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Exhibit 10.6
SEVERANCE AND NON-COMPETITION AGREEMENT
Agreement made as of the 30th of July 2003, between Maritrans
General
Partner Inc., a Delaware corporation (the
"Company"), and Douglas R. Sparks (the
"Employee").
WHEREAS, the Employee is currently employed by the Company in
an
important executive position;
WHEREAS, the Company is a subsidiary of Maritrans Inc., a
publicly
traded corporation ("Maritrans");
WHEREAS, in consideration for the Employee agreeing not to compete
with
the Company in the event the Employee's
employment is terminated, the Company
agrees that the Employee shall receive the
compensation set forth in this
Agreement as a cushion against the
financial and career impact on the Employee
in the event the Employee's employment with
the Company is terminated without
cause whether or not there is a Change of
Control of Maritrans;
NOW, THEREFORE, in consideration of the foregoing and the
mutual
covenants and agreements hereinafter set
forth and intending to be legally bound
hereby, the parties hereto agree as
follows:
1.
Definitions. For all purposes of this Agreement, the following
terms shall have the meanings specified in this Section unless
the context clearly otherwise requires:
(a)
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the
General
Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange
Act").
(b) "Base
Salary " shall mean the sum of the Employee's
base salary, at the rate in effect on the Termination
Date or at the time of a Change of Control, if
higher, together with any and all salary reduction
authorized amounts under any of the Company's benefit
plans or programs, but excluding any amounts
attributable to the exercise of stock options by the
Employee under the Company's Equity Compensation Plan
and the Cash Long Term Incentive Plan.
(c)
"Beneficial Owner" of any securities shall mean:
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(i) that such
Person or any of such Person's
Affiliates or Associates, directly or
indirectly, has the right to acquire
(whether such right is exercisable
immediately or only after the passage of
time) pursuant to any agreement, arrangement
or understanding (whether or not in writing)
or upon the exercise of conversion rights,
exchange rights, rights, warrants or
options, or otherwise, securities of the
Company; provided, however, that a Person
shall not be deemed the "Beneficial Owner"
of securities tendered pursuant to a tender
or exchange offer made by such Person or any
of such Person's Affiliates or Associates
until such tendered securities are accepted
for payment, purchase or exchange;
(ii)
that such Person or any of such Person's
Affiliates or Associates, directly or
indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the
Exchange Act), including without limitation
pursuant to any agreement, arrangement or
understanding, whether or not in writing;
provided, however, that a Person shall not
be deemed the "Beneficial Owner" of any
security under this subsection (ii) as a
result of an oral or written agreement,
arrangement or understanding to vote such
security if such agreement, arrangement or
understanding (A) arises solely from a
revocable proxy given in response to a
public proxy or consent solicitation made
pursuant to, and in accordance with, the
applicable provisions of the General Rules
and Regulations under the Exchange Act, and
(B) is not then reportable by such Person on
Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii)
where voting securities are beneficially
owned, directly or indirectly, by any other
Person (or any Affiliate or Associate
thereof) with which such Person (or any of
such Person's Affiliates or Associates) has
any agreement, arrangement or understanding
(whether or not in writing) for the purpose
of acquiring, holding, voting (except
pursuant to a revocable proxy as described
in the proviso to subsection (ii) above) or
disposing of any voting securities of the
Company; provided, however, that nothing in
this subsection (d) shall cause a Person
engaged in business as an underwriter of
securities to be the "Beneficial Owner" of
any securities acquired through such
Person's participation in good faith in a
firm commitment underwriting until the
expiration of forty days after the date of
such acquisition.
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(d) "Board"
shall mean the Board of Directors of
Maritrans Inc.
(e) "Cause"
shall mean i) misappropriation of funds, ii)
habitual insobriety or substance abuse, iii)
conviction of a crime involving moral turpitude, iv)
gross negligence in the performance of duties, which
gross negligence has had a material adverse effect on
the business, operations, assets, properties or
financial condition of the Company and its
Subsidiaries taken as a whole, or v) for purposes of
Section 3(a), a judgment by the Board that the
Employee is not satisfactorily performing his duties
after Employee has received written notification of
specific performance deficiencies and has had a
minimum of three months' opportunity to correct such
noted deficiencies In such case, employee shall
receive regular updates regarding his performance and
retain his rights under the Company's Complaint
Review Process during the three month period, but the
ultimate ruling by the Board shall be considered
final.
(f) "Change of
Control" shall be deemed to have taken
place if (i) any Person (except the Company or any
employee benefit plan of the Company or of any
Affiliate, any Person or entity organized, appointed
or established by the Company for or pursuant to the
terms of any such employee benefit plan), together
with all Affiliates and Associates of such Person,
shall become the Beneficial Owner in the aggregate of
20% or more of the common stock of Maritrans then
outstanding); provided, however, that no "Change of
Control" shall be deemed to occur during any period
in which any such Person, and its Affiliates and
Associates, are bound by the terms of a standstill
agreement under which such parties have agreed not to
acquire more than 30% of the common stock of the
Company of the Common Stock of the Company then
outstanding or to solicit proxies, (ii) during any
twenty-four month period, individuals who at the
beginning of such period constituted the board of
directors of Maritrans cease for any reason to
constitute a majority thereof, unless the election,
or the nomination for election by the Maritrans'
shareholders, of at least seventy-five percent of the
directors who were not directors at the beginning of
such period was approved by a vote of at least
seventy-five percent of the directors in office at
the time of such election or nomination who were
directors at the beginning of such period, (iii)
consummation by Maritrans of a reorganization, merger
or consolidation (a Business Combination), in each
case, with respect to which all or substantially all
of the individuals and entities who were the
respective beneficial owners of the outstanding
common stock of Maritrans prior to such Business
Combination do not, following such Business
Combination, beneficially own, directly or
indirectly, more than 50% of the then outstanding
shares of common stock entitled to vote generally in
the election of directors of the corporation,
business trust or other entity resulting from or
being the surviving entity in such Business
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Combination in substantially the same proportion as
their ownership immediately prior to such Business
Combination of the outstanding common stock or
Maritrans, or (iv) consummation of a complete
liquidation or dissolution of Maritrans or sale or
other disposition of all or substantially all of the
assets of Maritrans other than to a corporation,
business trust or other entity with respect to which,
following such
sale or disposition, more than 50% of
the then outstanding shares of common stock entitled
to vote generally in the election of directors, is
then owned beneficially, directly or indirectly, by
all or substantially all of the individuals and
entities who were the beneficial owners of the
outstanding common stock of Maritrans immediately
prior to such sale or disposition in substantially
the same proportion as their ownership of the
outstanding common stock immediately prior to such
sale
or disposition, provided, however, that no
"Change of Control" shall be deemed to occur if a
management buy-out occurs i.e. the acquirement by
then current officers and directors of Maritrans of
more than fifty percent of its outstanding common
stock. If the Employee is not a member of the group
of officers acquiring such stock, then a Change of
Control shall be deemed to have occurred.
(g) "Normal
Retirement Date" shall mean the first day of
the calendar month coincident with or next following
the Employee's 65th birthday.
(h) "Person"
shall mean any individual, firm,
corporation, partnership or other entity.
(i)
"Subsidiary" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(j)
"Termination Date" shall mean the date of receipt of
the Notice of Termination described in Section 2
hereof or any later date specified therein, as the
case may be.
(k)
"Termination of Employment" shall mean the
termination of the Employee's actual employment
relationship with the Company.
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(l)
"Termination following a Change of Control" shall
mean a Termination of Employment within six months
prior or two years after a Change of Control either:
(i) initiated
by the Company for any reason
other than (x) the Employee's continuous
illness, injury or incapacity for a period
of six consecutive months or (y) for
"Cause;" or
(ii)
initiated by the Employee upon one or more
of the following occurrences:
(A) any
failure of the Company to
comply with and satisfy any of the
terms of this Agreement;
(B) any
significant reduction by the
Company of the authority, duties or
responsibilities of
the Employee;
(C) any
removal by the Company of the
Employee from the employment grade,
compensation level which the
Employee holds as of the effective
date hereof except in connection
with promotions to higher office;
(D) the
requirement that the Employee
undertake business travel to an
extent substantially greater than
is reasonable and customary for the
position the Employee holds.
2. Notice of
Termination. Any Termination of Employment shall be
communicated by a Notice of Termination to the other party
hereto given in accordance with Section 17 hereof. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific reasons for
the termination, (ii) briefly summarizes the facts and
circumstances deemed to provide a basis for termination of the
Employee's employment, and (iii) if the Termination Date is
other than the date of
receipt of such notice, specifies the
Termination Date (which date shall not be more than 15 days
after the giving of such notice).
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3. Severance Compensation upon Termination.
(a) In the
event of the Employee's involuntary
Termination of Employment for reason other than
Cause, as consideration for the non-competition and
non-solicitation covenants contained in Sections 12
and 13, the Company shall pay to the Employee, upon
the execution of a release in form and substance
satisfactory to the company and its counsel, his
regular Base Salary, subject to customary employment
taxes and deductions, for 12 months following the
Termination Date but all other benefit coverages,
retirement benefits and fringe benefit eligibility
shall cease upon the Termination Date.
(b)
