculating the amount due
under section 6.3(a) of the Employment Agreement.
4. Johnson agrees and acknowledges that the
Company, on a timely basis, has paid, or agreed to pay, to
Johnson all other amounts due and owing in accordance with
the terms of the Employment Agreement and that the Company
has no obligation, contractual or otherwise to Johnson except
as provided herein nor to hire, rehire or re-employ Johnson
in the future.
5. Johnson agrees and reaffirms that Section 2 of
the Employment Agreement, as to Confidential Information,
shall continue to apply notwithstanding his resignation and
the termination of the Employment Agreement, and that the
Company shall be entitled to all remedies available under
Section 4 of the Employment Agreement in enforcing its rights
thereunder.
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6. Johnson further agrees and reaffirms that
Section 3 of the Employment Agreement, as to Non-Competition,
shall continue to apply for 24 months from December 17 ,
1993, notwithstanding his resignation and the termination of
the Employment Agreement, and that the Company shall be
entitled to all remedies available under Section 4 of the
Employment Agreement in enforcing its rights thereunder.
7. In full and complete settlement of any claims
that Johnson may have against the Company, including any
possible violations of the Age Discrimination in Employment
Act, 29 U.S.C. Section 621 et seq., ("ADEA") in connection with his
resignation from employment by the Company, and for and in
consideration of the undertakings of the Company described
herein, Johnson does hereby REMISE, RELEASE, AND FOREVER
DISCHARGE the Company, Maritrans General Partner Inc.,
Maritrans Operating Partners L.P. and their subsidiaries and
affiliates, their officers, directors, shareholders,
partners, employees and agents, and their respective
successors and assigns, heirs, executors and administrators
(hereinafter collectively referred to as "Maritrans"), of and
from any and all manner of actions and causes of actions,
suits, debts, claims and demands whatsoever in law or in
equity, which he ever had, now has, or hereafter may have, or
which Johnson's heirs, executors or administrators hereafter
may have, by reason of any matter, cause or thing whatsoever
from the beginning of Johnson's employment with Maritrans to
the date of this Agreement; and particularly, but without
limitation of the foregoing general terms, any claims arising
from or relating in any way to Johnson's employment
relationship or the Employment Agreement and Johnson's
resignation from that employment relationship with Maritrans
and the termination of the Employment Agreement, including
but not limited to, any claims which have been asserted,
could have been asserted, or could be asserted now or in the
future under any federal, state or local laws, including, but
not limited to, any claims under ADEA, Title VII of the Civil
Rights Act of 1964, 42 U.S.C. Section 2000e et seq. ("Title VII"),
the Pennsylvania Human Relations Act, 43 P.S. Section 951 et seq.,
and any common law claims now or hereafter recognized and all
claims for counsel fees and costs; provided, however, that
nothing herein shall preclude Johnson from joining Maritrans
in any action brought against him which arises out of actions
taken within the scope of his employment by the Company and
for which he would have been indemnified pursuant to the
bylaws of the Company as of the date hereof, unless later
limited in accordance with applicable law, (in which case he
shall notify Maritrans within five business days after
receiving service of process as to the commencement of the
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action and give Maritrans the right to control the defense of
any such action).
8. Johnson further agrees and covenants that
neither he, nor any person, organization or other entity on
his behalf, will file, charge, claim, sue or cause or permit
to be filed, charged, or claimed, any action for damages,
including injunctive, declaratory, monetary or other relief,
involving any matter occurring at any time in the past up to
the date of this Agreement, or involving any continuing
effects of any actions or practices which may have arisen or
occurred prior to the date of this Agreement, including any
charge of discrimination under ADEA, Title VII or the
Pennsylvania Human Relations Act. In addition, Johnson
further agrees and covenants that, from and after the date
hereof, he will not voluntarily assist, cooperate or be
involved in any way in any action or claim of another
employee or former employee against the Company or any of its
affiliates, officers, directors or employees, and that the
Company shall be entitled to all remedies available at law or
equity in enforcing its rights hereunder. Finally, Johnson
also agrees and covenants that should he, or any other
person, organization or entity on his behalf, file, charge,
claim, sue or cause or permit to be filed, charged, or
claimed, any action for damages, including injunctive,
declaratory, monetary or other relief, despite his agreement
not to do so hereunder, then he will pay all of the costs and
expenses of the Company (including reasonable attorneys'
fees) incurred in the defense of any such action or
undertaking.
9. In full and complete settlement of any claims
that the Company may have against Johnson, other than the
fulfillment of Johnson's obligations hereunder or his
remaining obligations under the Employment Agreement, and for
and in consideration of the undertakings of Johnson described
herein, Maritrans does hereby REMISE, RELEASE, AND FOREVER
DISCHARGE Johnson and his heirs, executors and administrators
(hereinafter collectively referred to as "Johnson"), of and
from any and all manner of actions and causes of actions,
suits, debts, claims and demands whatsoever in law or in
equity, which Maritrans ever had, now has, or hereafter may
have, by reason of any civil (but specifically not any
criminal act) matter, cause or thing whatsoever from the
beginning of Johnson's employment with Maritrans to the date
of this Agreement; and particularly, but without limitation
of the foregoing general terms, any claims arising from or
relating in any way to Johnson's employment relationship or
the Employment Agreement and the termination of that
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employment relationship with Maritrans and of the Employment
Agreement.
10. Johnson hereby agrees and acknowledges that
under this Agreement, the Company has agreed to provide him
with compensation and benefits, described under Section 2
hereof, that he would have no right to receive under the
Employment Agreement or otherwise, and that such compensation
is sufficient to support the release, covenants and
agreements by Johnson herein.
11. Johnson further agrees and acknowledges that
the undertakings of the Company as provided in this Agreement
are made to provide an amicable conclusion of Johnson's
employment by the Company.
12. Johnson hereby certifies that he has read the
terms of this Agreement, that he has been advised by the
Company to consult with an attorney which he has done, and
that he understand its terms and effects. Johnson
acknowledges, further, that he is executing this Agreement of
his own volition with a full understanding of its terms and
effects and with the intention, as expressed in Section 7
hereof, of releasing all claims recited herein in exchange
for the consideration described herein, which he acknowledges
is adequate and satisfactory to him. The Company has made no
representations to Johnson concerning the terms or effects of
this Agreement other than those contained in this Agreement.
13. Johnson hereby acknowledges that he was
presented with this Agreement on November 16, 1993, and that
he has been informed that he had the right to consider this
Agreement and the release contained herein for a period of at
least twenty-one (21) days prior to execution. Johnson also
understands that he has the right to revoke this Agreement
for a period of seven (7) days following execution, by giving
written notice to the Company at 2600 One Logan Square,
Philadelphia, PA 19103, in which event the provisions of this
Agreement shall be null and void, and the parties shall have
the rights, duties, obligations and remedies afforded by the
Employment Agreement.
14. If any portion of this Agreement shall be held
invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions of this Agreement.
15. This Agreement shall be interpreted and
enforced under the laws of the Commonwealth of Pennsylvania.
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IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day and year first above
written.
ATTEST: MARITRANS INC.
/s/ John C. Newcomb By: /s/ Stephen A. Van Dyck
----------------------------- ----------------------------
Secretary Chairman
/s/ James H. Sanborn /s/ Craig N. Johnson
----------------------------- ----------------------------
Witness CRAIG N. JOHNSON
<PAGE>
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EXHIBIT 10.8
RETIREMENT AGREEMENT
AND GENERAL RELEASE
THIS AGREEMENT, made and entered into on this 22nd
day of November, 1993 by and between Maritrans Inc., a
Delaware corporation, with principal offices at Philadelphia,
Pennsylvania (hereinafter referred to as the "Company"), and
James H. Sanborn, an individual residing at 324 Keller Road,
Berwyn, PA 19312 (hereinafter referred to as "Sanborn").
W I T N E S S E T H:
WHEREAS, the Company has heretofore employed
Sanborn under an Employment Agreement entered into as of
April 1, 1993 (the "Employment Agreement"); and
WHEREAS, Sanborn has decided to retire from the
Company's employ and terminate the Employment Agreement on
December 17, 1993 and the Company believes that these actions
are in its best interest; and
WHEREAS, the Company and Sanborn wish to enter into
an agreement to clearly set forth certain payments to be made
and actions to be taken by reason of Sanborn's retirement and
the termination of the Employment Agreement and to provide
for a mutual release as to any claims either party might have
against the other including, without limitation, claims that
might be asserted by Sanborn under the Employment Agreement
and the Age Discrimination in Employment Act, as further
described herein; and
WHEREAS, the Employment Agreement shall be and is
superseded by this Agreement except as to the obligations
imposed, and the rights provided, by sections 2, 3 and 4 (and
section 6 to the extent provided by Section 3 below) of the
Employment Agreement, which shall remain in full force and
effect consistent with the terms of this Agreement and the
Employment Agreement;
NOW, THEREFORE, in consideration of the mutual
promises contained herein, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Sanborn hereby confirms his voluntary
retirement from the employ of the Company, effective on
December 17, 1993. Sanborn's term as a director of the
Company (which expires at the annual meeting of the
shareholders of the Company to be held in 1995) is not
subject to this Agreement and Sanborn shall continue to serve
as a director during the current term at the pleasure of the
Chairman of the Board of Directors of the Company.
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2. In addition to any payments due to Sanborn
under any employee benefit plan or program of the Company
and, notwithstanding Sanborn's retirement and the termination
of the Employment Agreement, the Company shall pay to
Sanborn, in exchange for the release provided in Section 7
below, and subject to applicable employment and income tax
withholdings and deductions, (i) his normal base salary
through December 31, 1993, (ii) commencing January 1, 1994, a
supplemental monthly single life pension benefit equal to
$5,346 reduced by the amount of the retirement benefit
actually payable under (a) the Retirement Plan of Maritrans
Inc. and (b) the Maritrans Inc. Excess Benefit Plan, which
pension benefit shall be payable in the same form, at the
same time, for the same duration and subject to the same
actuarial reductions or adjustments as the retirement benefit
paid under the Retirement Plan, and (iii) commencing January
1, 1994, a monthly sum equal to the COBRA premium (plus a tax
equalization amount) due under the Company's Health Plan, and
continuing until June 30, 1995.
3. Notwithstanding Sanborn's retirement (i) the
Company will pay to Sanborn, on or before April 30, 1994, the
bonus, if any, that Sanborn would have earned under the
Maritrans Inc. Executive Award Plan for 1993, and (ii) in the
event that the there is a Change of Control of the Company,
as defined in section 6 of the Employment Agreement, and the
transaction pursuant to which that Change of Control occurs
is publicly announced by the Company or the subject of an
executed letter of intent, in either event on or before May
1, 1994, section 6 of the Employment Agreement shall continue
to apply; provided, however, that (iii) any payments made
under Section 2 of this Agreement shall serve as an offset to
any amounts due under such section 6 and (iv) any such
payments made under Section 2 of this Agreement shall not be
taken into account in determining "Base Compensation" for the
purpose of calculating the amount due under section 6.3(a) of
the Employment Agreement.
4. Sanborn agrees and acknowledges that the
Company, on a timely basis, has paid, or agreed to pay, to
Sanborn all other amounts due and owing in accordance with
the terms of the Employment Agreement and that the Company
has no obligation, contractual or otherwise to Sanborn except
as provided herein nor to hire, rehire or re-employ Sanborn
in the future. Notwithstanding the foregoing, the Company
may ask Sanborn to provide consulting services after the date
hereof and, if Sanborn wishes to provide such services, the
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Company shall pay Sanborn at an hourly rate of $50, plus any
expenses that Sanborn incurs in connection with the
performance of those services, as adjusted from time to time
to such other rate as the parties may agree in writing.
5. Sanborn agrees and reaffirms that Section 2 of
the Employment Agreement, as to Confidential Information,
shall continue to apply notwithstanding his retirement and
the termination of the Employment Agreement, and that the
Company shall be entitled to all remedies available under
Section 4 of the Employment Agreement in enforcing its rights
thereunder.
6. Sanborn further agrees and reaffirms that
Section 3 of the Employment Agreement, as to Non-Competition,
shall continue to apply for 12 months from December 17 ,
1993, notwithstanding his retirement and the termination of
the Employment Agreement, and that the Company shall be
entitled to all remedies available under Section 4 of the
Employment Agreement in enforcing its rights thereunder.
7. In full and complete settlement of any claims
that Sanborn may have against the Company, including any
possible violations of the Age Discrimination in Employment
Act, 29 U.S.C. Section 621 et seq., ("ADEA") in connection with his
retirement from employment by the Company, and for and in
consideration of the undertakings of the Company described
herein, Sanborn does hereby REMISE, RELEASE, AND FOREVER
DISCHARGE the Company, Maritrans General Partner Inc.,
Maritrans Operating Partners L.P. and their subsidiaries and
affiliates, their officers, directors, shareholders,
partners, employees and agents, and their respective
successors and assigns, heirs, executors and administrators
(hereinafter collectively referred to as "Maritrans"), of and
from any and all manner of actions and causes of actions,
suits, debts, claims and demands whatsoever in law or in
equity, which he ever had, now has, or hereafter may have, or
which Sanborn's heirs, executors or administrators hereafter
may have, by reason of any matter, cause or thing whatsoever
from the beginning of Sanborn's employment with Maritrans to
the date of this Agreement; and particularly, but without
limitation of the foregoing general terms, any claims arising
from or relating in any way to Sanborn's employment
relationship or the Employment Agreement and Sanborn's
retirement from that employment relationship with Maritrans
and the termination of the Employment Agreement, including
but not limited to, any claims which have been asserted,
could have been asserted, or could be asserted now or in the
future under any federal, state or local laws, including, but
not limited to, any claims under ADEA, Title VII of the Civil
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Rights Act of 1964, 42 U.S.C. Section 2000e et seq. ("Title VII"),
the Pennsylvania Human Relations Act, 43 P.S. Section 951 et seq.,
and any common law claims now or hereafter recognized and all
claims for counsel fees and costs; provided, however, that
nothing herein shall preclude Sanborn from joining Maritrans
in any action brought against him which arises out of actions
taken within the scope of his employment by the Company and
for which he would have been indemnified pursuant to the
bylaws of the Company as of the date hereof, unless later
limited in accordance with applicable law, (in which case he
shall notify Maritrans within five business days after
receiving service of process as to the commencement of the
action and give Maritrans the right to control the defense of
any such action).
8. Sanborn further agrees and covenants that
neither he, nor any person, organization or other entity on
his behalf, will file, charge, claim, sue or cause or permit
to be filed, charged, or claimed, any action for damages,
including injunctive, declaratory, monetary or other relief,
involving any matter occurring at any time in the past up to
the date of this Agreement, or involving any continuing
effects of any actions or practices which may have arisen or
occurred prior to the date of this Agreement, including any
charge of discrimination under ADEA, Title VII or the
Pennsylvania Human Relations Act. In addition, Sanborn
further agrees and covenants that, from and after the date
hereof, he will not voluntarily assist, cooperate or be
involved in any way in any action or claim of another
employee or former employee against the Company or any of its
affiliates, officers, directors or employees, and that the
Company shall be entitled to all remedies available at law or
equity in enforcing its rights hereunder. Finally, Sanborn
also agrees and covenants that should he, or any other
person, organization or entity on his behalf, file, charge,
claim, sue or cause or permit to be filed, charged, or
claimed, any action for damages, including injunctive,
declaratory, monetary or other relief, despite his agreement
not to do so hereunder, then he will pay all of the costs and
expenses of the Company (including reasonable attorneys'
fees) incurred in the defense of any such action or
undertaking.
9. In full and complete settlement of any claims
that the Company may have against Sanborn, other than the
fulfillment of Sanborn's obligations hereunder or his
remaining obligations under the Employment Agreement, and for
and in consideration of the undertakings of Sanborn described
herein, Maritrans does hereby REMISE, RELEASE, AND FOREVER
DISCHARGE Sanborn and his heirs, executors and administrators
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(hereinafter collectively referred to as "Sanborn"), of and
from any and all manner of actions and causes of actions,
suits, debts, claims and demands whatsoever in law or in
equity, which Maritrans ever had, now has, or hereafter may
have, by reason of any civil (but specifically not any
criminal act) matter, cause or thing whatsoever from the
beginning of Sanborn's employment with Maritrans to the date
of this Agreement; and particularly, but without limitation
of the foregoing general terms, any claims arising from or
relating in any way to Sanborn's employment relationship or
the Employment Agreement and his retirement from that
employment relationship with Maritrans and the termination of
the Employment Agreement.
10. Sanborn hereby agrees and acknowledges that
under this Agreement, the Company has agreed to provide him
with compensation and benefits, described under Sections 2
and 3 hereof, that he would have no right to receive under
the Employment Agreement or otherwise, and that such
compensation is sufficient to support the release, covenants
and agreements by Sanborn herein.
11. Sanborn further agrees and acknowledges that
the undertakings of the Company as provided in this Agreement
are made to provide an amicable conclusion of Sanborn's
employment by the Company.
12. Sanborn hereby certifies that he has read the
terms of this Agreement, that he has been advised by the
Company to consult with an attorney and that he understands
its terms and effects. Sanborn acknowledges, further, that
he is executing this Agreement of his own volition with a
full understanding of its terms and effects and with the
intention, as expressed in Section 7 hereof, of releasing all
claims recited herein in exchange for the consideration
described herein, which he acknowledges is adequate and
satisfactory to him. The Company has made no representations
to Sanborn concerning the terms or effects of this Agreement
other than those contained in this Agreement.
13. Sanborn hereby acknowledges that he was
presented with this Agreement on November 22, 1993, and that
he has been informed that he had the right to consider this
Agreement and the release contained herein for a period of at
least twenty-one (21) days prior to execution. Sanborn also
understands that he has the right to revoke this Agreement
for a period of seven (7) days following execution, by giving
written notice to the Company at 2600 One Logan Square,
Philadelphia, PA 19103, in which event the provisions of this
Agreement shall be null and void, and the parties shall have
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the rights, duties, obligations and remedies afforded by the
Employment Agreement.
14. If any portion of this Agreement shall be held
invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions of this Agreement.
15. This Agreement shall be interpreted and
enforced under the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day and year first above
written.
ATTEST: MARITRANS INC.
/s/ John C. Newcomb By: /s/ Stephen A. Van Dyck
------------------------------ --------------------------
Secretary Chairman
/s/ Diana Maxwell /s/ James H. Sanborn
------------------------------ --------------------------
Witness JAMES H. SANBORN
<PAGE>
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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into on
November 15, 1993, by and between Maritrans Holdings Inc., a
Delaware corporation (the "Company"), and Edward J. Flood
("Employee").
WHEREAS, Employee is presently employed by the Company as
its President; and
WHEREAS, the Company and Employee desire to enter into a new
agreement to provide for Employee's continued employment by the
Company, upon the terms and conditions set forth herein,
beginning as of April 1, 1993, the date of Employee's appointment
to his current position;
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. This Agreement shall supersede and
replace the agreement entered into between Employee and Maritrans
GP Inc., a predecessor of the Company, as of February 12, 1992,
which shall be void as of the date hereof.
1.1. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on April 1, 1993 and shall
continue for an indefinite period until terminated in accordance
with Section 5 or Section 6 hereof.
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1.2. Duties and Responsibilities. During the Employment
Term, Employee shall perform all duties and accept all
responsibilities incident to such positions as are assigned to
him by the Chief Executive Officer of Maritrans Inc., the parent
corporation of the Company, (the "Parent Company") or as
otherwise may be assigned to him by the Board of Directors of the
Parent Company (the "Board").
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 his full
time, attention and energy thereto. 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. 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
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installments at such times as the Company customarily pays its
other employees (but in any event no less often than monthly).
Employee's Base Salary shall be subject to review and adjustment
by the Board pursuant to its normal performance review policies
for executives. 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 or
agreed to by Employee.
(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 executives 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 executives of the Company generally, and (iii) entitled to
vacation and holidays during the Employment Term in accordance
with the Parent Company's normal policy.
1.5. Incentive Compensation. In addition to the Base
Salary set forth in Section 1.4 hereof, Employee shall
participate in the Company's Executive Award Plan (which shall be
substantially similar to that of the Parent Company unless the
Board determines otherwise) and such other annual or long-term
incentive compensation plans (including stock option and stock
grant plans), if any, for executives generally, as may be
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established from time to time by the Board in its sole
discretion. The terms and provisions of any such incentive
compensation plan shall be determined in the sole discretion of
the Board.
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.
3. Non-Competition.
(a) During the Employment Term and for a period of one year
thereafter, Employee will not, unless acting pursuant hereto or with
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the prior written consent of the Board or in the event of a
termination for "cause" under Section 5.3(d), 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.
(b) The foregoing restriction shall not be construed to
prohibit the ownership by 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 Employee
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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
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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.
(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
for the Eastern District of Pennsylvania, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in Philadelphia County, Pennsylvania, (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,
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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:
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 except for payments prescribed under any disability
benefit plan which may be in effect for employees of the Company and
in which he participated. 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
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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) an amount equal to one year of Employee's
Base Salary at the time of his death, and (iii) a pro rata portion
of the 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 (a) engages in gross
misconduct, dishonesty, mismanagement, deliberate and premeditated
acts against the interest of the Company or the Parent Company,
(b) materially fails to perform or observe any of the terms or
provisions of this Agreement, (c) is convicted of a felony or (d) is
adjudged by the Board not to be satisfactorily performing his
duties.
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
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cured any such failure by the end of the notice period). In
addition, 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. Upon any such termination or removal,
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.
(b) Notwithstanding the foregoing, in the event that Employee
executes a written release, substantially in the form attached
hereto as Exhibit A, but subject to such changes as counsel to the
Company may recommend, 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, in lieu of the
payment described in subsection (a) 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 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) outplacement services, (B)
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service credit, for purposes of determining the vesting of any stock
options, performance units or other grants under any long term
incentive plan of the Company or the Parent Company, for an
additional twelve months, (C) a lump sum payment equal to the amount
of benefits he would have received under the Company's pension,
profit sharing and savings plans for such twelve month period, (D) a
monthly amount (together with a tax equalization payment) for twelve
months equal to the premium due under the Company's health benefit
plan and (E) continuation of life insurance and long term disability
benefits for twelve months at the level in effect at the time of
such termination or removal. No other payments or benefits shall be
due under this Agreement to Employee and the Company shall have no
further liability or obligation.
(c) 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.
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:
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(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 the total
cash remuneration received by Employee in all capacities with the
Company, and its Affiliates, as reported for Federal income tax
purposes on Form W-2, and 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 Employee, for the five calendar years (or such number of actual
full calendar years of employment, if less than five) immediately
preceding the calendar year in which occurs a 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
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proviso to subsection (ii) above) or disposing of any
voting securities of the Company or the Parent 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.
(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 the
Parent Company); 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 Parent Company then
outstanding or to solicit proxies, or (ii) during any
twenty-four month period, individuals who at the beginning
of such period constituted the Board cease for any reason
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to constitute a majority thereof, unless the election, or
the nomination for election by the shareholders of the
Parent Company, 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 65th
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 other.
(h) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.
(i) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within one year after a 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 (other than in Section 5.3(d) hereof),
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or (ii) initiated by the Employee upon any 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 Employee;
(C) 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;
(D) the requirement that Employee undertake business
travel to an extent substantially greater than is
reasonable and customary for the position he holds
pursuant hereto.
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, the
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Company shall pay to Employee, within fifteen days after the
Termination Date (or as soon as practicable thereafter in the event
that the procedures set forth in Section 6.10(b) hereof cannot be
completed within 15 days), in lieu of any other payments required
under any other Section of this Agreement, an amount in cash equal
to 2.99 multiplied by his Base Compensation.
(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.
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. Termination of Non-Competition Requirements. In the event
of a Termination upon a Change of Control, any non-competition
agreements hereunder or otherwise executed by Employee, or any non-
competition provisions binding on Employee in connection with any
employee bonus, benefit, incentive or other plan or program provided
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by the Company or any Affiliate, shall immediately terminate;
provided, however, that this provision shall not terminate or
otherwise modify the confidentiality provisions contained in Section
2 hereof.
6.6. 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.
6.7. 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
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amount of any payment or benefit provided for herein be reduced by
any compensation earned by other employment or otherwise.
6.8. 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.
6.9. 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.
6.10. 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
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 Employee
to reduce the Payment to avoid or reduce the taxation of excess
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parachute payments under Section 4999 of the Code, the aggregate
present value of amounts payable or distributable to or for the
benefit of 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 6, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 6 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 Employee within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the
Company and Employee. Employee shall in his sole discretion
determine which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this
Section 6. Within five days after Employee'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.
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(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 Employee which 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 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 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
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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.
6.11. Settlement of All Disputes.
(a) In the event of any dispute, controversy or claim arising
out of or relating to any provision of this Section 6 or Employee's
Termination upon a Change in Control, the Company shall appoint as
the sole and exclusive arbiter of such dispute, controversy or
claim, a committee composed of two persons who were members of the
Board at any time within five years prior to the Change of Control
(which persons may, but need not be, directors of the Company at the
time of such dispute, controversy or claim); provided, however, that
no person shall be eligible to serve thereon who (i) is at the
Termination Date, or shall have been at any time within one year
prior thereto, an executive officer of the Company, or (ii) shall be
or have been at any time related in any manner to or otherwise
affiliated with, or was first nominated by, the corporation, Person
or group whose acquisition of shares of Common Stock of the Parent
Company has given rise to a Change of Control. The decision of such
committee and the award of any monetary judgment or other relief by
such committee shall be final and binding upon Employee and the
Company, and shall not be subject to appeal. Judgment may be
entered upon the decision and award of such committee by Employee or
the Company in any court of competent jurisdiction. The Company
shall pay the persons selected pursuant to this subsection a
reasonable fee for their services, and shall reimburse such persons
for their expenses incurred in this capacity. In addition, the
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Company shall, to the maximum extent permitted by law, indemnify and
hold harmless such persons of and from any and all claims, damages
or expenses of any nature whatsoever relating to or arising from
their activities in this capacity.
(b) In the event that the Company shall be unable to appoint
the committee referred to in (a) above after good faith efforts to
do so, or in the event that such committee cannot reach a unanimous
agreement, any remaining dispute, controversy or claim arising out
of or relating to any provision of this Agreement or Employee's
Termination upon a Change of Control shall be settled by arbitration
in the City of Philadelphia, Pennsylvania, in accordance with the
commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and Employee, respectively,
and the third of whom shall be selected by the other two
arbitrators. Each arbitrator selected as provided herein is
required to be or have been a director or an executive officer of a
corporation whose shares of common stock were listed during at least
one year of such service on the New York Stock Exchange or the
American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. Any award entered
by the arbitrators shall be final, binding and nonappealable and
judgment may be entered thereon by any party in accordance with
applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The fees
of the American Arbitration Association and the arbitrators and any
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expenses relating to the conduct of the arbitration shall be paid by
the Company.
(c) The party or parties challenging the right of Employee to
the benefits of this Agreement shall in all circumstances have the
burden of proof.
6.12. 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
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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 Commonwealth of Pennsylvania
without giving effect to any conflict of laws provisions.
9. Litigation Expenses. Except as provided in Section 6.6
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.
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:
2600 One Logan Square
Philadelphia, PA 19103
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Employee, to:
Edward J. Flood
P.O. Box 588, 1055 Gypsy Hill Road
Gwynedd Valley, PA 19437
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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.
(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
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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 HOLDINGS INC.
Attest:
[SEAL]
/s/ John C. Newcomb By /s/ Gary L. Schaefer
-------------------------------- ------------------------------
Secretary Name: Gary L. Schaefer
Title: Treasurer
Witness:
/s/Anna S. Richmond /s/Edward J. Flood
-------------------------------- ------------------------------
EDWARD J. FLOOD
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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into on
October 5, 1993, by and between Maritrans General Partner Inc., a
Delaware corporation (the "Company"), and Charles R. Ward
("Employee").
WHEREAS, Employee is presently employed by the Company as
its President, Eastern Division; and
WHEREAS, the Company and Employee desire to enter into a new
agreement to provide for Employee's continued employment by the
Company, upon the terms and conditions set forth herein,
beginning as of April 1, 1993, the date of Employee's appointment
to his current position;
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. This Agreement shall supersede and
replace the agreement entered into between Employee and Maritrans
GP Inc., a predecessor of the Company, as of February 12, 1992,
which shall be void as of the date hereof.
1.1. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on April 1, 1993 and shall
continue for an indefinite period until terminated in accordance
with Section 5 or Section 6 hereof.
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1.2. Duties and Responsibilities. During the Employment
Term, Employee shall perform all duties and accept all
responsibilities incident to such positions as are assigned to
him by the Company's Chief Executive Officer or as otherwise may
be assigned to him by the Company's Board of Directors (the
"Board").
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 his full
time, attention and energy thereto. 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. 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
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other executives (but in any event no less often than monthly).
Employee's Base Salary shall be subject to review and adjustment
by the Company pursuant to its normal performance review policies
for executives. 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 or
agreed to by Employee.
(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 executives 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 executives of the Company generally, and (iii) entitled to
vacation and holidays during the Employment Term in accordance
with the Company's normal policy.
1.5. Incentive Compensation. In addition to the Base
Salary set forth in Section 1.4 hereof, Employee shall
participate in the Company's Executive Award Plan and such other
annual or long-term incentive compensation plans (including stock
option and stock grant plans), if any, for executives generally,
as may be established from time to time by the Board in its sole
discretion. The terms and provisions of any such incentive
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compensation plan shall be determined in the sole discretion of
the Board.
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.
3. Non-Competition.
(a) During the Employment Term and for a period of one year
thereafter, Employee will not, unless acting pursuant hereto or with
the prior written consent of the Board or in the event of a
termination for "cause" under Section 5.3(d), directly or
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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.
(b) The foregoing restriction shall not be construed to
prohibit the ownership by 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 Employee
nor any group of persons including Employee in any way, either
directly or indirectly, manages or exercises control of any such
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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
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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.
(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
for the Eastern District of Pennsylvania, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in Philadelphia County, Pennsylvania, (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,
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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:
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 except for payments prescribed under any disability
benefit plan which may be in effect for employees of the Company and
in which he participated. 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
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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) an amount equal to one year of Employee's
Base Salary at the time of his death, and (iii) a pro rata portion
of the 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 (a) engages in gross
misconduct, dishonesty, mismanagement, deliberate and premeditated
acts against the interest of the Company, (b) materially fails to
perform or observe any of the terms or provisions of this Agreement,
(c) is convicted of a felony or (d) is adjudged by the Board not to
be satisfactorily performing his duties.
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). In
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addition, 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. Upon any such termination or removal,
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.
(b) Notwithstanding the foregoing, in the event that Employee
executes a written release, substantially in the form attached
hereto as Exhibit A, but subject to such changes as counsel to the
Company may recommend, 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, in lieu of the
payment described in subsection (a) 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 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) outplacement services, (B)
service credit, for purposes of determining the vesting of any stock
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options, performance units or other grants under any long term
incentive plan of the Company, for an additional twelve months, (C)
a lump sum payment equal to the amount of benefits he would have
received under the Company's pension, profit sharing and savings
plans for such twelve month period, (D) a monthly amount (together
with a tax equalization payment) for twelve months equal to the
premium due under the Company's health benefit plan and (E)
continuation of life insurance and long term disability benefits for
twelve months at the level in effect at the time of such termination
or removal. No other payments or benefits shall be due under this
Agreement to Employee and the Company shall have no further
liability or obligation.
(c) 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.
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:
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(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 the total
cash remuneration received by Employee in all capacities with the
Company, and its Affiliates, as reported for Federal income tax
purposes on Form W-2, and 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 Employee, for the five calendar years (or such number of actual
full calendar years of employment, if less than five) immediately
preceding the calendar year in which occurs a 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
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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.
(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., the parent of the Company); 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, or
(ii) 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
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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 65th
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 other.
(h) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.
(i) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within one year after a 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 (other than in Section 5.3(d) hereof),
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or (ii) initiated by the Employee upon any 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 Employee;
(C) 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;
(D) the requirement that Employee undertake business
travel to an extent substantially greater than is
reasonable and customary for the position he holds
pursuant hereto.
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, the
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Company shall pay to Employee, within fifteen days after the
Termination Date (or as soon as practicable thereafter in the event
that the procedures set forth in Section 6.10(b) hereof cannot be
completed within 15 days), in lieu of any other payments required
under any other Section of this Agreement, an amount in cash equal
to 2.99 multiplied by his Base Compensation.
(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.
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. Termination of Non-Competition Requirements. In the event
of a Termination upon a Change of Control, any non-competition
agreements hereunder or otherwise executed by Employee, or any non-
competition provisions binding on Employee in connection with any
employee bonus, benefit, incentive or other plan or program provided
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by the Company or any Affiliate, shall immediately terminate;
provided, however, that this provision shall not terminate or
otherwise modify the confidentiality provisions contained in Section
2 hereof.
6.6. 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.
6.7. No Mitigation. Employee shall not be required to
mitigate the amount of any payment or benefit provided for in this
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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.
6.8. 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.
6.9. 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.
6.10. 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
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 Employee
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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 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 6, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 6 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 Employee within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the
Company and Employee. Employee shall in his sole discretion
determine which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this
Section 6. Within five days after Employee'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.
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(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 Employee which 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 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 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
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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.
6.11. Settlement of All Disputes.
(a) In the event of any dispute, controversy or claim arising
out of or relating to any provision of this Section 6 or Employee's
Termination upon a Change in Control, the Company shall appoint as
the sole and exclusive arbiter of such dispute, controversy or
claim, a committee composed of two persons who were members of the
Board at any time within five years prior to the Change of Control
(which persons may, but need not be, directors of the Company at the
time of such dispute, controversy or claim); provided, however, that
no person shall be eligible to serve thereon who (i) is at the
Termination Date, or shall have been at any time within one year
prior thereto, an executive officer of the Company, or (ii) shall be
or have been at any time related in any manner to or otherwise
affiliated with, or was first nominated by, the corporation, Person
or group whose acquisition of shares of Common Stock of the Company
has given rise to a Change of Control. The decision of such
committee and the award of any monetary judgment or other relief by
such committee shall be final and binding upon Employee and the
Company, and shall not be subject to appeal. Judgment may be
entered upon the decision and award of such committee by Employee or
the Company in any court of competent jurisdiction. The Company
shall pay the persons selected pursuant to this subsection a
reasonable fee for their services, and shall reimburse such persons
for their expenses incurred in this capacity. In addition, the
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Company shall, to the maximum extent permitted by law, indemnify and
hold harmless such persons of and from any and all claims, damages
or expenses of any nature whatsoever relating to or arising from
their activities in this capacity.
(b) In the event that the Company shall be unable to appoint
the committee referred to in (a) above after good faith efforts to
do so, or in the event that such committee cannot reach a unanimous
agreement, any remaining dispute, controversy or claim arising out
of or relating to any provision of this Agreement or Employee's
Termination upon a Change of Control shall be settled by arbitration
in the City of Philadelphia, Pennsylvania, in accordance with the
commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and Employee, respectively,
and the third of whom shall be selected by the other two
arbitrators. Each arbitrator selected as provided herein is
required to be or have been a director or an executive officer of a
corporation whose shares of common stock were listed during at least
one year of such service on the New York Stock Exchange or the
American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. Any award entered
by the arbitrators shall be final, binding and nonappealable and
judgment may be entered thereon by any party in accordance with
applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The fees
of the American Arbitration Association and the arbitrators and any
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expenses relating to the conduct of the arbitration shall be paid by
the Company.
(c) The party or parties challenging the right of Employee to
the benefits of this Agreement shall in all circumstances have the
burden of proof.
6.12. 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
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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 Commonwealth of Pennsylvania
without giving effect to any conflict of laws provisions.
9. Litigation Expenses. Except as provided in Section 6.6
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.
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:
2600 One Logan Square
Philadelphia, PA 19103
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Employee, to:
Charles R. Ward
53 Colonial Road
Havertown, PA 19083
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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.
(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
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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.
IN WITNESS WHEREOF, the undersigned, intending to be
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legally bound, have executed this Agreement on the date first above
written.
MARITRANS GENERAL PARTNER INC.
Attest:
[SEAL]
/s/ John C. Newcomb By /s/ Craig N. Johnson
------------------------------ ---------------------------------
Secretary Name: Craig N. Johnson
Title: President
Witness:
/s/A. Charles Amentt /s/Charles R. Ward
------------------------------ ---------------------------------
CHARLES R. WARD
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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into on
October 5, 1993, by and between Maritrans General Partner Inc., a
Delaware corporation (the "Company"), and Brian J. Telford
("Employee").
WHEREAS, Employee is presently employed by the Company as
its President, Gulf Division; and
WHEREAS, the Company and Employee desire to enter into a new
agreement to provide for Employee's continued employment by the
Company, upon the terms and conditions set forth herein,
beginning as of April 1, 1993, the date of Employee's appointment
to his current position;
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. This Agreement shall supersede and
replace the agreement entered into between Employee and Maritrans
GP Inc., a predecessor of the Company, as of September 8, 1992,
which shall be void as of the date hereof.
1.1. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on April 1, 1993 and shall
continue for an indefinite period until terminated in accordance
with Section 5 or Section 6 hereof.
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1.2. Duties and Responsibilities. During the Employment
Term, Employee shall perform all duties and accept all
responsibilities incident to such positions as are assigned to
him by the Company's Chief Executive Officer or as otherwise may
be assigned to him by the Company's Board of Directors (the
"Board").
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 his full
time, attention and energy thereto. 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. 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
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other executives (but in any event no less often than monthly).
Employee's Base Salary shall be subject to review and adjustment
by the Company pursuant to its normal performance review policies
for executives. 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 or
agreed to by Employee.
(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 executives 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 executives of the Company generally, and (iii) entitled to
vacation and holidays during the Employment Term in accordance
with the Company's normal policy.
1.5. Incentive Compensation. In addition to the Base
Salary set forth in Section 1.4 hereof, Employee shall
participate in the Company's Executive Award Plan and such other
annual or long-term incentive compensation plans (including stock
option and stock grant plans), if any, for executives generally,
as may be established from time to time by the Board in its sole
discretion. The terms and provisions of any such incentive
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compensation plan shall be determined in the sole discretion of
the Board.
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.
3. Non-Competition.
(a) During the Employment Term and for a period of one year
thereafter, Employee will not, unless acting pursuant hereto or with
the prior written consent of the Board or in the event of a
termination for "cause" under Section 5.3(d), directly or
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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.
(b) The foregoing restriction shall not be construed to
prohibit the ownership by 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 Employee
nor any group of persons including Employee in any way, either
directly or indirectly, manages or exercises control of any such
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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
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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.
(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
for the Eastern District of Pennsylvania, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in Philadelphia County, Pennsylvania, (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,
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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:
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 except for payments prescribed under any disability
benefit plan which may be in effect for employees of the Company and
in which he participated. 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
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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) an amount equal to one year of Employee's
Base Salary at the time of his death, and (iii) a pro rata portion
of the 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 (a) engages in gross
misconduct, dishonesty, mismanagement, deliberate and premeditated
acts against the interest of the Company, (b) materially fails to
perform or observe any of the terms or provisions of this Agreement,
(c) is convicted of a felony or (d) is adjudged by the Board not to
be satisfactorily performing his duties.
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). In
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addition, 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. Upon any such termination or removal,
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.
(b) Notwithstanding the foregoing, in the event that Employee
executes a written release, substantially in the form attached
hereto as Exhibit A, but subject to such changes as counsel to the
Company may recommend, 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, in lieu of the
payment described in subsection (a) 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 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) outplacement services, (B)
service credit, for purposes of determining the vesting of any stock
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options, performance units or other grants under any long term
incentive plan of the Company, for an additional twelve months, (C)
a lump sum payment equal to the amount of benefits he would have
received under the Company's pension, profit sharing and savings
plans for such twelve month period, (D) a monthly amount (together
with a tax equalization payment) for twelve months equal to the
premium due under the Company's health benefit plan and (E)
continuation of life insurance and long term disability benefits for
twelve months at the level in effect at the time of such termination
or removal. No other payments or benefits shall be due under this
Agreement to Employee and the Company shall have no further
liability or obligation.
(c) 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.
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:
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(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 the total
cash remuneration received by Employee in all capacities with the
Company, and its Affiliates, as reported for Federal income tax
purposes on Form W-2, and 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 Employee, for the five calendar years (or such number of actual
full calendar years of employment, if less than five) immediately
preceding the calendar year in which occurs a 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
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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.
(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., the parent of the Company); 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, or
(ii) 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
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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 65th
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 other.
(h) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.
(i) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within one year after a 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 (other than in Section 5.3(d) hereof),
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or (ii) initiated by the Employee upon any 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 Employee;
(C) 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;
(D) the requirement that Employee undertake business
travel to an extent substantially greater than is
reasonable and customary for the position he holds
pursuant hereto.
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, the
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Company shall pay to Employee, within fifteen days after the
Termination Date (or as soon as practicable thereafter in the event
that the procedures set forth in Section 6.10(b) hereof cannot be
completed within 15 days), in lieu of any other payments required
under any other Section of this Agreement, an amount in cash equal
to 2.99 multiplied by his Base Compensation.
(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.
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. Termination of Non-Competition Requirements. In the event
of a Termination upon a Change of Control, any non-competition
agreements hereunder or otherwise executed by Employee, or any non-
competition provisions binding on Employee in connection with any
employee bonus, benefit, incentive or other plan or program provided
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by the Company or any Affiliate, shall immediately terminate;
provided, however, that this provision shall not terminate or
otherwise modify the confidentiality provisions contained in Section
2 hereof.
6.6. 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.
6.7. 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
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amount of any payment or benefit provided for herein be reduced by
any compensation earned by other employment or otherwise.
6.8. 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.
6.9. 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.
6.10. 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
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 Employee
to reduce the Payment to avoid or reduce the taxation of excess
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parachute payments under Section 4999 of the Code, the aggregate
present value of amounts payable or distributable to or for the
benefit of 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 6, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 6 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 Employee within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the
Company and Employee. Employee shall in his sole discretion
determine which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this
Section 6. Within five days after Employee'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.
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(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 Employee which 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 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 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
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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.
6.11. Settlement of All Disputes.
(a) In the event of any dispute, controversy or claim arising
out of or relating to any provision of this Section 6 or Employee's
Termination upon a Change in Control, the Company shall appoint as
the sole and exclusive arbiter of such dispute, controversy or
claim, a committee composed of two persons who were members of the
Board at any time within five years prior to the Change of Control
(which persons may, but need not be, directors of the Company at the
time of such dispute, controversy or claim); provided, however, that
no person shall be eligible to serve thereon who (i) is at the
Termination Date, or shall have been at any time within one year
prior thereto, an executive officer of the Company, or (ii) shall be
or have been at any time related in any manner to or otherwise
affiliated with, or was first nominated by, the corporation, Person
or group whose acquisition of shares of Common Stock of the Company
has given rise to a Change of Control. The decision of such
committee and the award of any monetary judgment or other relief by
such committee shall be final and binding upon Employee and the
Company, and shall not be subject to appeal. Judgment may be
entered upon the decision and award of such committee by Employee or
the Company in any court of competent jurisdiction. The Company
shall pay the persons selected pursuant to this subsection a
reasonable fee for their services, and shall reimburse such persons
for their expenses incurred in this capacity. In addition, the
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Company shall, to the maximum extent permitted by law, indemnify and
hold harmless such persons of and from any and all claims, damages
or expenses of any nature whatsoever relating to or arising from
their activities in this capacity.
(b) In the event that the Company shall be unable to appoint
the committee referred to in (a) above after good faith efforts to
do so, or in the event that such committee cannot reach a unanimous
agreement, any remaining dispute, controversy or claim arising out
of or relating to any provision of this Agreement or Employee's
Termination upon a Change of Control shall be settled by arbitration
in the City of Philadelphia, Pennsylvania, in accordance with the
commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and Employee, respectively,
and the third of whom shall be selected by the other two
arbitrators. Each arbitrator selected as provided herein is
required to be or have been a director or an executive officer of a
corporation whose shares of common stock were listed during at least
one year of such service on the New York Stock Exchange or the
American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. Any award entered
by the arbitrators shall be final, binding and nonappealable and
judgment may be entered thereon by any party in accordance with
applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The fees
of the American Arbitration Association and the arbitrators and any
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expenses relating to the conduct of the arbitration shall be paid by
the Company.
(c) The party or parties challenging the right of Employee to
the benefits of this Agreement shall in all circumstances have the
burden of proof.
6.12. 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
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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 Commonwealth of Pennsylvania
without giving effect to any conflict of laws provisions.
9. Litigation Expenses. Except as provided in Section 6.6
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.
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:
2600 One Logan Square
Philadelphia, PA 19103
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Employee, to:
Brian J. Telford
5102 E. Longboat Blvd.
Tampa, Florida 33615
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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.
(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
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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.
IN WITNESS WHEREOF, the undersigned, intending to be
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legally bound, have executed this Agreement on the date first above
written.
MARITRANS GENERAL PARTNER INC.
Attest:
[SEAL]
/s/ John C. Newcomb By /s/ Craig N. Johnson
------------------------------ -------------------------------
Secretary Name: Craig N. Johnson
Title: President
Witness:
/s/ Jimmie Miller /s/ Brian J. Telford
------------------------------ -------------------------------
BRIAN J. TELFORD
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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into on
October 5, 1993, by and between Maritrans General Partner Inc., a
Delaware corporation (the "Company"), and Edward R. Sheridan
("Employee").
WHEREAS, Employee is presently employed by the Company as
its President, Distribution Services Division; and
WHEREAS, the Company and Employee desire to enter into a new
agreement to provide for Employee's continued employment by the
Company, upon the terms and conditions set forth herein,
beginning as of April 1, 1993, the date of Employee's appointment
to his current position;
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. This Agreement shall supersede and
replace the agreement entered into between Employee and Maritrans
GP Inc., a predecessor of the Company, as of February 1, 1993,
which shall be void as of the date hereof.
1.1. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on April 1, 1993 and shall
continue for an indefinite period until terminated in accordance
with Section 5 or Section 6 hereof.
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1.2. Duties and Responsibilities. During the Employment
Term, Employee shall perform all duties and accept all
responsibilities incident to such positions as are assigned to
him by the Company's Chief Executive Officer or as otherwise may
be assigned to him by the Company's Board of Directors (the
"Board").
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 his full
time, attention and energy thereto. 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. 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 $160,000,
for each full year of the Employment Term ("Base Salary"),
payable in installments at such times as the Company customarily
pays its other executives (but in any event no less often than
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monthly). Employee's Base Salary shall be subject to review and
adjustment by the Company, commencing in 1994, pursuant to its
normal performance review policies for executives. 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 or agreed to by Employee.
(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 executives 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 executives of the Company generally, and (iii) entitled to
vacation and holidays during the Employment Term in accordance
with the Company's normal policy.
1.5. Incentive Compensation. In addition to the Base
Salary set forth in Section 1.4 hereof, Employee shall
participate in the Company's Executive Award Plan and such other
annual or long-term incentive compensation plans (including stock
option and stock grant plans), if any, for executives generally,
as may be established from time to time by the Board in its sole
discretion. The terms and provisions of any such incentive
compensation plan shall be determined in the sole discretion of
the Board.
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1.6 Supplemental Pension. Notwithstanding anything in
this Agreement to the contrary, in addition to the benefit
programs set forth in Section 1.4(b) hereof, Employee shall be
entitled to a supplemental pension (the "Supplemental Pension")
equal to (i) the after-tax, single life benefit he would have
received under the Star Enterprises Retirement Plan (the "Star
Plan"), as in effect on February 1, 1993, had he remained a
participant in the Star Plan until the date of his retirement or
termination of employment from the Company for any other reason
(the "Benefit Date") less (ii) the sum of the single life
benefits (a) actually due from the Star Plan and (b) actually due
from the Company's Retirement Plan, both calculated on the
Benefit Date using the actuarial assumptions employed by the
company in providing benefits under its Retirement Plan. The
Company shall secure the payment to Employee of the Supplemental
Pension by contributing amounts necessary to fund such Pension,
as determined by the Company in its sole discretion, to the
Maritrans Operating Partners L.P. Excess Benefit Trust Fund (the
"Trust Fund") such that the Trust Fund will hold at least 85% of
the estimated present value of such Pension by the Benefit Date.
Employee shall be paid the Supplemental Pension in lump sum
within 60 days following the Benefit Date.
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
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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.
3. Non-Competition.
(a) During the Employment Term and for a period of one year
thereafter, Employee will not, unless acting pursuant hereto or with
the prior written consent of the Board or in the event of a
termination for "cause" under Section 5.3(d), 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
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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.
(b) The foregoing restriction shall not be construed to
prohibit the ownership by 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 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
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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
for the Eastern District of Pennsylvania, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of
general jurisdiction in Philadelphia County, Pennsylvania, (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.
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5. Termination. The Employment Term shall terminate upon the
occurrence of any one of the following events:
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 except for payments prescribed under any disability
benefit plan which may be in effect for employees of the Company and
in which he participated. 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
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Company, generally, (ii) an amount equal to one year of Employee's
Base Salary at the time of his death, (iii) a pro rata portion of
the incentive compensation, if any, as referred to in Section 1.5
hereof, in respect of the year during which Employee died, and (iv)
the Supplemental Pension.
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 and the Supplemental Pension. For purposes
of this Agreement, Employee's employment may be terminated for
"cause" if he (a) engages in gross misconduct, dishonesty,
mismanagement, deliberate and premeditated acts against the interest
of the Company, (b) materially fails to perform or observe any of
the terms or provisions of this Agreement, (c) is convicted of a
felony or (d) is adjudged by the Board not to be satisfactorily
performing his duties.
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). In
addition, 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
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the giving of such notice. Upon any such termination or removal,
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 except for the payment of the Supplemental
Pension.
(b) Notwithstanding the foregoing, in the event that Employee
executes a written release, substantially in the form attached
hereto as Exhibit A, but subject to such changes as counsel to the
Company may recommend, 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, in lieu of the
payment described in subsection (a) 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 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) outplacement services, (B)
service credit, for purposes of determining the vesting of any stock
options, performance units or other grants under any long term
incentive plan of the Company, for an additional twelve months, (C)
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a lump sum payment equal to the amount of benefits he would have
received under the Company's pension, profit sharing and savings
plans for such twelve month period, (D) a monthly amount (together
with a tax equalization payment) for twelve months equal to the
premium due under the Company's health benefit plan, (E) the
continuation of life insurance and long term disability benefits for
twelve months at the level in effect at the time of such termination
or removal, and (F) the Supplemental Pension. No other payments or
benefits shall be due under this Agreement to Employee and the
Company shall have no further liability or obligation.
(c) 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, except the
Supplemental Pension, and the Company shall have no further
liability or obligation.
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
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and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(b) "Base Compensation" shall mean the average of the total
cash remuneration received by Employee in all capacities with the
Company, and its Affiliates, as reported for Federal income tax
purposes on Form W-2, and 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 Employee, for the five calendar years (or such number of actual
full calendar years of employment, if less than five) immediately
preceding the calendar year in which occurs a 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;
(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
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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;
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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.
(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., the parent of the Company); 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, or
(ii) 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
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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 65th
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 other.
(h) "Termination of Employment" shall mean the termination of
Employee's actual employment relationship with the Company.
(i) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within one year after a 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 (other than in Section 5.3(d) hereof),
or (ii) initiated by the Employee upon any of the
following occurrences:
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(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 Employee;
(C) 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;
(D) the requirement that Employee undertake business
travel to an extent substantially greater than is
reasonable and customary for the position he holds
pursuant hereto.
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, the
Company shall pay to Employee, within fifteen days after the
Termination Date (or as soon as practicable thereafter in the event
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that the procedures set forth in Section 6.10(b) hereof cannot be
completed within 15 days), in lieu of any other payments required
under any other Section of this Agreement, other than the
Supplemental Pension, an amount in cash equal to 2.99 multiplied by
his Base Compensation.
(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.
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. Termination of Non-Competition Requirements. In the event
of a Termination upon a Change of Control, any non-competition
agreements hereunder or otherwise executed by Employee, or any non-
competition provisions binding on Employee in connection with any
employee bonus, benefit, incentive or other plan or program provided
by the Company or any Affiliate, shall immediately terminate;
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provided, however, that this provision shall not terminate or
otherwise modify the confidentiality provisions contained in Section
2 hereof.
6.6. 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.
6.7. 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
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amount of any payment or benefit provided for herein be reduced by
any compensation earned by other employment or otherwise.
6.8. 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.
6.9. 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.
6.10. 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
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 Employee
to reduce the Payment to avoid or reduce the taxation of excess
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parachute payments under Section 4999 of the Code, the aggregate
present value of amounts payable or distributable to or for the
benefit of 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 6, present value shall be determined in
accordance with Section 280G(d)(4) of the Code.
(b) All determinations to be made under this Section 6 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 Employee within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the
Company and Employee. Employee shall in his sole discretion
determine which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the requirements of this
Section 6. Within five days after Employee'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.
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(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 Employee which 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 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 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
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<PAGE> 234
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.
6.11. Settlement of All Disputes.
(a) In the event of any dispute, controversy or claim arising
out of or relating to any provision of this Section 6 or Employee's
Termination upon a Change in Control, the Company shall appoint as
the sole and exclusive arbiter of such dispute, controversy or
claim, a committee composed of two persons who were members of the
Board at any time within five years prior to the Change of Control
(which persons may, but need not be, directors of the Company at the
time of such dispute, controversy or claim); provided, however, that
no person shall be eligible to serve thereon who (i) is at the
Termination Date, or shall have been at any time within one year
prior thereto, an executive officer of the Company, or (ii) shall be
or have been at any time related in any manner to or otherwise
affiliated with, or was first nominated by, the corporation, Person
or group whose acquisition of shares of Common Stock of the Company
has given rise to a Change of Control. The decision of such
committee and the award of any monetary judgment or other relief by
such committee shall be final and binding upon Employee and the
Company, and shall not be subject to appeal. Judgment may be
entered upon the decision and award of such committee by Employee or
the Company in any court of competent jurisdiction. The Company
shall pay the persons selected pursuant to this subsection a
reasonable fee for their services, and shall reimburse such persons
for their expenses incurred in this capacity. In addition, the
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<PAGE> 235
Company shall, to the maximum extent permitted by law, indemnify and
hold harmless such persons of and from any and all claims, damages
or expenses of any nature whatsoever relating to or arising from
their activities in this capacity.
(b) In the event that the Company shall be unable to appoint
the committee referred to in (a) above after good faith efforts to
do so, or in the event that such committee cannot reach a unanimous
agreement, any remaining dispute, controversy or claim arising out
of or relating to any provision of this Agreement or Employee's
Termination upon a Change of Control shall be settled by arbitration
in the City of Philadelphia, Pennsylvania, in accordance with the
commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of
whom shall be selected by the Company and Employee, respectively,
and the third of whom shall be selected by the other two
arbitrators. Each arbitrator selected as provided herein is
required to be or have been a director or an executive officer of a
corporation whose shares of common stock were listed during at least
one year of such service on the New York Stock Exchange or the
American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. Any award entered
by the arbitrators shall be final, binding and nonappealable and
judgment may be entered thereon by any party in accordance with
applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The fees
of the American Arbitration Association and the arbitrators and any
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<PAGE> 236
expenses relating to the conduct of the arbitration shall be paid by
the Company.
(c) The party or parties challenging the right of Employee to
the benefits of this Agreement shall in all circumstances have the
burden of proof.
6.12. 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
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<PAGE> 237
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 Commonwealth of Pennsylvania
without giving effect to any conflict of laws provisions.
9. Litigation Expenses. Except as provided in Section 6.6
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.
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:
2600 One Logan Square
Philadelphia, PA 19103
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Employee, to:
Edward R. Sheridan
2106 Pecan Trail
Richmond, Texas 77469
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<PAGE> 238
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.
(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
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<PAGE> 239
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 GENERAL PARTNER INC.
Attest:
[SEAL]
/s/ John C. Newcomb By /s/ Craig N. Johnson
------------------------------ -----------------------------
Secretary Name: Craig N. Johnson
Title: President
Witness:
/s/ Jill Cathleen Lott /s/ Edward R. Sheridan
------------------------------ -----------------------------
EDWARD R. SHERIDAN
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EXHIBIT 10.13
PROFIT SHARING AND SAVINGS PLAN
OF
MARITRANS INC.
(as amended and restated
effective November 1, 1993)
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TABLE OF CONTENTS
Page
----
ARTICLE I Adoption of Plan . . . . . . . . . . . . 1
ARTICLE II Definitions. . . . . . . . . . . . . . . 3
ARTICLE III Eligibility. . . . . . . . . . . . . . . 21
ARTICLE IV Contributions. . . . . . . . . . . . . . 24
ARTICLE V Allocations of Contributions and
Valuations . . . . . . . . . . . . . . 34
ARTICLE VI Investment Directions. . . . . . . . . . 40
ARTICLE VII Retirement Benefits. . . . . . . . . . . 45
ARTICLE VIII Disability . . . . . . . . . . . . . . . 48
ARTICLE IX Death Benefits . . . . . . . . . . . . . 50
ARTICLE X Vested Benefits Upon Termination
of Service . . . . . . . . . . . . . . 52
ARTICLE XI Distribution of Benefits . . . . . . . . 55
ARTICLE XII Life Insurance . . . . . . . . . . . . . 61
ARTICLE XIII Withdrawals and Loans. . . . . . . . . . 64
ARTICLE XIV Special Provisions for Top-Heavy
Plans. . . . . . . . . . . . . . . . . 71
ARTICLE XV Administration and Fiduciary
Responsibility . . . . . . . . . . . . 76
ARTICLE XVI Amendment of Plan. . . . . . . . . . . . 81
ARTICLE XVII Termination of Plan. . . . . . . . . . . 83
ARTICLE XVIII Miscellaneous. . . . . . . . . . . . . . 84
SCHEDULE A Provisions pertaining to Tank
Cleaning Inc. Participants . . . . . . 87
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ARTICLE I
ADOPTION OF PLAN
Sonat Marine Inc. adopted the Performance Retirement Plan
of Sonat Marine Inc. (the "Plan") for the benefit of its eligible
employees effective January 1, 1985. The Plan continued the
benefits provided under the revised Profit Sharing Plan of IOT
Corporation and Subsidiary Corporations. As a result of the
purchase of the assets of the Sonat Marine Group by Maritrans
Operating Partners L.P., sponsorship of the Plan was transferred to
Maritrans GP Inc. effective April 14, 1987. The Plan is now known
as the Profit Sharing Plan of Maritrans GP Inc.
The Plan was amended and restated in its entirety,
effective January 1, 1988, to incorporate all amendments and to
comply with the Tax Reform Act of 1986 and the Omnibus Budget
Reconciliation Act of 1986.
Effective April 1, 1993, in connection with a change in
business structure, the sponsorship of the Plan was transferred to
Maritrans Inc. and the name of the Plan was changed to the Profit
Sharing Plan of Maritrans Inc.
The Plan is now amended and restated in its entirety,
effective November 1, 1993, to reflect the merger of the Maritrans
Inc. 401(k) Savings Plan (the "Savings Plan") with and into the
Plan. As a result of the merger, the Plan name is changed to the
Profit Sharing and Savings Plan of Maritrans Inc. Except as
otherwise provided herein or required by law the Plan, as amended
and restated, shall apply only to an employee who terminates
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employment on or after November 1, 1993. The rights and benefits,
if any, of other former employees shall be determined in accordance
with the provisions of the Plan as it existed prior to such date.
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ARTICLE II
DEFINITIONS
Whenever used herein the following words and phrases shall
have the meaning set forth below unless a different meaning is
plainly required by the context. The singular shall include or
mean the plural and the masculine pronoun shall include or mean the
feminine pronoun, where applicable.
Section 2.1. "Account" shall mean the accounts maintained
under the Plan for each Participant which represent the
Participant's interest in the Fund. The term "Account" shall
refer, as the context indicates, to any or all of the following:
"Employer Contribution Account" -- The Account to which
are credited Employer Contributions allocated to a Participant,
adjustments for withdrawals and distributions, and earnings, losses
and expenses attributable thereto.
"Salary Reduction Contribution Account" -- the Account to
which are credited Participant contributions allocated to a
Participant, adjustments for withdrawals and distributions, and the
earnings, losses and expenses attributable thereto.
"Profit Sharing Plan Rollover Account" -- the Account to
which are credited a Participant's rollover contributions pursuant
to Section 4.8 of the Plan.
"Savings Plan Rollover Account" -- The Account to which
are credited a Participant's rollover contributions pursuant to
Section 4.9 of the Plan.
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Section 2.2. "Affiliated Company" shall mean any cor-
poration which is included within a controlled group of corpora-
tions (within which the Company is also included), as determined
under Section 1563(a) of the Code, without regard to Sections
1563(a)(4) and (e)(3)(C) of the Code; provided, however, that for
the purposes of Sections 5.4 and 5.5 herein, such determination
under Section 1563(a) of the Code shall be made by substituting the
phrase "more than 50 percent" for the phrase "at least 80 percent"
each place it appears in Section 1563(a)(l) of the Code.
Section 2.3. "Anniversary Date" shall mean the first day
of each Plan Year during which the Plan is in effect.
Section 2.4. "Board" shall mean the Board of Directors of
the Company.
Section 2.5. "Break in Service" shall mean any 12-
consecutive month period beginning on an Employee's Date of
Severance and each anniversary thereof during which an Employee
fails to perform an Hour of Service. An Employee who is absent
from work for maternity or paternity reasons shall not be treated
as having incurred a Break in Service during the twelve month
period beginning on the first anniversary of the first date of such
absence. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (a) by reason of
the pregnancy of the Employee, (b) by reason of a birth of a child
of the Employee, (c) by reason of the placement of a child with the
Employee in connection with the adoption of such child by the
Employee, or (d) for purposes of caring for such child for a period
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beginning immediately following such birth or placement. In order
for this paragraph to apply, an Employee shall provide to the
Committee, in the form and manner prescribed by the Committee,
information establishing (a) that the absence from work is for
reasons set forth in this paragraph, and (b) the number of days for
which there was such an absence. Nothing in this Section shall be
interpreted as an expansion or modification of any policy of the
Employer regarding maternity and paternity leave.
Section 2.6. "Code" shall mean the Internal Revenue Code
of 1986, as amended.
Section 2.7. "Committee" shall mean the Committee ap-
pointed by the Board to assist in administration of the Plan in
accordance with Article XIV.
Section 2.8. "Common Stock" shall mean the common stock
of Maritrans Inc. without any rights that may have been issued with
respect thereto.
Section 2.9. "Company" shall mean Maritrans Inc., a
Delaware corporation with its principal office in Philadelphia,
Pennsylvania.
Section 2.10. "Compensation" for a salaried Employee
shall mean the basic salary paid by the Employer or Participating
Employer to an Employee during the portion of a Plan Year in which
he is eligible to participate in the Plan. For an hourly paid
Employee, "Compensation" shall mean the regular hourly rate of
compensation paid to him multiplied by his Hours of Service during
the portion of any Plan Year in which he is eligible to participate
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<PAGE> 248
in the Plan up to 2080 Hours. Compensation shall include bonuses
and overtime pay, but shall not include commissions, fringe
benefits or severance pay. In the case of a seagoing supervisor,
Compensation shall include premium pay. Compensation shall also
include all amounts which the Participant elects to defer under the
provisions of a cash or deferred arrangement maintained by the
Employer. Notwithstanding the foregoing, for purposes of Section
5.1, Compensation shall mean all remuneration which is required to
be reported as wages on the Participant's Form W-2 for the Plan
Year and, unless the Employer elects otherwise, the Participant
elects to defer under the provisions of a cash or deferred
arrangement maintained by the Employer. Notwithstanding the
foregoing, for purposes of determining the amount of a
Participant's Salary Reduction Contribution pursuant to Section 4.5
and limitations on a Participant's Salary Reduction Contribution
pursuant to Section 5.3, Compensation shall mean a Participant's
gross wages received from the Employer during the Plan Year prior
to reduction for Contributions made hereunder. Effective Jan-
uary 1, 1989, Compensation in excess of $200,000 (adjusted to
reflect any cost-of-living increases provided in accordance with
section 415(d) of the Code) shall be disregarded. In determining
Compensation for purposes of this limitation, the rules of Code
section 414(q)(6) shall apply, except that in applying such rules,
the term "family" shall include only the Spouse of the employee and
any lineal descendants who have not attained age 19 before the
close of the Plan Year. If as a result of the application of the
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<PAGE> 249
rules of Code section 414(q)(6), the limitation is exceeded, then
the limitation shall be prorated among the affected family members
in proportion to each such family member's Compensation as
determined under this Section prior to the application of this
limitation.
Section 2.11. "Date of Employment" shall mean the first
day on which an Employee performs an Hour of Service.
Section 2.12. "Date of Reemployment" shall mean the first
day on which an Employee performs an Hour of Service after
incurring a Break in Service.
Section 2.13. "Date of Severance" shall mean the earlier
of:
(a) the date on which an Employee quits, is discharged,
retires or dies, or
(b) the first anniversary of an Employee's absence from
Service for any reason other than quit, discharge, retirement or
death.
Section 2.14. "Disability" shall mean a physical or
mental condition that restricts the Participant's ability to work
and qualifies him for disability benefits under the Social Security
Act.
Section 2.15. "Earliest Retirement Age" shall mean for
purposes of Section 2.35 the earlier of (a) the date on which the
Participant is entitled to a distribution under the Plan; or (b)
the later of (i) the date the Participant attains age 50, or (ii)
the earliest date on which, under the Plan, the Participant could
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<PAGE> 250
elect to receive benefits if the Participant incurred a Date of
Severance.
Section 2.16. "Effective Date" shall mean January 1,
1981.
Section 2.17. "Eligibility Computation Period" shall mean
the 12-month period beginning on an Employee's Date of Employment
or Date or Reemployment, whichever is applicable, and each anniver-
sary thereof.
Section 2.18. "Employee" shall mean any person employed
by the Employer. However, no such person shall be considered an
Employee under this Plan for any period during which his compen-
sation and conditions of employment are the subject of agreement
between the Employer, a Participating Employer or an Affiliated
Company and a collective bargaining unit unless the agreement with
such unit specifically provides for participation under the Plan.
In addition, no person whose duties are primarily seagoing shall be
considered an Employee under this Plan; provided, however, that on
or after August 15, 1984, any person who is a seagoing supervisor
and who is not covered by a collective bargaining agreement shall
be considered an Employee under this Plan as of August 15, 1984,
or, if later, the date on which the collective bargaining agreement
covering such seagoing supervisor expires. Other categories of
employees may be excluded from the definition of Employee only by
specific direction set forth in the Adoption Agreement of a Par-
ticipating Employer. "Employee" shall not include any leased
employees within the meaning of Section 414(n)(2) of the Code.
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Section 2.19. "Employer" shall mean the Company and each
Participating Employer, either singularly or collectively, as
required by the context.
Section 2.20. "Employer Contributions" shall mean monies
paid into the Fund on behalf of a Participant by the Employer in
accordance with Article III.
Section 2.21. "Entry Date" shall mean the first day of
the month coinciding with or next following the day on which an
Employee is eligible to become a Participant in accordance with
Section 3.1.
Section 2.22. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as it may be amended from time to
time.
Section 2.23. "Fiduciary" shall mean the individuals,
corporation or other entity which has consented to be responsible
for administration of any part of the Plan including, but not
limited to, the Employer, the Committee, the Plan Administrator,
the Trustee and, if any, the Investment Advisor but only with
respect to the specific responsibilities assigned to each as de-
scribed in Article XV. The term "Fiduciary" shall also include any
other person properly authorized, in accordance with Committee
rules, by any of the aforementioned persons to deal with Fund
assets, for purposes of the Plan, but only with respect to the
scope of the authority so delegated.
Section 2.24. "415 Compensation" shall mean a Partici-
pant's remuneration including wages, salaries, fees for pro-
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fessional services and other amounts received for personal services
actually rendered in the course of employment with an Employer
maintaining the Plan including overtime, bonuses, premium time,
etc., but excluding the following:
(a) contributions made by the Employer to a deferred
compensation plan which, without regard to section 415 of the Code,
are not includable in the Participant's gross income for the
taxable year in which contributed;
(b) Employer contributions made on behalf of a Par-
ticipant to a simplified employee pension to the extent they are
deductible by the Participant under section 219(b)(7) of the Code;
(c) distributions from a deferred compensation plan
(except from an unfunded non-qualified plan when includable in
gross income);
(d) amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or property) held
by a Participant either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(e) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; or
(f) other amounts which receive special tax benefits,
such as premiums for group term life insurance (to the extent
excludable from gross income) or Employer contributions towards the
purchase of an annuity contract described in section 403(b) of the
Code.
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Section 2.25. "Fund" shall mean the assets held by the
Trustee from contributions made by the Employer and Participating
Employers, including income, gains and losses thereon, as the
source of benefits under this Plan.
Section 2.26. "Highly Compensated Employee" shall mean:
(a) each Employee who, with respect to the Employer or an
Affiliated Company, performed services (an "Active Employee")
during the Plan Year for which a determination is being made (the
"Determination Year") and who during such Determination Year, or
the preceding Determination Year,
(i) was at any time a five-percent owner (as defined
in section 416(i) of the Code and the regulations issued
thereunder);
(ii) received 415 Compensation in excess of $75,000
(adjusted to reflect any cost of living increases provided in
accordance with section 415(d) of the Code);
(iii) received 415 Compensation in excess of $50,000
(adjusted to reflect any cost of living increases provided in
accordance with section 415(d) of the Code) and was in the top
twenty percent of Active Employees (based on 415 Compensation
received) during such year; or
(iv) was an officer (as defined in section 416(i) of
the Code and the regulations issued thereunder) and received 415
Compensation greater than one hundred and fifty percent of the
amount in effect under section 415(c)(1)(A) of the Code for the
calendar year in which a determination is made.
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Notwithstanding the foregoing, the provisions of paragraph (ii),
(iii) or (iv) above shall not cause an Employee to be treated as a
Highly Compensated Employee for the Determination Year of reference
unless such Employee is one of the top 100 Active Employees (based
on 415 Compensation received) during such Determination Year and
was a Highly Compensated Employee in accordance with the provisions
of paragraph (ii), (iii) or (iv) above for the preceding
Determination Year (without regard to this sentence).
(b) The determination of Highly Compensated Employee made
pursuant to this Section shall be made in accordance with section
414(q) of the Code and the regulations issued thereunder.
(c) For purposes of this Section, the term "415 Com-
pensation" shall include amounts deferred under a plan maintained
by the Employer and qualified under section 401(k) of the Code.
Section 2.27. "Hour of Service" shall mean
(a) each hour for which an Employee is paid or entitled
to payment for the performance of duties for the Employer or an
Affiliated Company;
(b) each hour for which an Employee is paid, or entitled
to payment, by the Employer or an Affiliated Company on account of
a period of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due to
vacations, holiday, illness, incapacity (including Disability),
layoff, jury duty, military duty or leave of absence. No more than
501 Hours of Service shall be credited under this Section to any
Employee on account of any single continuous period during which
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such Employee performs no duties (whether or not such period occurs
in a single Plan Year). For purposes of this Section, a payment
shall be deemed to be made by or due from the Employer or an
Affiliated Company regardless of whether such payment is made by or
due from the Employer or an Affiliated Company directly or through,
among others, a trust fund (other than the Fund), or insurer, to
which the Employer or an Affiliated Company contributes or pays
premiums and regardless of whether contributions made or due from
such trust fund (other than the Fund), insurer or other entity are
for the benefit of particular employees or are on behalf of a group
of employees in the aggregate; and
(c) each hour for which back-pay, irrespective of miti-
gation of damages, has either been awarded or agreed to by the
Employer or an Affiliated Company. In the event that the same
hours could, by the terms of this Section, be credited under more
than one paragraph of this Section, such hours shall be credited as
provided in paragraph (a) or (b) only, whichever is applicable.
(d) Hours of Service shall be credited pursuant to the
provisions of 29 CFR 2530.200b-2(b) and (c), which are incorporated
herein by reference. Nothing in this Section shall be construed to
deny an Employee credit for an Hour of Service if credit is
required by federal statute other than the Employee Retirement
Income Security Act of 1974, as amended. In applying such other
federal statutes, the nature and extent of such credit shall be
governed by such other federal law.
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(e) For purposes of Sections 2.43(b), 3.1 and 5.1 only,
Hours of Service shall be credited in accordance with paragraphs
(a), (b), (c) and (d) of this Section. For all other purposes of
the Plan, Hours of Service shall be credited only in accordance
with paragraph (a) of this Section.
Section 2.28. "Investment Advisor" shall mean an adviser
which is (a) registered under the "Investment Advisers Act of
1940," (b) a bank, or (c) an insurance company qualified to perform
investment services in more than one State, which is appointed by
the Committee to render investment advice as provided in Article
XIII hereof and which acknowledges in writing its status as a Fid-
uciary under the Plan.
Section 2.29. "Investment Fund" shall mean any one of the
funds comprising the Fund, as designated from time to time by the
Committee.
Section 2.30. "Merger Effective Date" shall mean close
of business November 1, 1993, the effective date of the merger of
the Maritrans Inc. Savings Plan with and into the Plan.
Section 2.31. "Net Profits" shall mean the Employer's, or
a Participating Employer's, net income for any fiscal year or its
accumulated income from prior years determined in accordance with
standard accounting practices regularly employed by the Employer,
or Participating Employer, in maintaining its books of account. In
the case of a current year, Net Profits shall be determined without
deduction for federal, state or local taxes based upon net income
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or for contributions made by the Employer, or Participating
Employers, under this Plan.
Section 2.32. "Non-Highly Compensated Employee" shall
mean an Employee who is not a Highly Compensated Employee.
Section 2.33. "Normal Retirement Age" shall mean age 65.
"Normal Retirement Date" shall mean the first day of the month
coinciding with or next following his attainment of his Normal
Retirement Age.
Section 2.34. "Participant" shall mean any Employee
qualifying for participation in accordance with Article III
hereof. A person shall cease to be a Participant when he and any
beneficiary of his no longer have rights to any benefits under the
Plan.
Section 2.35. "Participating Employer" shall mean any
Affiliated Company which is designated by the Board as a
Participating Employer under the Plan and whose designation as such
has become effective upon acceptance of such status by the Board of
Directors of the Affiliated Company. A Participating Employer may
revoke its acceptance of such designation at any time, but until
such acceptance has been revoked, all of the provisions of the Plan
and amendments thereto shall apply to the Employees of the
Participating Employer. In the event the designation as a
Participating Employer is revoked by the Board of Directors of such
Participating Employer, the Plan shall be deemed terminated only as
to such Participating Employer.
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Section 2.36. "Plan" shall mean the Profit Sharing and
Savings Plan of Maritrans Inc., the Trust Agreement and the
Resolution of the Board appointing the Plan Administrator,
Committee and other Fiduciaries.
Section 2.37. "Plan Administrator" shall mean the person
appointed by the Board to administer the Plan in accordance with
Article XV. In the absence of such an appointment, the Employer
shall be the Plan Administrator.
Section 2.38. "Plan Year" shall mean the period from
January 1 through December 31 for any year in which the Plan is in
effect.
Section 2.39. "Qualified Domestic Relations Order" shall
mean a judgment, decree or order (including approval of a property
settlement agreement) made pursuant to a state domestic relations
law (including a community property law) which:
(a) relates to the provision of child support, alimony
payments or marital property rights to a spouse, former spouse,
child or other dependent of a Participant (the 'Alternate Payee');
(b) creates or recognizes the existence of the Alternate
Payee's right to, or assigns to the Alternate Payee the right to,
receive all or a portion of the benefits payable to a Participant
under this Plan;
(c) specifies (i) the name and last known mailing address
(if any) of the Participant and each Alternate Payee covered by the
order, (ii) the amount or percentage of the Participant's Plan
benefits to be paid to the Alternate Payee, or the manner in which
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such amount or percentage is to be determined, and (iii) the number
of payments or the period to which the order applies and each plan
to which the order relates; and
(d) does not require the Plan to (i) provide any type or
form of benefit, or any option not otherwise provided under the
Plan, (ii) provide increased benefits, or (iii) pay benefits to the
Alternate Payee that are required to be paid to another Alternate
Payee under a prior Qualified Domestic Relations Order.
Notwithstanding the foregoing, a Qualified Domestic Relations Order
may provide that distribution commence on or after the date on
which the Participant attains, or would have attained his Earliest
Retirement Age regardless of whether the Participant has incurred
a Date of Termination on that date, if the Order directs (i) that
the payment of the benefits be determined as if the Participant had
retired on the date on which payment is to begin under such Order,
taking into account only the balance standing to the Participant's
credit in his Accounts on such date, and (ii) that the payment be
made in a form in which such benefits may be paid under the Plan to
the Participant.
Section 2.40. "Required Distribution Date" shall mean the
April 1 of the Plan Year following the later of (a) the Plan Year
in which the Employee age 70 1/2, or (b) the Plan Year in which the
Employee retires. Notwithstanding the foregoing, clause (b) of the
preceding sentence shall not apply in the case of an Employee who
is a five-percent owner (as defined in Section 416 of the Code) at
any time during the five-Plan-Year period ending in the Plan Year
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in which the Participant attains age 70-1/2. In addition to the
foregoing requirements, effective January 1, 1989, clause (b) shall
not apply to any Participant unless the Participant had attained
age 70 1/2 before January 1, 1988.
Section 2.41. "Salary Reduction Contributions" shall
mean Basic Contributions and Deferred Bonus Contributions (as such
terms are defined in Section 4.01) paid into the Fund for a
Participant pursuant to Article IV, in a manner intended to satisfy
the requirements of section 401(k) of the Code.
Section 2.42. "Service" shall mean all periods of active
employment with the Employer or an Affiliated Company commencing on
the Employee's Date of Employment or Date of Reemployment,
whichever is applicable, and ending on his Date of Severance.
Service shall also include all periods of Severance during which an
Employee does not incur a Break in Service.
Section 2.43. "Severance" shall mean the period of time
commencing on an Employee's Date of Severance and ending on the
date on which the Employee again performs an Hour of Service.
Section 2.44. "Spouse" shall mean the husband or wife of
a Participant who is married to that Participant on the date on
which the payments to the Participant are to begin as provided in
the Plan; provided, that a former spouse shall be treated as a
Spouse to the extent required under a Qualified Domestic Relations
Order.
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Section 2.45. "Stock" shall mean either Common Stock or
rights or a combination of Common Stock and rights, as the case may
be.
Section 2.46. "Stock Fund" shall mean an Investment Fund
invested solely in Stock. The availability of the Stock Fund as an
Investment Fund shall be determined by the Committee, in its sole
discretion.
Section 2.47. "Trust Agreement" shall mean the separate
written agreement adopted as a part of the Plan which sets forth
the provisions under which the Trustee shall manage the Fund.
Section 2.48. "Trustee" shall mean the bank or trust
company or the individuals designated by the Employer to administer
the Fund in accordance with this Plan as provided herein.
Section 2.49. "Valuation Date" shall mean June 30 and
December 31 of each Plan Year on which the fair market value of the
Fund shall be determined, as well as any other day on which the
Committee determines that the fair market value of the Fund shall
be calculated.
Section 2.50. "Years of Service" shall mean the number of
whole Years of an Employee's Service whether or not such years were
completed consecutively.
(a) For Eligibility Computation Periods ending after
January 1, 1985, an Employee shall be credited with one Year of
Service for each 12 months of Service he completes. Less than
whole year periods of Service, whether or not consecutive, shall be
aggregated on the basis that 12 months of Service (30 days are
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deemed to be a month in the case of the aggregation of fractional
months) equal one Year of Service.
(b) For Eligibility Computation Periods completed prior
to January 1, 1985, an Employee shall be credited with all of the
Years of Service credited to him under the Plan as in effect on
December 31, 1984.
(c) If an Employee incurs a Date of Severance and, prior
to the occurrence of a One Year Break in Service, the Employee
performs an Hour of Service for the Employer or any Affiliated
Company, Years of Service shall also include the period between the
Date of Severance and the date on which such Hour of Service is
performed.
(d) In the case of any Participant who has incurred a
Date of Severance but who is reemployed after incurring five (5)
consecutive One Year Breaks in Service, Years of Service after such
five year period shall not be taken into account for the purposes
of determining the vested interest attributable to Employer
Contributions made before such five year period.
(e) In the case of a Participant who has incurred a Date
of Severance and who does not have any vested interest in his
Account at such Date, Years of Service before any consecutive One
Year Breaks in Service shall not be taken into account in
determining Years of Service after such Breaks if the number of
consecutive One Year Breaks in Service equals or exceeds the
greater of (i) five or (ii) the aggregate number of Years of
Service prior to such Periods. Such aggregate number of Years of
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Service shall be deemed not to include any Years of Service not
required to be taken into account under this Section by reason of
any prior One Year Break in Service. For purposes of determining
an Employee's eligibility to participate in the Plan under Section
3.1, and his vested percentage under 10.1, Years of Service shall
include all years of employment with the Employer or an Affiliated
Company whether or not the employee qualified as an Employee during
those years.
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ARTICLE III
ELIGIBILITY
Section 3.1. Eligibility to Participate - Employer
Contributions.
(a) General Requirements -- All Employees who were Par-
ticipants in the Plan prior to the Merger Effective Date shall con-
tinue to participate herein. All other Employees shall become
Participants on the Entry Date coinciding with or next succeeding
their completion of 1000 Hours of Service in an Eligibility Com-
putation Period and attainment of age 21.
(b) Participation -- Any Employee eligible to participate
in the Plan shall automatically become a Participant as provided in
subsection (a) and may not waive benefits provided pursuant to this
Section 3.1 or elect not to participate in the Plan.
Section 3.2. Eligibility to Participate - Salary
Reduction Contributions. All Employees who were Participants in
the Plan prior to the Merger Effective Date shall continue to
participate herein. All other Employees shall become Participants
on the Entry Date coinciding with or next following his Date of
Employment.
Section 3.3. Required Information. All eligible in-
dividuals must furnish the Committee with such information as it
may reasonably request in accordance with the uniform procedures
established by the Committee and announced to the Employees.
Section 3.4. Change of Job Classification and Transfers.
In the event a change of job classification or a transfer to an
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<PAGE> 265
Affiliated Company results in a Participant no longer qualifying as
an Employee, such employee shall cease to be a Participant as of
the effective date of such change of job classification or
transfer, but the employee shall not be deemed to have incurred a
Date of Severance. If the Affiliated Company maintains a qualified
retirement plan which permits the transfer of a Participant's
Accounts from this Plan to such plan, such Participant, upon
written notice in the form and at the time prescribed by the
Committee, may elect to have the value of his Accounts transferred
to such other Plan; provided, however, that the Committee, in its
sole discretion, may refuse to allow a transfer if such transfer
would violate the provisions of Section 411(d)(6) of the Code and
the regulations thereunder. Any Employee who is or becomes
represented by a collective bargaining agent shall remain eligible
to participate in the Plan until a collective bargaining agreement
is executed by the Employer and the collective bargaining agent of
the Employee, unless such agreement specifically provides for
participation in the Plan by such Employee. Absent such express
provision, such represented Employee shall cease to be eligible for
participation in the Plan upon the execution of said agreement and
thereafter until such time as a subsequent collective bargaining
agreement expressly provides for participation in the Plan or the
Employee is no longer represented by a collective bargaining agent.
From the date of said ineligibility, he shall not be treated as an
Employee for the purpose of determining eligibility to participate
in the Plan. Should an employee again qualify as an Employee, he
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shall become a Participant as of the effective date of such
change.
Section 3.5. Re-entry. If a Participant incurs a Break
in Service and once again qualifies to participate in the Plan, he
shall become a Participant on the first day following such Break in
Service on which he performs an Hour of Service. If a terminated
Employee, who had qualified for participation hereunder, incurs a
Break in Service prior to his Entry Date and is subsequently re-
hired by the Employer, he shall become a Participant on the later
of his Date of Reemployment or his Entry Date. If a terminated
Employee, who had not qualified for participation is subsequently
rehired by the Employer, he shall be eligible to participate as
provided in Section 3.l as if he had not been previously employed
by the Employer.
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ARTICLE IV
CONTRIBUTIONS
Section 4.1. Contributions by Employer. For each Plan
Year, the Employer shall contribute to the Fund so much of its Net
Profits as the Board may authorize and direct. All such con-
tributions shall be held and administered by the Trustee as a part
of the Fund according to the terms of the Trust Agreement. Not-
withstanding any other provisions of this Section, Employer Con-
tributions for any Plan Year shall not exceed the maximum amount
deductible by the Employer for such Year under the provisions of
section 404 of the Code. Except as expressly provided herein,
these Contributions shall be irrevocable. All amounts contributed
hereunder shall be conditioned on their deductibility.
Section 4.2. Determination of Employer Contributions.
The Board shall determine the amount of any Employer Contributions
to be made to the Fund under the terms of this Plan. In de-
termining such Contributions, the Board shall be entitled to rely
upon computations of its Net Profits made by independent public
accountants regularly employed by it or made by the Employer's
comptroller or treasurer. The determination shall be final and
conclusive and shall not be subject to change as the result of any
subsequent audit by the Internal Revenue Service or as the result
of any subsequent adjustment of the Employer's books of account.
The Trustee shall have no duty to inquire into the amount of the
Employer's annual Contribution or the method used in determining
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the amount of the Employer Contribution, but shall be accountable
only for funds received by it.
Section 4.3. Time and Payment of Employer Contributions.
Employer Contributions shall be determined as of the last day of
each Plan Year. Such amounts shall be paid over to the Trustees
within the time prescribed by law, including any extensions of such
time, for the filing of the Employer's federal income tax return
for such year.
Section 4.4. Form of Employer Contributions. Employer
Contributions may be in cash or property acceptable to the Trustee
and the Committee valued at the fair market value thereof on the
date of contribution.
Section 4.5. Salary Reduction Contributions.
Participants are not required to make Salary Reduction
Contributions hereunder. Effective as of the Merger Effective
Date, a Participant may make a written election, in the manner
prescribed by the Committee, to reduce Compensation and make Salary
Reduction Contributions in accordance with the provisions of this
Section, which election shall become effective on the Entry Date
coinciding with or next following receipt of such election.
Notwithstanding the foregoing, the Committee, in its sole
discretion, may unilaterally amend or revoke a Participant's
election at any time, if the Committee determines that Salary
Reduction Contributions to such Participant's Salary Reduction
Contribution Account would otherwise exceed the limitations of
Article V.
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(a) Basic and Deferred Bonus Contributions. A
Participant's Basic Contributions into the Fund shall be in the
aggregate at the rate of 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% (in
whole percentages only) of the Compensation excluding bonuses
otherwise payable to the Participant. In addition, a Participant
may make, by a separate written election, in the manner prescribed
by the Committee, Deferred Bonus Contributions of not more than 10%
of the annual bonus or incentive award otherwise payable to the
Participant. Notwithstanding anything contained herein to the
contrary, a Participant's total Salary Reduction Contributions
under the Plan together with elective deferrals (as defined in
section 402(g) of the Code) under any other plan or arrangement
maintained by the Employer or an Affiliated Company shall not
exceed $7,000 (as adjusted in accordance with section 402(g) of the
Code and the regulations issued thereunder) for any calendar year.
Furthermore, should a Participant claim that his Salary Reduction
Contributions under the Plan (reduced by Salary Reduction
Contributions previously distributed pursuant to Section 4.8 or
returned to the Participant pursuant to Section 5.2(d)) when added
to his other elective deferrals under any other plan or arrangement
(whether or not maintained by the Employer or an Affiliated
Company) exceed the limit imposed by section 402(g) of the Code for
the calendar year in which the deferrals occurred, the Participant
shall allocate to the Plan or to such other qualified cash or
deferred arrangement the excess deferrals. The Committee
notwithstanding any other provision of the Plan shall distribute,
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by April 15 of the following calendar year, the amount of the
Salary Reduction Contributions specified in the Participant's claim
as of the end of the Plan Year plus income thereon and plus income
thereon from the end of the Plan Year to the date of distribution.
The Participant's claim shall be in writing and should be submitted
to the Committee no later than the March 1 following the calendar
year in which such deferrals occurred. Notwithstanding anything in
this Section 4.5 to the contrary, a Participant shall be deemed to
have made a claim for distribution of excess elective deferrals
from the Plan to the extent that his Salary Reduction Contributions
together with his elective deferrals under any other plan or
arrangement maintained by the Employer or an Affiliated Company
exceed the limit imposed by section 402(g) of the Code for the
calendar year.
(b) Participant Written Agreement. Amounts representing
a Participant's Basic Contributions shall be deducted from payrolls
pursuant to a salary reduction agreement between the Employer and
the Participant, and such amounts shall, not less frequently than
monthly, be paid into the Fund. Amounts representing a
Participant's Deferred Bonus Contributions shall be deducted from
payrolls pursuant to a bonus deferral agreement between the
Employer and the Participant, and such amounts shall, not more
frequently than annually, be paid into the Fund.
(c) Suspension or Change in Rates of Basic Contributions.
A Participant may suspend or change the rate of his Basic
Contributions by submitting a written request, in the manner and at
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the time prescribed by the Committee. If a Participant suspends
making Basic Contributions, he shall be allowed to resume making
Basic Contributions on any Entry Date unless the Committee, in its
sole discretion which shall be exercised in a uniform and
nondiscriminatory manner, permits Basic Contributions to be resumed
on an earlier date. A Participant may change the rate at which he
makes Basic Contributions as of any Entry Date by a written
request, in the manner and at the time prescribed by the Committee;
provided, however, that a Participant whose rate of Compensation is
decreased may reduce such rate as of the effective date of such
decrease. All Basic Contributions by a Participant shall be
suspended without any request on his part for any month in which he
is on leave of absence without Compensation. Such suspension shall
continue until the first day of the month following the termination
of such leave.
(d) Records. All Salary Reduction Contributions
transferred to the Trustee under the Plan shall be accompanied by
written instructions from the Committee to the Trustee that: (a)
identify the Participant on whose behalf the Salary Reduction
Contribution is being made; and (b) direct the investment of the
Salary Reduction Contribution in accordance with the Participant's
investment directions pursuant to Article VI.
Section 4.6. Expenses of the Plan. All normal expenses
incurred in the operation and administration of the Plan, including
the Trustee's compensation, shall be paid by the Employer, or at
the election of the Employer such expenses shall be paid from the
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Fund. However, extraordinary expenses incurred on behalf of a
particular Participant shall, upon determination by the Committee,
be charged against the Participant's Accounts.
Section 4.7. Return of Contributions. All Contributions
under the Plan are conditioned upon the deductibility of such
Contributions under Section 404 of the Code and, to the extent the
deduction is disallowed, shall be returned to the Employer within
one year after the disallowance of the deduction. The Employer
shall pay amounts attributable to Salary Reduction Contributions
thereby returned to it to the appropriate Participants as soon as
practicable thereafter. Notwithstanding the foregoing, the maximum
amount which may be returned shall be the value of the Salary
Reduction Contributions on the date they are returned. In the
event that, with respect to any Plan Year, the deductibility of all
Contributions under the Plan by the Employer would be limited under
section 404 of the Code, the Committee shall reduce the rate of
Contribution which may be made to the Plan to the extent necessary
to permit full utilization of the deduction from the prior year.
Contributions shall be held in trust for the exclusive benefit of
Participants and their beneficiaries and may not, except as
otherwise provided herein, revert to the Employer. Notwithstanding
the foregoing, if the Employer so directs, the Trustee shall return
to the Employer that part of the Employer Contribution for any Plan
Year which is made under a mistake of fact or which is conditioned
on the deductibility of such Contribution, which deduction is
subsequently disallowed. The amount of such Contribution which may
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be returned to the Employer shall not exceed the excess of (a) the
amount contributed over (b) the amount that would have been
contributed if there had not occurred a mistake of fact or a
mistake in determining the deduction. Such amount must be returned
to the Employer within one year from the date of such mistaken
contribution or disallowance of deduction. Earnings attributable
to any excess Contribution may not be returned to the Employer but
losses attributable thereto shall reduce the amount returned.
Further, if withdrawal of the amount attributable to the mistaken
Contribution would cause the balance of any Participant's
individual Account to be reduced to less than the balance which
would have been in the Account had the mistaken amount not been
contributed, then the amount to be returned to the Employer
hereunder shall be limited so as to avoid such reduction.
Section 4.8. Rollovers and Transfers from Qualified
Plans. With the approval of the Committee, an Employee (regardless
of whether he has met the eligibility requirements of Article III)
may deposit into a Profit Sharing Plan Rollover Account the entire
amount of cash received as a distribution from another qualified
trust forming a part of a plan described in section 401(a) of the
Code or from an individual retirement program described in section
408 of the Code, but only if the deposit qualifies as a tax-free
rollover as defined in section 402 of the Code. If the deposit
does not qualify as a tax-free rollover, the deposit shall be
refunded to the Employee. In addition to the foregoing, and with
the approval of the Committee, the Trustee may accept on behalf of
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any Employee an amount of cash or property transferred directly
from another qualified trust forming part of a qualified plan
described in section 401(a) of the Code and such amount of cash or
property shall be deposited into a Rollover Account for such
Employee. The Committee shall have the right to refuse to accept
the transferred amount if such receipt would cause this Plan to be
subject to the provisions of sections 401(a)(11) and 417 of the
Code with respect to such Employee. Rollovers and transferred
amounts made in cash shall be invested in accordance with the
provisions of Article VI. To the extent that a rollover or
transferred amount consists of property, and absent a direction by
the Employee to liquidate such property and invest the proceeds in
accordance with Article VI, the Trustee or Insurer shall hold the
property as a separate Investment Fund hereunder. An Employee who
is not a Participant shall be treated as a Participant with respect
to his Profit Sharing Plan Rollover Account for purposes of
valuations, investments and distributions.
Section 4.9. Merger of Maritrans Inc. 401(k) Savings
Plan. Notwithstanding the foregoing Section 4.8, effective on the
Merger Effective Date, all assets held under the Maritrans Inc.
401(k) Savings Plan shall be transferred to the Fund and merged
with the assets of the Plan. All benefits payable after the Merger
Effective Date from the Maritrans Inc. 401(k) Savings Plan shall be
payable from the Fund under the Plan. With respect to each
Participant who has an account under the Maritrans Inc. 401(k)
Savings Plan on the Merger Effective Date, the Participant's
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contribution account under such Savings Plan shall be transferred
to his Salary Reduction Account under the Plan, and the
Participant's rollover account under the Savings Plan shall be
transferred to his Savings Plan Rollover Account under the Plan.
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ARTICLE V
ALLOCATIONS OF CONTRIBUTIONS AND VALUATIONS
Section 5.1. Allocation of Employer Contributions.
Employer Contributions for each Plan Year shall be totaled and
shall then be apportioned among and allocated to the Employer
Contribution Account established and maintained by the Plan
Administrator for each Participant. The Employer Contribution
Account of each Participant who completed 1,000 or more Hours of
Service during the Plan Year for which the Employer Contribution is
made shall receive an allocation of that Employer Contribution in
the proportion that the Compensation of each such Participant bears
to the total Compensation of all Participants for such Plan Year.
Allocation of the Employer Contributions shall be made immediately
after appraisal of the Fund and allocation of gains and losses
under Section 6.7.
Section 5.2. Allocation of Salary Reduction
Contributions. Salary Reduction Contributions made for a
Participant in respect of any Plan Year shall be allocated to his
Salary Reduction Contribution Account and shall be invested in
accordance with the provisions of Article VI.
Section 5.3 Limitations on Salary Reduction
Contributions. For any Plan Year (a) that Salary Reduction
Contributions under the Plan shall not be in excess of the
limitations on deductions imposed under section 404(a)(3) of the
Code; (b) the Plan shall satisfy the coverage requirements of
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section 410(b)(1) of the Code; (c) that the Plan shall satisfy the
average deferral percentage test set forth in Section 5.3(a).
(a) Average Deferral Percentage Test. Effective January
1, 1987, the average deferral percentage for Highly Compensated
Employees who are Participants in the Plan shall not exceed the
greater of (i) or (ii) as follows:
(i) The average deferral percentage for all
Participants who are Non-Highly Compensated Employees, multiplied
by 1.25, or
(ii) The average deferral percentage for all
Participants who are Non-Highly Compensated Employees, multiplied
by 2.0; provided that the average deferral percentage for Highly
Compensated Employees who are Participants may not exceed the
average deferral percentage for Participants who are Non-Highly
Compensated Employees by more than two percentage points.
(b) Average Deferral Percentage. For purposes of Section
5.3(a), the term "average deferral percentage" as applied to a
specified group of Participants shall mean the average of the
ratios, calculated separately for each such Participant in such
group of:
(i) the amount of Salary Reduction Contributions,
excluding any Salary Reduction Contributions in determining the
deferral percentage described in the next paragraph that are
distributed to an Employee who is not a Non-Highly Compensated
Employee pursuant to a deemed claim for distribution under Section
5.3(d)(ii) or returned to the Participant pursuant to Section
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5.3(d)(i), paid to the Plan on behalf of each such Participant for
such Plan Year, to
(ii) the Participant's Compensation for such Plan
Year.
For the purposes of this Section, the deferral percentage of a
Highly Compensated Employee who is a Participant under this Plan
and who has made elective deferrals under any other qualified cash
or deferred arrangement (excluding plans that are not permitted to
be aggregated under Treas. Reg. Section 1.401(k)-1(b)(3)(ii)(B))
maintained by the Employer or an Affiliated Company pursuant to
section 401(k) of the Code shall be the sum of his deferral
percentages under all such plans.
(c) Treatment of Family Members. For purposes of
Sections 5.3(a) and (c), if a Highly Compensated Employee is
subject to the family aggregation rules of section 414(q)(6) of the
Code because he is either a five-percent owner (as defined in
section 416(i) of the Code and the regulations issued thereunder),
or is one of the top 10 Highly Compensated Employees (based on 415
Compensation received including Basic and Deferred Bonus
Contributions hereunder) during the Plan Year of reference, the
combined actual deferral (or contribution) ratio for the family
group (which shall be treated as one Highly Compensated Employee)
shall be the actual deferral (or contribution) ratio determined by
combining the applicable Salary Reduction Contributions and
Compensation of all of the eligible family members.
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Any family member(s) included above shall not be
considered a separate Tank Cleaning Inc. Participant in determining
the average deferral percentage or average contribution percentage
hereunder. In addition, the Compensation, elective deferrals and
matching contributions of each such family member shall not be
taken into account in determining the average deferral percentage
and average contribution percentage for the group of Tank Cleaning,
Inc. Employees who are not Highly Compensated Employees. For
purposes of this paragraph, "family member" means, with respect to
an Employee, such Employee's spouse and lineal ascendants and
descendants and the spouses of such lineal ascendants and
descendants, taking into account legal adoptions.
(d) Return of Excess Salary Reduction Contributions. If
the average deferral percentage for all Participants who are Highly
Compensated Employees exceeds the amount specified in Sections
5.3(a) for any Plan Year, the Salary Reduction Contributions for
the Highly Compensated Employee with the highest deferral
percentage shall be reduced so that his applicable percentage is
reduced to the greater of:
(i) such percentage that enables the Plan to satisfy
the applicable percentage test, or
(ii) a percentage equal to the applicable percentage
of the Highly Compensated Employee with the next highest
percentage.
Such procedure shall be repeated until the applicable
percentage test is satisfied. Notwithstanding any other provisions
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of the plan, the amount so reduced, together with the earnings
thereon, shall be deemed to have been contributed to the Plan by
mistake of fact, shall be refunded to the Employer, and shall
thereafter be paid (subject, however, to the withholding taxes and
other amounts as though such amounts were current remuneration) by
the Employer to the Participants from whose Compensation such
amount was obtained. Such payment shall be made within two and one
half (2 1/2) months following the close of such Plan Year, if
administratively practicable, but in no event later than the last
day of the Plan Year following such Plan Year.
Section 5.4. Maximum Allocation to Participants.
Notwithstanding any other provisions of this Plan, the Annual
Additions to any Participant's account for any Plan Year shall not
exceed the lesser of (a) $30,000 (or, effective January 1, 1987, if
greater, twenty-five percent 25% of the dollar limitation in effect
under section 415(b)(1)(A) of the Code), or, (b) twenty-five
percent (25%) of the total 415 Compensation paid to the Participant
during a Plan Year. For purposes of Article V, "Annual Additions"
for any Plan Year means the sum of: (a) all contributions made by
the Employer or an Affiliated Company hereunder or under any other
defined contribution plan maintained by either; and (b) the amount
of forfeitures allocated to a Participant's Account.
Section 5.5. Maximum Limit for Employees Also Partici-
pating in Defined Benefit Plan. If a Participant is also earning
retirement benefits under a separate defined benefit plan or plans
established by the Employer or an Affiliated Company, the benefits
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under such plan or plans for any Plan Year shall be so limited that
the sum of fractions (a) and (b) below shall not exceed 1.0 where:
(a) is a fraction, the numerator of which is the proj-
ected annual benefit of the Participant under the defined benefit
plan and the denominator of which is the lesser of:
(i) the product of 1.25 and $90,000 (effective
January 1, 1987, adjusted to reflect any cost of living increases
provided in accordance with section 415 of the Code), or
(ii) the product of 1.4 and 100% of the Participant's
average annual 415 Compensation for his high three consecutive
years; and
(b) is a fraction, the numerator of which is the sum of
all Annual Additions for all years during which he was a Par-
ticipant and the denominator of which is the sum of the lesser of
(i) and (ii) for each year during which the Participant was an
Employee of the Employer:
(i) the product of 1.25 and the dollar limitation in
effect under Section 415(c)(1)(A) of the Code for such year, or
(ii) the product of 1.4 and 25% of the Participant's
415 Compensation for such year.
Section 5.6. Statements. The Trustee shall furnish each
Participant at such times as determined by the Committee,
statements reflecting the fair market value of the Participant's
Accounts under the Plan as of the most recent Valuation Date and
the number of shares of Stock in his Accounts as of such Date.
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ARTICLE VI
INVESTMENT DIRECTIONS
Section 6.1. Investment of Employer Contributions and
Profit Sharing Plan Rollovers. Each Participant may direct the
investment of 50% or 100% of the funds credited to his Employer
Contribution Account and Profit Sharing Plan Rollover Account
hereunder, in accordance with this Section and such rules as may be
established by the Committee, into a separate Fixed Income Fund
established by the Committee. Each Participant shall be notified
by the Committee upon first becoming a Participant and, thereafter,
at the time specified by the Committee, of his right to make an
election under this Section. Such election shall be made on a form
supplied by the Committee and shall be filed with the Committee at
least 30 days prior to the date as of which it is to become
effective, unless the Committee waives this requirement. As of the
date on which an election becomes effective, the Committee shall
cause the Participant's Employer Contribution Account and Profit
Sharing Plan Rollover Account to be valued and cause the elected
portion of the Participant's Employer Contribution Account and
Profit Sharing Plan Rollover Account to be invested in the Fixed
Income Fund. Thereafter, 50% or 100%, as elected, of all future
amounts credited to the Participant's Employer Contribution Account
and Profit Sharing Plan Rollover Account for a period of five (5)
Plan Years shall be invested in the Fixed Income Fund and shall
continue to be so invested until the Participant notifies the
Committee of a change in investment direction; provided, however,
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that a Participant who directs that amounts credited to his
Employer Contribution Account and Profit Sharing Plan Rollover
Account and all future allocations be invested in the Fixed Income
Fund may not change such direction for a period of five (5) Plan
Years. Thereafter, a change request shall be in writing on a form
supplied by the Committee and shall be filed with the Committee at
least 30 days prior to the date as of which it is to become
effective, unless the Committee waives this requirement. No change
request may thereafter be made for another period of five (5) Plan
Years.
Notwithstanding the foregoing, any Participant upon
reaching age 60, may make an election at the time prescribed by the
Committee, to direct that 50% or 100% of the amounts credited to
his Employer Contribution Account and Profit Sharing Plan Rollover
Account and such percentage of any further allocations be invested
in the Fixed Income Fund. A Participant making this election may
not change his election for a period of five (5) Plan Years. The
Fixed Income Fund, shall be separately valued on each Valuation
Date as required, and on the Valuation Date occurring at the end of
each Plan Year. All Participants' Employer Contribution Accounts
and Profit Sharing Plan Rollover Accounts invested in such Fund
shall be adjusted so that each Employer Contribution Account and
Profit Sharing Plan Rollover Account reflects its portion of the
value of such Fund in the proportion that such Employer
Contribution Account and Profit Sharing Plan Rollover Account bore
to the aggregate value of all Employer Contribution Accounts
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invested in the Fixed Income Fund immediately after the addition of
the Employer Contributions to the Fixed Income Fund for the
preceding Plan Year. Notwithstanding anything herein to the
contrary, the Committee may reduce the five (5) Plan Year period
referred to herein if necessary in order to initially enter into a
contractual arrangement for the establishment or continuation of
the Fund.
Section 6.2. Investment of Salary Reduction
Contributions. Each Participant shall, in the manner prescribed by
the Committee, direct that the total of his Salary Reduction
Contributions be paid into and invested in any one or more of the
Investment Funds in such percentages as the Participant may direct,
provided that each pay period's investment in any Investment Fund
shall be in increments of twenty-five percent (25%) of the
Participant's Salary Reduction Contributions. If the Stock Fund is
an available Investment Fund, no Participant may direct the
investment of more than $2,500.00 into the Stock Fund in any Plan
Year. The percentage allocation of a Participant's future Salary
Reduction Contributions to be paid into and invested in the
Investment Funds may be changed as of any March 1 or September 1 by
giving written notice, in the manner prescribed by the Committee at
least seven days before the change is to become effective.
Section 6.3. Investment of Rollover Accounts. In
accordance with rules and regulations issued by the Plan
Administrator, each Participant shall have the right to direct that
his Profit Sharing Plan Rollover Account and/or his Savings Plan
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Rollover Account, if any, be invested in the manner prescribed in
Section 6.2.
Section 6.4. Transfer of Investments. A Participant may
transfer any portion, in twenty-five percent (25%) increments, of
his interest in any Investment Fund attributable to Salary
Reduction Contributions to any one or a combination of the other
Investment Funds as of any April 1 or October 1 of any Plan Year,
by giving written notice in the manner prescribed by the Committee
at least 35 days before the transfer is to become effective.
Section 6.5. Notice. Any direction or notice pursuant to
Section 6.1, 6.2, 6.3 and/or 6.4 shall be made in accordance with
such rules as may be established by the Committee. If a
Participant fails to make any direction, his Salary Reduction
Contributions shall be invested automatically in a fixed income
Investment Fund designated by the Committee.
Section 6.6. Reliance on Investment Direction. All
investment directions or notices by Participants pursuant to
Section 6.1, 6.2, 6.3 or 6.4 shall be timely furnished by the
Committee to the Trustee. In making any investment of Plan assets,
the Trustee shall be fully entitled to rely on such directions or
notices furnished by the Committee and shall be under no duty to
make any inquiry or investigation with respect thereto. If the
Trustee receives any Salary Reduction Contribution under the Plan
that is not accompanied by written instructions directing its
investment, the Trustee may hold or return all or a portion of the
Salary Reduction Contribution uninvested without liability for loss
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of income or appreciation pending receipt of proper investment
directions.
Section 6.7 Valuation of Fund and Allocation of Gains and
Losses. The entire Fund shall be appraised annually as of the
Valuation Date occurring December 31 of each year to determine its
fair market value. The Fund shall also be appraised at other Valu-
ation Dates as directed by the Committee, in its sole discretion.
The appraisal on each Valuation Date shall be made before addition
of the Employer Contribution for the Plan Year that includes the
Valuation Date, but any appraisal shall take into consideration all
income received and accrued, all realized and unrealized gains and
losses and all expenses chargeable to the Fund. Thereupon, all
Participants' Accounts shall be adjusted so that each Account
reflects its portion of the new value of the Fund in the proportion
that such Account bore to the aggregate value of all Accounts
immediately after addition of the Employer Contributions for the
preceding Plan Year.
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ARTICLE VII
RETIREMENT BENEFITS
Section 7.1. Normal Retirement. Upon reaching his Normal
Retirement Age, a Participant shall receive the entire amount
standing to the credit of his Account, adjusted under Article V as
of the close of the Valuation Date immediately preceding or
coinciding with his Normal Retirement Date, payable in the form
of: (a) a lump-sum payment; or (b) a series of regular annual
payments (each annual payment to include all income for such year
attributable to the Participant's undistributed interest in the
Fund) resulting in the distribution of the Participant's entire
account within a ten-year or shorter period. The form of payment
shall be determined by the Participant. Notwithstanding anything
herein to the contrary, with respect to amounts attributable to a
Participant's Salary Reduction Contribution Account and Savings
Plan Rollover Account, a Participant may make a written election,
in the manner prescribed by the Committee, distribution to a
Participant or a beneficiary hereunder may consist in whole or in
part of the Participant's share of the Investment Fund or Funds in
which his Account is invested in accordance with Article VI,
including any certificates for Stock held in the Stock Fund. In
making any such distribution under the Plan, the Trustee shall be
fully entitled to rely on the instructions furnished by the
Committee and shall be under no duty to make any inquiry or
investigation with respect thereto.
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Section 7.2. Early Retirement. A Participant who has at-
tained age fifty-five and has credit for six Years of Service may
retire at any time prior to his Normal Retirement Age, and in such
event he shall receive distribution of his benefits upon such early
retirement in the manner provided in Section 7.1 hereof.
Section 7.3. Postponed Retirement. A Participant may
retire on the first day of any month following his Normal Retire-
ment Date. Notwithstanding the foregoing and in accordance with
Section 12(c) of the Age Discrimination in Employment Act, nothing
in this Section shall prohibit the compulsory retirement of any
Employee who has attained age 65 and who for the two-year period
immediately before retirement is employed in a bona fide executive
or high policy-making position, provided that such Employee is
entitled to an immediate nonforfeitable annual retirement benefit
payable from this or any other pension, profit-sharing, savings or
deferred compensation plan or any combination of such plans main-
tained by the Employer, which benefit equals in the aggregate at
least $44,000.
Section Section 7.4. Transfer to Affiliated Company.
Transfer of an Employee to the service of an Affiliated Company
which is not a Participating Employer or the termination of a
corporation's status as a Participating Employer (while remaining
an Affiliated Company) under the Plan shall not be treated as a
Severance under the Plan, and, in such event, benefits shall be
payable in accordance with this Article VII upon the Participant's
termination of Service. Notwithstanding the foregoing, an Employee
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who transfers to the service of an Affiliated Company and who is
fully vested under the provisions of Section 10.1, shall be
entitled to a withdrawal of all, but less than all, of the amounts
credited to his Employer Contribution Account and Profit Sharing
Plan Rollover Account as of the Valuation Date coinciding with or
immediately preceding his date of transfer.
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ARTICLE VIII
DISABILITY
Section 8.1. Disability Benefit. A Participant who
incurs a Disability shall be entitled to retire and receive the
entire amount standing to his credit in his Account, computed as of
the close of the Valuation Date immediately preceding or coinciding
with the date of Disability, payment to be made in such manner as
the Committee may determine having regard for the preferences of
the Participant but treating all persons in similar circumstances
alike. Notwithstanding anything herein to the contrary, with
respect to amounts attributable to a Participant's Salary Reduction
Contribution Account and Savings Plan Rollover Account, a
Participant may make a written election, in the manner prescribed
by the Committee, distribution to a Participant or a beneficiary
hereunder may consist in whole or in part of the Participant's
share of the Investment Fund or Funds in which his Account is
invested in accordance with Article VI, including any certificates
for Stock held in the Stock Fund. In making any such distribution
under the Plan, the Trustee shall be fully entitled to rely on the
instructions furnished by the Committee and shall be under no duty
to make any inquiry or investigation with respect thereto.
Section 8.2. Determination of Disability. The fact and
time of Disability shall be determined by the Committee on the
basis of independent medical evidence, and such determination shall
be conclusive. However, if a Participant is determined to be elig-
ible for disability benefits under Social Security by the Social
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Security Administration that determination shall be binding upon
the Committee.
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ARTICLE IX
DEATH BENEFITS
Section 9.1. Death Benefit. In the event a Participant
dies while an Employee of the Employer or after retirement or other
termination of service while benefits on his behalf remain undis-
tributed from the Fund, the entire amount of his Account attribut-
able to Employer Contributions or its undistributed balance valued
as of the Valuation Date immediately preceding his death, as the
case may be, shall be distributed to the designated beneficiary or
beneficiaries of the Participant set forth in his most recent
beneficiary designation filed with the Committee. In the absence
of an effective designation, the Committee shall direct distribu-
tion to and among the following persons with priority in the order
named: (a) surviving Spouse; (b) surviving children; (c) surviving
parents; (d) surviving brothers and sisters and (e) executor or
administrator. Notwithstanding anything herein to the contrary,
with respect to amounts attributable to a Participant's Salary
Reduction Contribution Account and Savings Plan Rollover Account,
a Participant may make a written election, in the manner prescribed
by the Committee, distribution to a Participant or a beneficiary
hereunder may consist in whole or in part of the Participant's
share of the Investment Fund or Funds in which his Account is
invested in accordance with Article VI, including any certificates
for Stock held in the Stock Fund. In making any such distribution
under the Plan, the Trustee shall be fully entitled to rely on the
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instructions furnished by the Committee and shall be under no duty
to make any inquiry or investigation with respect thereto.
Section 9.2. Designation of Beneficiary. Each
Participant shall, by written notice to the Committee, designate a
beneficiary or beneficiaries to receive any payment to which such
Participant may be entitled under the Plan at the time of his
death. If a Participant designates a beneficiary (including any
class of beneficiaries or any contingent beneficiaries) other than
or in addition to his Spouse, the Spouse of the Participant must
consent in writing to such beneficiary designation on a form
provided by the Committee, which consent shall be irrevocable.
Such consent shall acknowledge the financial effect of the election
on the Spouse's right to benefits under the Plan, and shall be
witnessed by the Chairman of the Committee, a Plan representative
designated by the Committee or a notary public. the spousal
consent requirement may be waived if it is established, to the
satisfaction of the Committee, that the consent may not be obtained
because there is no Spouse, because the Spouse cannot be located
after reasonable efforts have been made, or because other
circumstances exist to excuse spousal consent under applicable
regulations. Any beneficiary designation made by a Participant
which does not meet the requirements of this Section shall be
deemed null and void. The Participant shall have the right to
change a beneficiary designation or any subsequent beneficiary
designation, subject to the spousal consent provisions of this
Section.
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ARTICLE X
VESTED BENEFITS UPON TERMINATION OF SERVICE
Section 10.1. Termination of Service. Whenever a Par-
ticipant's Service with the Employer is terminated prior to his
Normal Retirement Date or his Early Retirement Date, if applicable,
for reasons other than death or Disability, vested interest in his
Account shall be determined as of his Date of Severance and valued
in Accordance with Section 10.5 as follows:
(a) Vested interest in his Employer Contribution Account
shall be determined on the basis of the number of Years of Service
credited to him in accordance with Section 2.50 as follows:
(i) For Plan Years beginning prior to January 1,
1989:
Years of Service Vested Interest
---------------- ---------------
Less than 2 0%
2 10%
3 20%
4 30%
5 50%
6 or more 100%
(ii) For Plan Years beginning on or after January 1,
1989:
Years of Service Vested Interest
---------------- ----------------
Less than 2 0%
2 10%
3 20%
4 40%
5 70%
6 or more 100%
Amounts in excess of the value of the Participant's vested interest
in his Employer Contribution Account shall be forfeited as of the
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date the Participant's Service terminates, and shall be reallocated
among remaining Participants in accordance with Section 10.3.
Participants who were Participants in the IOT Corporation Profit
Sharing Plan effective June 30, 1975, may nevertheless elect to
have their vested interest computed under Section 10.1 of that
plan. A Participant shall be fully vested in his Employer
Contribution Account upon attainment of his Normal Retirement Age,
or upon his Early Retirement Date, death or Disability.
(b) A Participant shall, at all times, have a 100%
vested interest in the value of his Salary Reduction Contribution
Account.
(c) A Participant shall, at all times, have a 100%
vested interest in the value of his Profit Sharing Plan Rollover
Account and his Savings Plan Rollover Account.
Section 10.2. No Forfeiture After Termination of Plan.
No forfeiture shall occur under this Article X if the Plan has been
previously terminated by the Employer or if Employer Contributions
have been completely discontinued.
Section 10.3. Allocation of Forfeitures. All for-
feitures arising under Section 10.1(a) shall remain as part of the
Fund and shall be allocated among the Employer Contribution
Accounts of all other Participants on the Valuation Date coincident
with or next succeeding the event giving rise to such forfeiture in
the same manner as contributions to the Fund under Section 5.1.
Section 10.4. Re-employment Before Break in Service. If
the Participant is reemployed by the Employer prior to incurring
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five (5) consecutive Breaks in Service, he shall have restored to
his Employer Contribution Account any forfeited amount; provided,
however, that if the Participant has received a distribution of all
or part of his vested interest in the Plan in accordance with the
provisions of this Article X hereof on account of incurring a
termination of Service, then such restoration shall not occur
unless such Participant repays the amount distributed prior to the
earlier of (a) five years after the Participant's Date of
Reemployment, or (b) the occurrence of five consecutive Breaks in
Service. Any amounts restored shall be paid first from forfeitures
for the current Plan Year and, where such forfeitures are not
sufficient, from additional contributions by the Employer. The
Committee shall maintain or cause to be maintained a record of the
amounts forfeited in accordance with the above. The Committee
shall inform the Employer of any amounts required to be restored
hereunder, and the Employer shall pay such amounts within thirty
(30) days of such notice.
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ARTICLE XI
DISTRIBUTION OF BENEFITS
Section 11.1. Time of Distribution.
(a) With respect to amounts attributable to a
Participant's Employer Contribution Account and Profit Sharing Plan
Rollover Account, if a Participant incurs a Date of Severance for
any reason, he (or his beneficiary in the event of his death) shall
receive a distribution of his vested interest in his Employer
Contribution Account and Profit Sharing Rollover Account as soon as
practicable following the Valuation Date as of which his benefit is
determined under this Section but in no event later than 60 days
following the later of:
(i) the end of the Plan Year in which his Normal
Retirement Date would occur (whether or not he remains employed to
that date);
(ii) the tenth anniversary of the date the Partici-
pant began to participate in the Plan; or
(iii) the Participant's Date of Severance; provided,
however, that no distribution shall be made to a Participant prior
to his Normal Retirement Age (except in the event of his death)
unless the Participant consents to the distribution. A
Participant's Employer Contribution Account and Profit Sharing Plan
Rollover Account shall be valued on the Valuation Date coinciding
with or immediately succeeding the event giving rise to the
distribution; provided, however, that if a Participant's Date of
Severance occurs prior to June 30 and such Participant is entitled
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to an Employer Contribution for the Plan Year, such Participant may
elect to delay distribution of his Employer Contribution Account
and Profit Sharing Plan Rollover Account (and the valuation of such
Accounts) until the Valuation Date coinciding with or immediately
succeeding the date on which the Employer Contribution for the Plan
Year is allocated to his Employer Contribution Account; and
provided further, that if a Participant's Date of Severance occurs
on or after June 30 as such Participant is not entitled to an
Employer Contribution for the Plan Year, his Employer Contribution
Account shall be valued on the Valuation Date coinciding with or
immediately preceding his Date of Severance. If a Participant has
attained his Normal Retirement Age at the time distribution becomes
due, the Participant or his beneficiary may elect, in the manner
and at time prescribed by the Plan Administrator, to defer the
receipt of all, but not less than all, of the distribution
otherwise to be made to him until any subsequent Plan Year but not
later than the Required Distribution Date. Notwithstanding the
foregoing, if the total nonforfeitable amount credited to the
Account of the terminated Participant does not exceed $3,500, the
Committee, in its sole discretion, may distribute such amount in a
lump sum at any time without the Participant's or beneficiary's
consent. Any amounts not distributed under this Section shall
remain a part of the Fund and shall continue to share in income,
gains and losses, but not in forfeitures. Notwithstanding anything
herein to the contrary, if a Participant incurs a Date of Severance
by reason of his voluntary resignation before he has attained age
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25, no distribution shall be made prior to the second Valuation
Date following his Date of Severance.
(b) With respect to amounts attributable to a
Participant's Salary Reduction Contribution Account and Savings
Plan Rollover Account, if a Participant incurs a Date of Severance
for any reason, he (or his beneficiary in the event of his death)
shall receive a distribution of his vested interest in his Salary
Reduction Contribution Account and Savings Plan Rollover Account as
soon as practicable after such Valuation Date; provided that (a) no
such distribution shall be made to a Participant prior to his
Normal Retirement Age unless the Participant consents to the
distribution as provided in section 411(a)(11) of the Code (except
for distributions made as a result of the Participant's death), and
(b) distribution to a Participant who fails to so consent shall be
made on such date (not later than the Required Distribution Date)
as the Participant may elect in writing (in the manner and at the
time prescribed by the Committee), or, if the Participant fails to
make such an election, as soon as practicable after the Valuation
Date coinciding with or immediately following the date the
Participant attains his Normal Retirement Age. Any amounts not
distributed under this Section shall remain a part of the Fund and
shall continue to share in income, gains and losses. Each
distribution shall be made not later than 60 days after the
Valuation Date on which the value of the distribution is measured.
Notwithstanding the foregoing, if the value of the Participant's
Account is less than or equal to $3,500.00 as of the Valuation Date
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coinciding with or immediately following the final pay transfer to
the administrator of the Plan, his Account shall be distributed as
soon as practicable after such Valuation Date.
Section 11.2. Required Distributions. A Participant's
interest in his Accounts (a) shall be distributed to him no later
than the Required Distribution Date, or (b) shall be distributed
beginning no later than the Required Distribution Date in install-
ments pursuant to Section 7.1(b); provided, however, that the
period over which distributions are made does not extend beyond the
life expectancy of the Participant or the joint life expectancies
of the Participant and his beneficiary (determined as of the time
when payment of benefits commences and where the Spouse is the
beneficiary, at the election of the Committee in its sole discre-
tion redetermined annually). If distribution has commenced in
accordance with clause (b) of the preceding sentence and the
Participant dies before his entire interest has been distributed to
him, his remaining interest shall be distributed over the remaining
number of installments payable as of the date of his death. If a
Participant dies before the distribution of his interest has begun
the Participant's entire interest shall be distributed within five
years after his death. The preceding sentence shall not apply,
however, if any portion of the Participant's interest is payable to
(or for the benefit of) a beneficiary over a period not extending
beyond the life expectancy of such beneficiary and distribution
begins not later than one year after the date of the Participant's
death or such later date permitted under applicable regulations.
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If the beneficiary referred to in the preceding sentence is the
surviving Spouse of the Participant, distributions are not required
to begin earlier than the date on which the Participant would have
attained age 70 1/2. If the surviving Spouse dies before dis-
tributions begin, the five-year distribution requirement shall be
applied as if the surviving Spouse were the Participant.
Section 11.3 Direct Rollovers. In the event any payment
or payments (excluding any amount not includible in gross income)
to be made to an individual pursuant to this Article XI would
constitute an "eligible rollover distribution" within the meaning
of section 401(a)(31)(C) of the Code and regulations thereunder,
such individual may request that, in lieu of payment to the
individual, all or part of such eligible rollover distribution be
rolled over directly to the trustee or custodian of an "eligible
retirement plan" within the meaning of section 401(a)(31)(C) of the
Code and regulations thereunder. Any such request shall be made in
writing, on the form and subject to such requirements and
restrictions as may be prescribed by the Plan Administrator for
such purpose pursuant to Treasury regulations, at such time in
advance of the date payment would otherwise be made as may be
required by the Plan Administrator. For purposes of this Section,
an "individual" shall include an Employee or former Employee or (a)
his surviving spouse or (b) his spouse or former spouse who is an
alternate payee under a Qualified Domestic Relations Order.
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The provisions of this Section 11.3 shall be construed to comply
with the requirements set forth in section 401(a)(31) of the Code
and any regulations thereunder.
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ARTICLE XII
LIFE INSURANCE
Section 12.1. Purchase of Life Insurance on Request. At
the written request of any person who has been a Participant on
three consecutive Anniversary Dates, the Committee shall direct the
Trustee to purchase one or more contracts of ordinary, cash value
life insurance on the life of the Participant from an insurance
company approved by the Committee. The Participant's request shall
specify the face amount of the insurance contracts and be
accompanied by applications for the contracts completed by the
Participant who will be solely responsible for selection of options
under any contract which options shall be consistent with the
Plan. The Trustee shall be the owner of such contracts but the
Participant shall have the right to designate the beneficiaries
thereof (which may be different than the person(s) designated to
receive the value of his account under Section 9.1 of the Plan).
Premiums on such contracts shall be paid by the Trustee from
Employer Contributions under the Plan that would otherwise be allo-
cated to the insured Participant's Employer Contribution Account or
from funds withdrawn from the insured's Employer Contribution
Account. If Employer Contributions that may be applied to pay
premiums on insurance contracts are not sufficient to maintain them
in full, the Participant shall instruct the Committee as to his
election under the contracts. If he fails to instruct the
Committee within the period required under the contracts, the
Committee shall direct the Trustee to surrender the contracts for
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their cash value and allocate the proceeds to the Participant's
Employer Contribution Account.
Section 12.2. Cash Value of Insurance. For purposes of
determining the value of an insured Participant's Employer
Contribution Account under Section 6.7 of the Plan, no value shall
be assigned to the insurance contracts. However, the cash value of
such contracts shall be treated as a part of the value of an
insured Participant's Employer Contribution Account under Sections
7.1 and 10.1 hereof.
Section 12.3. Transfer of Policy Upon Termination. Upon
termination of Service under Section 9.1 hereof, a Participant may
request in writing that any insurance contracts on his life be
assigned to him by the Trustee if the Participant shall (a) first
pay that portion of the then determined cash surrender value
thereof that exceeds his vested interest therein (as determined
under Section 10.1 hereof) to the Trustee or, (b) alternatively,
authorize the Trustee to borrow that portion of the cash surrender
value that exceeds his vested interest therein and then assign the
contracts to the Participant who shall be solely responsible for
premium payments and payments of principal and interest on the
insurance contract loan. In the absence of such request the
Trustee shall surrender any insurance contracts on the life of an
Employee to whom Section 10.1 applies and allocate the proceeds to
his Employer Contribution Account and Employer Contribution
Accounts of other Participants pursuant to Section 10.3 of the
Plan.
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Section 12.4. Limitation on Employer Contributions
Allocated to Insurance. In no event shall the aggregate Employer
Contributions made on behalf of a Participant and allocated to the
purchase of ordinary life insurance contracts on his life equal
fifty percent or more of the total of all Employer Contributions
made on behalf of the Participant.
Section 12.5. Transfer of Contracts. The Trustee shall
deliver any life insurance contracts covering the Participant to
the Participant upon his Normal or Early Retirement Date or upon
his retirement for Disability or, at the Participant's written
request, surrender them for their cash values which shall be
delivered to the Participant.
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ARTICLE XIII
WITHDRAWALS AND LOANS
Section 13.1. Withdrawals From Employer Contribution
Account and Profit Sharing Rollover Account. Upon submitting an
application, in the manner prescribed by the Committee, at least
thirty (30) days prior to the Valuation Date as of which it is to
become effective (unless the Committee, in its sole discretion,
permits a later application), a Participant may request a with-
drawal of his vested interest in his Employer Contribution Account
and Profit Sharing Plan Rollover Account. The amount of any
withdrawal, under this Section, or any loan under Section 13.3,
when added to all prior withdrawals under this Section, and the
outstanding balance of any loan under Section 13.3, shall not
exceed 50 percent of the product of:
(a) the Participant's highest Employer Contribution
Account and Profit Sharing Plan Rollover Account balances as of any
Valuation Date up to and including the Valuation Date preceding the
loan or withdrawal by two years, plus any withdrawals and any
outstanding loan balance prior to such date, less any net deprecia-
tion in Employer Contribution Account and Profit Sharing Plan
Rollover Account assets from such date; and
(b) his current vested interest (percentage).
Notwithstanding the foregoing, no amounts may be withdrawn from the
Participant's Employer Contribution Account and Profit Sharing Plan
Rollover Account unless they have been credited to the
Participant's Employer Contribution Account and Profit Sharing Plan
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Rollover Account for at least twenty-four months. The minimum
amount of any withdrawal shall be $2,500 or such higher amount as
specified by the Committee and any request shall be in integral
multiples of $500.
Section 13.2. Withdrawals From Salary Reduction
Contribution Account and Savings Plan Rollover Account. A
Participant may request a withdrawal of all or any part of the
amount of his Salary Reduction Contribution Account and Savings
Plan Rollover Account, upon giving a written request in the manner
prescribed by the Committee. A withdrawal may be not less than
$1,000.00, and no more than one withdrawal may be made in any Plan
Year. Payment to the Participant of the amount subject to the
withdrawal request shall be made as soon as administratively
possible after the request is received but in any event within
ninety days after the request. Any withdrawal shall be subject to
the following limitations:
(a) Subject to the provisions of subparagraph (b), no
amounts may be withdrawn from a Participant's Salary Reduction
Contribution Account unless he has attained age 59-1/2.
(b) Notwithstanding the age limitation imposed by
subparagraph (a), if the Committee determines, on a uniform,
nondiscriminatory basis, and on the basis of all relevant facts and
circumstances, that a withdrawal is requested on account of an
immediate and heavy financial need of the Participant, and the
withdrawal is necessary to satisfy such financial need, the
Committee may permit the Participant to withdraw any amounts
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standing to his credit in his Salary Reduction Contribution
Account. A withdrawal request shall be deemed to be on account of
an immediate and heavy financial need if it is on account of:
(i) expenses for medical care described in section
213(d) of the Code incurred by the Participant, his Spouse or
dependents, as defined in section 152 of the Code, (or as the
distribution is necessary for such persons to obtain such medical
care);
(ii) costs directly related to the purchase
(excluding mortgage payments) of a principal residence for the
Participant;
(iii) payment of tuition and related educational fees
for the next 12 months of post-secondary education for the
Participant, his Spouse or his dependents; or
(iv) the need to prevent the eviction of the
Participant from his principal residence or foreclosure on the
mortgage of the Participant's principal residence.
A withdrawal shall be deemed to be necessary to satisfy the
Participant's financial need, and shall be approved subject to the
following provisions:
(i) the distribution shall not be in excess of the
amount of the immediate and heavy financial need of the
Participant, including any amounts necessary to pay any federal,
state or local income taxes or penalties reasonably anticipated to
result from the distribution;
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(ii) the Participant shall first obtain all
withdrawals, other than hardship withdrawals, under the Plan;
(iii) the Participant's Salary Reduction
Contributions shall be suspended for a 12-month period beginning on
the date the withdrawal is received; and
(iv) the amount of Salary Reduction Contributions
made by the Participant in the Plan Year succeeding the Plan Year
in which the withdrawal occurs shall not exceed the dollar limit
specified in Section 4.5(a) less all Salary Reduction Contributions
made in the Plan Year in which the withdrawal occurs.
Anything to the contrary herein notwithstanding, effective
July 1, 1989, income, earnings, or appreciation attributable to
Salary Reduction Contributions and allocated to the Participant's
Salary Reduction Contribution Account after December 31, 1988 may
not be distributed on account of hardship.
Section 13.3. Loans. Not more frequently than once in
any Plan Year, and effective as of January 1 (or, with respect to
amounts attributable to a Participant's Salary Reduction Account or
Savings Plan Rollover Account, July 1) of the Plan Year, a
Participant (or former Participant or beneficiary who is a "party
in interest" as defined in Section 3(14) of ERISA) may request a
loan from the Plan. Application for a loan must be submitted in
writing, in the manner and at the time prescribed by the Committee.
The Committee shall direct the Trustee to make loans in accordance
with the following provisions:
(a) The minimum amount of any loan shall be $1000.
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(b) With respect to loans from a Participant's Employer
Contribution Account or Profit Sharing Plan Rollover Account, the
loan shall be subject to the limitations set forth in the second
sentence of Section 13.1.
(c) With respect to loans from a Participant's Salary
Reduction Contribution Account or Savings Plan Rollover Account,
the amount of all loans outstanding at any time for a borrower
(including any loans made under any other "qualified" plans of the
Employer or an Affiliated Company) shall not exceed 50% of the
balance in his Accounts.
(d) The amount of any loan, when added to the highest
outstanding balance of all loans from the Plan (or under any other
"qualified" plan of the Employer or an Affiliated Company) during
the one-year period ending on the day before the date on which the
loan is made, may not exceed $50,000.
(e) No more than one loan may be outstanding from the
Plan at any time. In the event that a borrower requests a loan
while any portion of the balance of a prior loan remains
outstanding, the new loan, if approved, shall include the
outstanding balance of the prior loan which prior loan shall be
deemed paid.
(f) Approval of loans, and the determination of the terms
and conditions of the loans shall be subject to the discretion of
the Committee, which discretion shall be exercised within each
class of borrowers (Participants, former Participants or
beneficiaries) on a reasonably equivalent basis.
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(g) Interest on the unpaid principal shall be at a
reasonable rate to be determined by the Committee in accordance
with generally prevailing market conditions for similar types of
loans.
(h) Unless otherwise specified, no loan shall have a term
in excess of five years, and the loan shall be repaid on a schedule
providing for level amortization determined by the Committee.
(i) Each loan shall be considered a separate Investment
Fund for purposes of Article VI, and the borrower shall specify
from which Investment Fund or Funds his interest is to be
liquidated to provide the loan principal.
(j) If any installment of a loan to a borrower is unpaid
on the date that he or his beneficiary becomes entitled to any
distribution from the Fund, or is unpaid upon termination of
employment or cessation of party-in-interest status, or is
otherwise unpaid for thirty days, such loan, in all events and
notwithstanding the terms thereof, shall become immediately due and
payable on such date. If repayment is not made within thirty days
thereafter, the amount of the loan, together with any accrued
unpaid interest thereon, shall be deducted from the amount of any
distribution to which the borrower or his beneficiary may become
entitled and shall be treated as a current distribution.
(k) Repayments of loans shall be by payroll deduction or,
in the event the borrower is not on the Employer's payroll, by
direct payment from the borrower to the Fund. A borrower may
prepay a loan in full at any time without penalty; provided,
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however, that such borrower may not request a new loan during the
twelve month period following the date of the prepayment.
Section 13.4. Duties of Trustee. All loans or withdrawal
payments to a Participant under the Plan shall be made by the
Trustee from the Accounts of the Participant only upon receipt of
written instructions furnished by the Committee setting forth the
amount of the loan or withdrawal payment and the name and address
of the recipient. In making any such loan or withdrawal payment
under the Plan, the Trustee shall be fully entitled to rely on the
instructions furnished by the Committee and shall be under no duty
to make any inquiry or investigation with respect thereto.
Section 13.5. Spousal Consent to Loans or Withdrawals.
No withdrawal or loan request shall be granted unless the Spouse of
the Participant consents in writing to such withdrawal or loan on
a form provided by the Committee. Such consent shall acknowledge
the effect of the withdrawal or loan on the Participant's benefit
under the Plan, shall be witnessed by the Chairman of the Commit-
tee, a plan representative designated by the Committee or a notary
public, and shall be irrevocable. Spousal consent may be waived if
it is established to the satisfaction of the Committee that the
consent may not be obtained because there is no Spouse, because the
Spouse cannot be located, or because of other circumstances as may
be prescribed by applicable regulations.
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ARTICLE XIV
SPECIAL PROVISIONS FOR TOP-HEAVY PLANS
Section 14.1. General Rule. Notwithstanding any pro-
vision in the Plan to the contrary, for any Plan Year in which the
Plan is determined to be a Top-Heavy Plan, the provisions of this
Article XIV shall become effective.
Section 14.2. Determination of Top-Heavy Status. The
Plan shall be considered a Top-Heavy Plan for the Plan Year, if, as
of the last day of the first Plan Year and thereafter, as of the
last day of the preceding Plan Year (the "Determination Date"):
(a) the value of the sum of all Accounts of Participants
who are Key Employees (as defined below) exceeds 60% of the sum of
all Accounts of all Participants, or
(b) the Plan is part of an Aggregation Group and such
Aggregation Group is determined to be a Top-Heavy Group (as defined
in section 416(g)(2)(B) of the Code).
In determining the above Top-Heavy ratio, the Account
balances of an Employee (a) who is a Non-Key Employee (defined for
purposes of this Article as an Employee who is not a Key Employee)
but who was a Key Employee in any prior Plan Year or (b) who has
not performed services for the Employer maintaining the Plan at any
time during the five-year period ending on the applicable
Determination Date are disregarded.
A Key Employee is defined as any Employee, former Employee
or the Beneficiary of such Employee who, at any time during a Plan
Year or the immediately preceding four (4) Plan Years is: (a) an
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officer of the Employer having annual 415 Compensation greater than
150 percent of the amount in effect under section 415(c)(1)(A) of
the Code for any Plan Year; (b) one of the ten (10) Employees who
own the largest interests in the Employer; (c) a five percent (5%)
owner of the Employer; or (d) a one-percent (1%) owner of the
Employer having annual 415 Compensation from the Employer of more
than one-hundred-fifty-thousand dollars ($150,000).
For purposes of this Section, Aggregation Group means (a)
each plan of the Employer or an Affiliated Company in which a Key
Employee participates, including any terminated plans which are
maintained within the five-year period ending on the applicable
Determination Date, and (b) each other plan of the Employer or an
Affiliated Company which enables such plan to meet the requirements
of section 401(a)(4) or 410 of the Code. The foregoing
notwithstanding, the Employer may treat any plan not required to be
included in the Aggregation Group as being part of such group if
such group would continue to meet the requirements of sections
401(a)(4) and 410 of the Code with such plan being taken into
account.
Section 14.3. Minimum Contributions. For any Plan Year
in which the Plan is determined to be a Top-Heavy Plan pursuant to
Section 14.2, the Employer Contributions for such Plan Year for
each Participant who is a Non-Key Employee shall not be less than
the lesser of
(a) 3% of the Participant's 415 Compensation for such
Plan Year, or
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(b) the percentage at which Employer Contributions are
made or are required to be made under the Plan for the Plan Year
for the Key Employee for whom such percentage is the highest.
Notwithstanding the foregoing, if a Participant is also partici-
pating in another defined contribution plan maintained by the Em-
ployer, the minimum contribution hereunder may be reduced in ac-
cordance with regulations issued under section 416(f) of the Code.
If a Participant is also participating in a defined benefit plan
maintained by the Employer, "5%" shall be substituted for "3%" in
paragraph (a) of this Section.
The Employer Contributions referred to above will be
provided to each Non-Key Employee who is a Participant who has not
separated from service at the end of the Plan Year, regardless of
such Employee's number of Hours of Service, Compensation, or
whether such Employee had made any contribution to the Plan.
Section 14.4. Minimum Vesting. For any Plan Year in
which the Plan is determined to be a Top-Heavy Plan pursuant to
Section 14.2, each Participant's Account shall become vested in
accordance with the following schedule:
Years of Service Vested Interest
---------------- ---------------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
The foregoing notwithstanding and subject to the provisions of
Section 17.2, if the Plan ceases to be Top-Heavy, the provisions of
Section 10.1 shall thereafter apply.
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Section 14.5. Adjustments to Maximum Limits on Benefits
and Contributions. For any Plan Year in which the Plan is deter-
mined to be a Top-Heavy Plan pursuant to Section 14.2, paragraphs
(a)(i) and (b)(i) of Section 5.5 shall be read by substituting the
number "1.00" for the number "1.25", wherever it appears.
Notwithstanding the foregoing, no adjustment shall be made to
Section 5.5 if the following requirements are met:
(a) Section 14.3 shall be applied by substituting "4%"
for "3%;" and the annual accrued benefit derived from employer
contributions under the defined benefit plan for each Participant
who is not a Key Employee is not less than the product of:
(i) 3% of such Participant's average annual
compensation during the period of consecutive years (not exceeding
five) which yields the highest average; and
(ii) the Participant's Years of Service (not exceed-
ing 10) during which the plan is a top-heavy plan;
(b) the aggregate of the accounts of Participants who are
Key Employees under the Plan does not exceed 90% of the aggregate
of the accounts of all Participants; and
(c) the sum of
(i) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans in the
Aggregation Group and
(ii) the aggregate of the accounts of Key Employees
under all defined contribution plans in the Aggregation Group does
not exceed 90% of such sum determined for all employees.
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(d) in the case of a Participant also participating in a
defined benefit plan maintained by the Employer, all of the
requirements of paragraph (a) shall be met by substituting "7 1/2%"
for "3%" in Section 14.3.
Section 14.6. Compensation Limitation. For any Plan
Year in which the Plan is determined to be a Top-Heavy Plan pur-
suant to Section 14.2, the amount of 415 Compensation taken into
account under the Plan for such Plan Year shall not exceed $200,000
(adjusted to reflect any cost of living increases provided in
accordance with Section 416(d) of the Code).
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ARTICLE XV
ADMINISTRATION AND FIDUCIARY RESPONSIBILITY
Section 15.1. Employer. The Employer, acting by deter-
mination of its Board of Directors, may amend the Plan as it deems
necessary or desirable, and shall appoint the Plan Administrator,
the Trustee, the Committee members and, if desired, the Investment
Advisor and determine the amount of contributions as provided in
Section 4.l. Should there be a vacancy in the position of Plan
Administrator, the Employer shall serve as Plan Administrator.
Section 15.2. Investment Advisor. If appointed by the
Employer, the Investment Advisor shall direct the Trustee in the
investment and reinvestment of the Fund, or such portion thereof as
may be assigned to it for supervision.
Section 15.3. Trustee. The Trustee will invest and
reinvest the Fund in accordance with the Trust Agreement and make
distributions upon instructions of the Committee.
Section 15.4. Committee. The Committee shall decide such
questions of Plan interpretation, eligibility and distribution of
benefits as the Plan Administrator may submit for its determina-
tion, shall resolve all inconsistencies, if any, in the Plan. The
Committee shall receive reports from the Trustee as to the status
of the Fund, advise the Board as to the status of the Fund from
time to time and instruct the Trustee with respect to benefit
distributions. The Committee may contract for clerical, legal,
accounting, actuarial and medical services as may be desirable for
the proper administration of the Plan, the cost of which may be
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paid from the Fund or by the Employer as the Employer shall
determine. The Committee may also authorize the Plan Administrator
to contract for such services as are necessary for the proper
discharge of its duties. The Committee is designated as the agent
for service of process.
Section 15.5. Plan Administrator. The Plan Administrator
shall maintain records of Participants' service, age, Plan
Compensation, allocation of contributions and any other information
which the Committee, in its sole discretion, determines is
necessary to administer the Plan. He shall interpret the Plan or,
at his discretion, refer such questions to the Committee. The Plan
Administrator shall provide rules for administration of the Plan
which are not inconsistent with its terms and the decisions of the
Committee. He shall determine questions of eligibility and
distribution of benefits or refer such questions to the Committee,
as he shall elect. The Plan Administrator shall also prepare or
cause to be prepared all tax returns and other reports that may be
required by law. Records of the Plan Administrator may be examined
by the Employer and the Committee and the Participant may examine
those records of the Plan Administrator relating to him.
Section 15.6. Claims Procedure. The Plan Administrator
will give written notice to every Participant or beneficiary whose
claim for benefits under the Plan is denied in whole or in part
setting forth reasons for such denial in understandable terms.
Upon receipt of such notice, the Participant or beneficiary may
request the Plan Administrator to review his claim for benefits, if
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he notifies the Employer in writing within 90 days after receipt of
notice denying the claim for benefits. The Participant or
beneficiary shall have the right to submit a written statement
supporting his claim for benefits to the Plan Administrator. The
Plan Administrator shall review such statements and render a de-
cision within 60 days. If the Plan Administrator is, because of
the need for more extensive investigation of the claimant's state-
ment, unable to act within such period, he shall so notify the
claimant in writing. In such event, the Plan Administrator shall
have an additional 60 days to render his determination. If the
Plan Administrator reaffirms the denial of benefits, the Partici-
pant or beneficiary may request review of such denial by the Com-
mittee if he notifies the Plan Administrator within 90 days after
his receipt of notice from the Plan Administrator reaffirming the
denial of benefits. The Committee shall then review the records
submitted to the Plan Administrator and such other documents as it
may require, and, within 60 days of such appeal, it shall give the
Participant or beneficiary written notice of its decision. If the
Committee is unable to act within the 60 day period, it shall so
notify the claimant in writing but, in any event, the Committee
must act within 120 days of the appeal. The decision of the
Committee shall be final.
Section 15.7. Uniformity of Action. Whenever the Em-
ployer, Plan Administrator or Committee are required or permitted
to make decisions with respect to eligibility of an Employee for
participation, contributions or benefit distributions, such
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decisions shall be uniform and consistent with respect to all
persons similarly situated. No action shall be taken which
discriminates in favor of the Employer's officers or supervisory
personnel.
Section 15.8. Reliance on Others. The Employer and its
Board of Directors, Trustee, Investment Advisor (if appointed),
Plan Administrator and Committee shall be Fiduciaries under the
Plan but shall be responsible only for those separate duties
assigned to each by the Plan, and none shall have responsibility
for performance of duties assigned to another of them under the
Plan. Each of them may rely on reports, notices, certifications or
other communications furnished by the others. The Committee and
Plan Administrator may rely on the reports and opinions furnished
by persons retained by them.
Section 15.9. Indemnification. The Employer shall in-
demnify each Board member, Committee member, the Plan Administra-
tor, and other Employees of any Participating Employer involved in
the administration of the Plan against all cost, expenses and
liabilities, including attorney's fees, incurred in connection with
any action, suit or proceeding instituted against him alleging any
act of omission or commission performed by him while acting in good
faith in discharging his duties with respect to the Plan. This
indemnification is limited to the extent such costs and expenses
are not covered under insurance as may be now or hereafter provided
by the Employer or any Participating Employer. Promptly after
receipt by an indemnified party under this Section of notice of the
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commencement of any action, such indemnified party shall notify the
Employer of the commencement thereof. The Employer shall be
entitled to participate at its own expense in the defense or to
assume the defense of any action brought against any party
indemnified hereunder. In the event the Employer elects to assume
the defense of any such suit, such defense shall be conducted by
counsel chosen by the Employer and the indemnified party shall bear
the fees and expenses of any additional counsel retained by him.
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ARTICLE XVI
AMENDMENT OF PLAN
Section 16.1. Right to Amend. The Employer, acting by
determination of its Board of Directors, shall have the right to
amend the Plan at any time. A Participating Employer shall also
have the right to amend its Adoption Agreement. However, no such
amendment shall be effective which would adversely affect the
qualified status of the Plan and Fund under Sections 401 and 501 of
the Code or under the corresponding provisions of subsequent
revenue laws.
Section 16.2. Amendment to Vesting Schedule. No Plan
amendment shall deprive any Participant or beneficiary of any of
the benefits to which he is entitled under this Plan with respect
to contributions previously made, nor shall any amendment eliminate
or reduce a protected benefit under section 411(d)(6) of the Code
except as provided in sections 412(c)(8) of the Code or in
applicable regulations. No Plan amendment shall decrease the
vested interest in any Participant's Account, nor shall any amend-
ment change any vesting schedule under the Plan unless each Par-
ticipant having at least five Years of Service at the end of the
period described in this sentence is permitted to elect, within a
period beginning on the date such amendment is adopted and ending
60 days after the latest of: (a) the day the amendment is adopted,
(b) the day the amendment becomes effective, or (c) the day the
Participant is issued written notice of the amendment, to have his
nonforfeitable percentage computed under the Plan without regard to
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such amendment; provided, however that effective July 1, 1989, this
sentence shall apply to Participants with at least three Years of
Service. Notwithstanding the foregoing, any modification or
amendment of the Plan may be made retroactively, if necessary or
appropriate to qualify or maintain the Plan as a plan meeting the
requirements of the Code and ERISA, as now in effect or hereafter
amended, or any other provisions of law, as now in effect or here-
after amended or adopted, and any regulation issued thereunder.
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ARTICLE XVII
TERMINATION OF PLAN
Section 17.1. Right to Terminate Reserved. The Employer
(and each Participating Employer as to its participation), acting
by determination of its Board reserves the right to terminate the
Plan at any time. However, no termination shall be effective which
would adversely affect the qualified status of the Plan and Fund
under Sections 401 and 501 of the Code or under the corresponding
provisions of subsequent revenue laws. The complete discontinuance
of contributions by the Employer shall be deemed a termination of
the Plan.
Section 17.2. Distribution on Termination. Upon
termination or partial termination of the Trust, all Participants'
Accounts shall become fully vested, and shall not thereafter be
subject to forfeiture. Upon termination of the Trust, the
Committee may direct the Trustee to distribute all assets remaining
in the Trust, after payment of any expenses properly chargeable
against the Trust, to the Participants in accordance with the value
of Accounts credited to such Participants as of the date of such
termination, in such manner as the Committee shall determine. The
Committee's determination shall be conclusive upon all persons.
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ARTICLE XVIII
MISCELLANEOUS
Section 18.1. No Other Benefits. No benefits other than
those specifically provided for herein shall be payable under the
Plan.
Section 18.2. Plan Not an Employment Contract. This Plan
shall not be construed to be a contract of employment. Nothing in
the Plan shall be deemed to restrict or limit an Employer's right
to discharge any Participant or other Employee at any time.
Section 18.3. Plan For Exclusive Benefit of Partici-
pants. The Plan and the Fund shall exist for the sole and ex-
clusive benefit of Participants and their beneficiaries, and no
amendment shall be made that would be inconsistent with such
purpose.
Section 18.4. Benefits Not Assignable. Except with
respect to federal income tax withholding and withdrawals and loans
under Article XIII, no benefits payable hereunder shall be subject
to assignment, transfer, sale or encumbrance and the Fund shall not
be liable for, or subject to, the debts or engagements of any
Participant or to any attachment or other legal process to collect
the same. Notwithstanding the foregoing, the Committee shall
direct the Trustee to comply with a Qualified Domestic Relations
Order. Upon receipt of any judgment, decree or order (including
approval of a property settlement agreement relating to the
provision of payment by the Plan to an Alternate Payee pursuant to
a state domestic relations law, the Committee shall promptly notify
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<PAGE> 327
the affected Participant and any Alternate Payee of the receipt of
such judgment, decree or order and shall notify the affected
Participant and any Alternate Payee of the Committee's procedure
for determining whether or not the judgment, decree or order is a
Qualified Domestic Relations Order. The Committee shall establish
a procedure to determine the status of a judgment, decree or order
as a Qualified Domestic Relations Order and to administer Plan
distributions in accordance with Qualified Domestic Relations
Orders. Such procedure shall be in writing, shall include a
provision specifying the notification requirements enumerated
above, shall permit an Alternate Payee to designate a
representative for receipt of communications from the Committee and
shall include such other provisions as the Committee shall
determine, including provisions required under applicable regu-
lations. Nothing herein, however, shall prevent the effective
designation of beneficiaries for receipt of survivors' benefits
under elections made pursuant to Section 9.2.
Section 18.5. Required Information Concerning Partici-
pants. The Committee and Plan Administrator may require eligible
Employees to furnish such information as to age, health, employment
and family status as they believe reasonably necessary to
administer the Plan.
Section 18.6. Incompetence of Participant. If the Com-
mittee determines that any Participant or beneficiary entitled to
benefits under this Plan is physically or mentally incompetent or
is a minor, that such person is in the care of another person and
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<PAGE> 328
that no guardian, committee or other representative has been duly
appointed, payment may be made to the person or institution caring
for the Participant or beneficiary. The receipt of such person or
institution shall be a complete discharge for the payment of such
benefit.
Section 18.7. Merger with Another Plan. In the event
that this Plan merges or consolidates with or transfers assets or
liabilities to any other plan after the Effective Date of this
Plan, each Participant shall be entitled to a retirement benefit
which is equal to or greater than the benefit which he would have
been entitled to receive immediately before the merger, consoli-
dation or transfer of assets or liabilities. For purposes of the
comparison described above, benefits shall be computed as if this
Plan had terminated immediately prior to the merger, consolidation
or transfer and as if the surviving or recipient plan had termin-
ated immediately after such merger, consolidation or transfer.
Section 18.8. Controlling Laws. The rights and ob-
ligations of the Employer and its Employees under this Plan shall
be determined in accordance with the laws of the Commonwealth of
Pennsylvania and, where applicable, of the United States of
America.
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SCHEDULE A
PROVISIONS PERTAINING TO TANK CLEANING INC. PARTICIPANTS
The following provisions shall supersede and/or supplement
certain of the provisions of Articles I through XIV of the Plan to
the extent provided below with respect to any Tank Cleaning Inc.
Participant. References to Section numbers pertain to Sections in
the main Plan document unless specifically indicated otherwise.
A. The following is added at the end of Section 2.1:
"A Tank Cleaning Inc. Participant's Accounts may also
include his 'Matching Account.' 'Matching Account' shall
include Matching Contributions made on behalf of Tank Cleaning
Inc. Participant in respect of any Plan Year shall be allocated
to his Matching Account and shall be invested in the Investment
Fund or Funds in the same manner and to the same proportionate
extent as the Tank Cleaning Inc. Participant designates for his
Contribution Account."
B. The following is added at the end of Section 2.20:
"Employer Contributions for a Tank Cleaning Inc.
Participant may also include 'Matching Contributions' (intended
to satisfy the requirements of section 401(m) of the Code)."
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<PAGE> 330
C. Section 2.27 is amended to read, in its entirety, as
follows:
"Section 2.27. Hours of Service. Hours of Service shall
mean, for any Tank Cleaning Inc. Participant:
(a) except as provided in subsection (b),
(i) each hour for which he is directly or
indirectly paid or entitled to payment by an
Employer or an Affiliated Company for the
performance of employment duties; or
(ii) each hour for which he is entitled, either by
award or agreement, to back pay from an
Employer or an Affiliated Company, irrespective
of mitigation of damages; or
(iii) each hour for which he is directly or
indirectly paid or entitled to payment by an
Employer or an Affiliated Company on account of
a period of time during which no duties are
performed due to vacation, holiday, illness,
incapacity (including disability), jury duty,
layoff, leave of absence, or military duty; or
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(iv) each hour for which he is absent for military
service under leave granted by the Employer or
Affiliated Company or required by law, provided
the Employee returns to service with the
Employer or Affiliated Company within such
period as his right to reemployment is
protected by law.
(b) Anything to the contrary in subsection (a)
notwithstanding:
(i) No Hours of Service shall be credited to an
Employee for any period merely because, during
such period, payments are made or due him under
a plan maintained solely for the purpose of
complying with applicable workers'
compensation, unemployment compensation, or
disability insurance laws.
(ii) No more than 501 Hours of Service shall be
credited to an Employee under paragraph (a)(3)
of this definition on account of any single
continuous period during which no duties are
preformed by him except to the extent otherwise
provided in the Plan.
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<PAGE> 332
(iii) No Hours of Service shall be credited to an
Employee with respect to payments solely to
reimburse for medical or medically related
expenses.
(iv) No Hours of Service shall be credited twice.
(v) Hours of Service shall be credited at least as
liberally as required by the rules set forth in
Department of Labor Reg. Section 2530.200b-2(b) and
(c)."
D. Section 4.5(a) is amended to add the following after the
first sentence thereof:
"A Tank Cleaning Inc. Participant's Basic Contributions
into the Fund shall be in the aggregate at a whole percentage
rate, elected by the Tank Cleaning Inc. Participant, of the
Compensation otherwise payable to the Tank Cleaning Inc.
Participant."
E. A new Section 4.10 is added to read, in its entirety, as
follows:
"Section 4.10. Matching Contributions. Tank Cleaning
Inc. shall make 'Matching Contributions' to the Plan for each
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<PAGE> 333
Plan Year. Such Matching Contributions shall equal 50% of all
Basic and Deferred Bonus Contributions made by each Tank
Cleaning Inc. Participant for that Plan Year, not in excess of
6% of each such Tank Cleaning Inc. Participant's Compensation,
provided that such Tank Cleaning Inc. Participant is an
Employee on the last day of such Plan Year."
F. The first paragraph of Section 5.3 is amended to read, in
its entirety, as follows:
"Section 5.3. General Requirements. For any Plan Year,
the Committee shall insure (a) that Contributions under the
Plan shall not exceed the limitations on deductions imposed
under section 404(a)(3) of the Code; (b) that the Plan shall
satisfy the coverage requirements of section 410(b)(1) of the
Code; (c) that the Plan shall satisfy the average deferral
percentage test set forth in Section 5.3(a); and (d) that the
Plan shall satisfy the average contribution percentage test set
forth in Section 5.7."
G. A new Section 4.11 is added to read, in its entirety, as
follows:
"Section 4.11. Return of Excess Contributions. If the
average deferral percentage (or the average contribution
percentage) for all Tank Cleaning Inc. Participants who are
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<PAGE> 334
Highly Compensated Employees exceeds the amount specified in
Sections 5.3(a) (or 5.3(c) for any Plan Year, the Basic and
Deferred Bonus Contributions (and if necessary, Matching
Contributions) for the Highly Compensated Employee(s) with the
highest deferral (or contribution) percentage shall be reduced
so that his applicable percentage is reduced to the greater of
(a) such percentage that enables the Plan to satisfy the
applicable percentage test, or (b) a percentage equal to the
applicable percentage of the Highly Compensated Employee(s)
with the next highest percentage. This procedure shall be
repeated until the applicable percentage test is satisfied.
The amount so reduced, together with the attributable earnings
thereon, including earnings for the Plan Year for which the
excess amounts were contributed and shall be deemed to have
been contributed to the Plan by mistake of fact, shall be
refunded to the Employer, and shall thereafter be returned by
the Employer to the Tank Cleaning Inc. Participants from whom
such excess contribution was obtained (subject, however, to the
withholding of taxes and other amounts as though such amounts
were current remuneration). Such payment shall be made within
two and one half (2 1/2) months following the close of such
Plan Year, if administratively practicable, but in no event
later than 12 months of the close of the Plan Year with respect
to which the reduction applies.
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<PAGE> 335
H. A new Section 5.7 is added to read, in its entirety, as
follows:
"Section 5.7. Average Contribution Percentage Test. The
term 'average contribution percentage test' shall mean the
numerical test set forth in Section 5.3(a) substituting for the
term 'average deferral percentage' the term 'average
contribution percentage'. The following rules shall also
apply:
(a) The term "average contribution percentage" as
applied to a specified group of Participants shall mean
the average of the ratios, calculated separately for each
such Participant in the group of:
(i) the amount of Matching Contributions paid to
the Plan on behalf of such Participant for such Plan
Year and, at the discretion of the Employer, Basic
and Deferred Bonus Contributions, to
(ii) the Participant's Compensation for such Plan
Year.
(b) Basic and Deferred Bonus Contributions may be
taken into account under this Section only to the extent
necessary to satisfy the average contribution percentage
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<PAGE> 336
test, and only to the extent that the Plan continues to
satisfy the average deferral percentage test set forth in
Section 5.3(a) without taking into account such Basic and
Deferred Bonus Contributions.
(c) If two or more plans of the Employer or an
Affiliated Company to which Employee contributions or
Employer matching contributions are made are treated as
one plan for purposes of sections 401(a)(4) and 410(b) of
the Code, such plans shall be treated as one plan for
purposes of this Section. If a Highly Compensated
Employee participates in any other plan of the Employer to
which Employer matching contributions, Employee
contributions or elective deferrals are made, all such
contributions shall be aggregated for purposes of this
Section (excluding plans that are not permitted to be
aggregated under Treas. Reg. Section 1.401(m)-1(b)(3)(ii))."
I. A new Section 5.8 is added to read, in its entirety, as
follows:
"Section 5.8. Limitation on Use of Percentage Tests. For
any Plan Year, the sum of the average deferral percentage and
the average contribution percentage for all Tank Cleaning Inc.
Participants who are Highly Compensated Employees shall not
exceed the sum of (a) and (b) where:
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<PAGE> 337
(a) is the product of 1.25 and the greater of
(i) the average deferral percentage for all Tank Cleaning
Inc. Participants who are Non-Highly Compensated
Employees; or (ii) the average contribution percentage for
all Tank Cleaning Inc. Participants who are Non-Highly
Compensated Employees; and
(b) is the product of 2.0 and the lesser of (i) or
(ii) above; provided, however, that in no event shall this
amount exceed the lesser of (i) or (ii) above by more than
two percentage points.
If the limitation in this Section is not met, the actual
deferral percentage or the actual contribution percentage of
Highly Compensated Employees, as determined by the Committee,
shall be reduced in the manner prescribed in Section 5.5 until
such limitation is met."
J. A new Section 5.9 is added to read, in its entirety, as
follows:
"Section 5.9. Aggregation. For purposes of Sections
5.3(a), 5.7 and 5.8, the Plan shall be aggregated and treated
as a single plan with other plans maintained by the Employer or
an Affiliated Company to the extent that the Plan is aggregated
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<PAGE> 338
with any such other plan for purposes of satisfying section
410(b) (other than section 410(b)(2)(A)(ii)) of the Code."
K. A new Section 10.5 is added to read, in its entirety, as
follows:
"Section 10.5. Vesting of Matching Account. A Tank
Cleaning Inc. Participant shall become 100% vested in his
Matching Account upon the earlier of (i) his Normal Retirement
Age, (ii) the occurrence of death or Disability,
(iii) termination of the Plan or partial termination of the
Plan as to him or complete discontinuance of Matching
Contributions, or (iv) at the earliest date on which the Tank
Cleaning Inc. Participant could elect Early Retirement. At any
time other than a time delineated in the preceding sentence of
this Section, the Tank Cleaning Inc. Participant's vested
percentage in his Matching Account shall be determined
according to the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 years 0%
2 but less than 3 years 10%
3 but less than 4 years 20%
4 but less than 5 years 40%
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<PAGE> 339
5 but less than 6 years 70%
6 or more years 100%
In the event the vesting schedule in this Section is amended,
any Participant who has completed at least three Years of
Service as defined in Section 10.6 at the time of such
amendment, may elect, pursuant to Section 16.1, to have the
vested interest of his Matching Account determined without
regard to such amendment."
L. A new Section 10.6 is added to read, in its entirety, as
follows:
"Section 10.6. Years of Service for Vesting. For
the purposes of this Article, an Employee shall be
credited with a Year of Service for each Plan Year during
which he is credited with 1,000 or more Hours of Service
beginning with the Plan Year commencing January 1, 1991."
M. A new Section 10.7 is added to read, in its entirety, as
follows:
"Section 10.7. Breaks in Service and Loss of Service.
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<PAGE> 340
(a) An Employee's Years of Service shall be
canceled if he incurs a Break in Service before his
Normal Retirement Date and at a time when (1) he has no
nonforfeitable interest in his Accounts, other than his
Rollover Account or Contribution Account or (2) he has no
Account under the Plan.
(b) Except as provided in Subsections (c) and (d)
of this Section, an Employee or former Employee shall
incur a Break in Service in any Plan Year in which he is
not credited with more than 500 Hours of Service.
(c) If an Employee is absent for one or more of the
following reasons, then, to the extent he is not
otherwise credited with Hours of Service with respect to
such absence, he shall be credited with an Hour of
Service, solely for purposes of Subsection (b) of this
Section, for each Hour of Service with which he would
have been credited if he had continued to be actively
employed during the period of absence due to:
(1) layoff for a period not in excess of one year;
(2) leave of absence with the approval of the
Committee for a period not in excess of one year,
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<PAGE> 341
unless such period is extended by the Committee;
(3) military service such that his right to
reemployment is protected by law.
(d) If an Employee is absent from work by reason of
pregnancy, childbirth, or placement in connection with
adoption, or for purposes of the care of such Employee's
child immediately after birth or placement in connection
with adoption, such Employee shall be credited, solely
for purposes of Subsection (b) of this Section, with the
Hours of Service with which such Employee would have been
credited but for the absence; or, if such hours cannot be
determined, with eight Hours of Service per normal
workday. The total number of hours to be treated as
Hours of Service under this Subsection shall not exceed
501. The hours described in this Subsection shall be
credited either for the Plan Year in which the absence
from work begins, if the Employee would be prevented from
incurring a Break in Service in such Plan Year because
the period of absence is treated as Hours of Service
under this Subsection, or, in any other case, for the
Plan Year next following the one in which the absence
from work begins. In order for an absence to be
considered on account of the reasons described in this
subparagraph, an Employee shall provide the Committee, in
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the form and manner prescribed by the Committee,
information establishing (i) that the absence from work
is for the reasons set forth in this subparagraph, and
(ii) the number of days for which there was such an
absence. Nothing in this Plan relating to such Hours of
Service shall be construed as expanding or amending any
maternity or paternity leave policy of the Employer."
N. A new Section 10.8 is added to read, in its entirety, as
follows:
"Section 10.8. Restoration of Service. The Years of
Service of an Employee that have been canceled pursuant to
Section 10.7 shall be restored if he thereafter completes a
Year of Service and, at his Reemployment Commencement Date,
the number of his consecutive Breaks in Service was less than
the greater of (a) the number of Years of Service to his
credit when the first such Break in Service occurred, or (b)
five."
O. A new Section 10.9 is added to read, in its entirety, as
follows:
"Section 10.9. Forfeitures and Restoration of Forfeited
Amounts upon Reemployment.
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<PAGE> 343
(a) If a Tank Cleaning Inc. Participant who has had a
Termination Date does not thereafter complete an Hour of
Service before the end of the Plan Year in which occurs the
earlier of:
(1) the date on which he receives a distribution of
his entire nonforfeitable interest in his Account, which
is less than 100%; or
(2) the date on which he incurs a one-year Break in
Service,
his Matching Account shall be closed, and the forfeitable
amount credited thereto shall be forfeited.
(b) Amounts forfeited from a Tank Cleaning Inc.
Participant's Matching Account under Subsection (a) of this
Section shall be used to reduce future Matching Contributions.
(c) If a Tank Cleaning Inc. Participant, who has
received a distribution described in Paragraph (a)(1) of this
Section, as a result of which a portion of his Accounts has
been forfeited, has a Reemployment Commencement Date prior to
incurring five consecutive one-year Breaks in Service, the
amount so forfeited shall be restored to his new Matching
Account, as applicable, if, and only if, he repays the full
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<PAGE> 344
amount of such distribution (if any) prior to the earlier of
(1) the fifth anniversary of his Reemployment Commencement
Date or (2) the date on which the Tank Cleaning Inc.
Participant has completed five consecutive one-year Breaks in
Service following the date of the distribution. Amounts
restored under this Subsection shall be charged against
forfeitures for the Plan Year. If the foregoing amounts are
insufficient, Tank Cleaning Inc. shall make any additional
contribution necessary to accomplish the restoration.
(d) If a Participant has had five consecutive one-year
Breaks in Service and again becomes an Employee, the amount
forfeited under subsection (a) shall not be restored to his
Account for any reason."
P. A new Section 11.4 is added to read, in its entirety, as
follows:
"Section 11.4. Distribution on Termination. The entire
amount of a Participant's nonforfeitable interest in his
Accounts shall be distributed after the Participant's
Termination Date. Such Distribution shall be made to the
Participant except in the event of his death, in which case
such distribution will be made to the Participant's designated
beneficiary."
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<PAGE> 345
Q. A new Section 14.7 is added to read, in its entirety, as
follows:
"Section 14.7. Minimum Vesting. For any Plan Year in
which the Plan is determined to be a Top-Heavy Plan, each Tank
Cleaning Inc. Participant's interest in his Matching Account
shall become vested in accordance with the following schedule
or in accordance with the provisions of Section 10.5,
whichever produces a greater nonforfeitable interest:
Years of Vested
Service Percentage
-------------------- ----------
Less than 2 years 0%
2 but less than 3 years 20%
3 but less than 4 years 40%
4 but less than 5 years 60%
5 but less than 6 years 80%
6 or more years 100%
The foregoing notwithstanding, if the Plan ceases to be
Top-Heavy, the provisions of Sections 10.5 and 2.1 shall
thereafter apply as to subsequent amounts credited to such
Accounts."
R. This Schedule A shall be effective as of November 1,
1993.
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<PAGE> 346
EXHIBIT 10.17
MARITRANS INC.
PERFORMANCE UNIT PLAN
I. Purpose. The purpose of the Maritrans Inc. Performance Unit
Plan (the "Plan") is to provide a means whereby Maritrans Inc.
(the "Company") may, through the granting of performance units
("Units"), attract and retain persons of outstanding executive
ability as employees of the Company, or of its affiliates, and
motivate such Executives, as defined below, to exert their best
efforts on behalf of the Company on a long-term basis. The
"Effective Date" of the Plan shall be April 1, 1993.
II. Administration. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of
Directors of the Company (the "Board"). The Committee shall have
full power and authority to interpret the Plan, make factual
determinations, and to prescribe, amend and rescind any rules,
forms and procedures as it deems necessary or appropriate for the
proper administration of the Plan and to make any other
determinations and take such other actions as it deems necessary
or advisable in carrying out its duties under the Plan. All
decisions and determinations by the Committee shall be final and
binding on the Company, recipients of Units, employees, and any
other persons having or claiming an interest hereunder.
III. Participation.
3.01 In General. The Committee shall determine, upon the
recommendation of the Chief Executive Officer of the Company (the
"CEO"), each Executive of the Company to whom Units are to be
granted under the Plan (a "Participant"), the number of Units to
be granted to each Participant, the initial dollar value of each
Unit, the benchmarks for determining the value of each Unit at
the conclusion of the Performance Period, as defined in Section
4.02 below, and any other terms and conditions relating to the
granting of Units. In making its determinations, the Committee
shall take the Company's overall compensation policy into
account. For the purposes of the Plan, an individual shall be an
"Executive" if the individual is an officer of the Company, or of
an affiliate, and is designated as an "Executive" for the
purposes of the Plan by the CEO.
3.02 Factors to be Considered. In determining whether an
individual may become a Participant under the Plan, the Committee
shall take into consideration the key employee's present and
potential contribution to the success of the Company and such
other factors as the Committee may in its sole discretion deem
proper and relevant.
IV. Grant of Units.
4.01 Grant and Number of Units. The grant of Units to each
Participant shall be evidenced by an agreement in the form and
manner prescribed by the Committee that shall indicate the number
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<PAGE> 347
of Units awarded to the Participant and the terms and conditions
thereof, consistent with the provisions of the Plan.
4.02 Performance Period. The Committee shall establish and
announce a measurement period over which the performance of the
Company shall be determined (the "Performance Period"). The
Performance Period shall normally be a period of three years
unless the Committee determines otherwise in its sole discretion.
For the initial period beginning with the Effective Date, the
Performance Period shall begin on the Effective Date and end on
December 31, 1995; provided, however, that the Company's
financial performance for 1993 shall be calculated on a pro forma
basis as if the Company had actual operations during the period
commencing January 1, 1993 and ending March 31, 1993.
4.03 Corporate Goals.
(a) Upon the recommendation of the CEO, at the beginning of
each Performance Period, the Committee shall establish and
announce the corporate goals (the "Corporate Goals") for each
Performance Period upon which the value of the Units shall be
determined. The Corporate Goals shall relate to the Company's
financial and operating performance during the applicable
Performance Period.
(b) The CEO shall also recommend to the Committee and the
Committee shall assign in its sole discretion a percentage to
each Corporate Goal, which when multiplied by the initial value
of a Participant's Units shall result in the amount to be
distributed to each Participant, under Section 4.05 hereof, (the
"Award") if that level of Corporate Goal is attained for the
Performance Period.
4.04 Award Determination.
(a) At the end of each Performance Period, the Committee in
its sole discretion shall determine the level of Corporate Goals
attained for such Performance Period.
(b) Based upon the Committee's determination of the extent
to which Corporate Goals have been met, a Participant's Award
will be determined as the product of: (i) the percentage assigned
to the level of Corporate Goals which have been met, (ii) the
initial value of a Unit and (iii) the number of Units assigned to
the Participant.
(c) A Participant who ceases to be an Executive during a
Performance Period for any reason other than death, long-term
disability (as determined with reference to the Company's long-
term disability plan), or retirement (as determined with
reference to the Company's qualified defined benefit plan) shall
not be eligible to receive any Award during the Performance
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Period in which such termination or demotion occurs (unless the
Committee in its sole discretion determines otherwise in the case
of a demotion). A Participant who ceases to be employed by
reason of death, disability or retirement before the end of a
Performance Period shall be eligible to receive an Award at the
close of such Performance Period on a pro-rated basis taking into
account the portion of the Performance Period during which the
Participant was employed as an Executive, such Award to be
determined by the Committee in its sole discretion. In the event
of death, the Participant's beneficiary designated under the
Company's group term life insurance plan shall receive any
payments due at the close of the current Performance Period.
4.05 Time and Manner of Payment. Awards shall be paid in two
equal installments. The first shall be paid as soon as practical
following the end of each Performance Period and the second on
the last day of September following the end of the Performance
Period. No payments shall be made to a Participant not employed
on the date payment is to be made unless termination occurred by
reason of death, disability, retirement or otherwise as
determined by the Committee in its sole discretion. All payments
shall be made in cash or check subject to applicable and
appropriate withholding taxes.
4.06 Accounts. The Company shall create an account on its books
to reflect the number of Units credited to each Participant
hereunder; provided, however, that no Participant or other person
shall under any circumstances acquire any property interest in
any specific assets of the Company. Nothing contained in this
Plan and no action taken pursuant hereto shall create or be
construed to create a fiduciary relationship between the Company
and any Participant or any other person. To the extent that any
person acquires a right to receive payment from the Company
hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.
V. Vesting Upon a Change of Control.
5.01 Change of Control. For the purposes hereof, a "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, or 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 the Company
then outstanding, or (ii) during any twenty-four month period,
individuals who at the beginning of such period constituted the
Board cease for any reason to constitute a majority thereof,
unless the election, or the nomination for election by the
Company's shareholders, of at least seventy-five percent of the
directors who were not directors at the beginning of such period
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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.
5.02 Vesting of Awards. Notwithstanding the provisions of
Section IV hereof, in the event that a Participant's employment
is involuntarily terminated, other than for "cause," as defined
in the Company's Severance Pay Plan, within one year following a
Change of Control, including a termination initiated by any
Executive pursuant to the change of control provisions of the
employment agreement applicable to that Executive, the
Participant shall receive, within 30 days of such termination, an
Award equal to the Award that could have been determined as if
the Participant's actual date of termination were the last day of
the then current Performance Period and on the basis of the
achievement of the Corporate Goals for the shortened Performance
Period plus any Award remaining due for the prior Performance
Period whether or not then payable pursuant to the provisions of
Section 4.05 hereof.
VI. General Provisions.
6.01 Transferability. No Unit awarded under this Plan shall be
transferred, assigned, pledged or encumbered by the Participant.
In the event of a Participant's death during his employment with
the Company, payments of any Award shall be made as provided in
Section IV hereof.
6.02 No Rights as Stockholder. No Participant shall have any
rights as a stockholder of the Company, including the right to
any cash dividends or the right to vote, as a result of the grant
or holding of any Units.
6.03 Adjustment for Non-Recurring Items, Etc. Notwithstanding
anything herein to the contrary, if the Company's financial
performance is affected by any event that is of a non-recurring
nature, the Committee in its sole discretion may make such
adjustments in the initial value of each Unit or in the Corporate
Goals for the then current Performance Period as it shall
determine to be equitable and appropriate in order to make the
Unit, as nearly as may be practicable, equivalent to the Unit
immediately prior to such event.
6.04 No Rights to Employment. Nothing in this Plan, and no
action taken pursuant hereto, shall confer upon any Participant
the right to continue in the employ of the Company, or affect the
right of the Company to terminate the Participant's employment at
any time for cause or for no cause whatsoever.
6.05 Withholding Tax. Notwithstanding any other provision of
this Plan, the Company shall be entitled to withhold from, or in
respect of, any Award to be made an amount sufficient to satisfy
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all federal, state and local tax withholding requirements
relating thereto. Such withholding may be made from other
amounts due from the Company to the Participant (including salary
or bonus).
6.06 Notices. Any notice hereunder to be given to the Company
shall be in writing and shall be delivered in person to the
Secretary of the Company, or shall be sent by registered mail,
return receipt requested, to the Secretary of the Company at the
Company's executive offices, and any notice hereunder to be given
to the Participant shall be in writing and shall be delivered in
person to the Participant, or shall be sent by registered mail,
return receipt requested, to the Participant at his last address
as shown in the employment records of the Company. Any notice
duly mailed in accordance with the preceding sentence shall be
deemed given on the date postmarked.
6.07 Termination and Amendment of the Plan/Modification of Units.
The Plan may be terminated, modified or amended by the Board at
any time, except that no such action shall deprive a Participant
of the right to the amount of the Award that could have been
determined as if the actual date of such action were the last day
of the then current Performance Period and on the basis of the
achievement of the Corporate Goals for the shortened Performance
Period with respect to any Units then outstanding under the Plan.
6.08 Miscellaneous.
(a) If the Company shall find that any person to whom any
payment is payable under this Plan is unable to care for his
affairs because of illness or accident, or is a minor, any
payment due (unless a prior claim therefor shall have been made
by a duly appointed guardian, committee or other legal
representative) may be paid to the spouse, a child, a parent, or
a brother or sister, or to any person deemed by the Company to
have incurred expense for such person otherwise entitled to
payment, in such manner and proportions as the Company may
determine. Any such payment shall be a complete discharge of the
liabilities of the Company under this Plan.
(b) This Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns and the
Participant and his heirs, executors, administrators and legal
representatives.
(c) This Plan shall be construed in accordance with, and
governed by, the law of the Commonwealth of Pennsylvania.
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EXHIBIT 11.1
MARITRANS INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
Year Ended December 31, 1993*
Primary:
Loss:
Net (loss) $(11,789,000)
============
Shares:
Weighted average number of
common shares outstanding 12,523,000
============
Primary (loss) per common share $ (.9414)
===========
Assuming full dilution:
Loss:
Net (loss) $(11,789,000)
============
Shares:
Weighted average number of
common shares outstanding 12,523,000
Assuming exercise of options reduced
by the number of shares which could
have been purchased with the proceeds
from the exercise of such options 3,474
------------
Weighted average number of common
shares outstanding as adjusted 12,526,474
============
Net (loss) per common share
Fully diluted (loss) per common share $ (.9411)**
============
- ------------
* See notes 1 and 3 of the notes to the consolidated financial statements.
** This calculation is submitted in accordance with Regulation S-K
item 601(b)(11) although it is contrary to paragraph 40 of APB
Opinion No. 15 because it produces an anti-dilutive result.
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