EXHIBIT 10.B
KENAN TRANSPORT COMPANY
Senior Management Severance Plan
WHEREAS, the Board of Directors of Kenan Transport Company (the
"Company") considers its senior management employees to be valuable assets
of the Company; and
WHEREAS, the Board of Directors believes that adoption of a
reasonable severance plan would have the effect of giving to such officers
a sense of security that would have a positive effect on their
performances on behalf of the Company; and
WHEREAS, this Board believes that a reasonable severance plan would
improve the ability of the Company to attract and maintain qualified
senior management; now, therefore, it is
RESOLVED, that this Board of Directors hereby adopts the following
Senior Management Severance Plan (the "Plan"):
1. PURPOSE. The purpose of the Plan is to attract and retain
competent senior management employees for the Company.
2. ELIGIBILITY. Any senior management employee of the Company
who is identified by the Board of Directors or its Compensation Committee
as a participant in the Plan and who enters into a Severance Agreement
substantially in the form attached to this Plan shall be a participant in
the Plan (a "Participant").
3. ENTITLEMENT. Any Participant who is terminated from his or
her employ by the Company "without cause" (as defined in Section 4) within
twenty-four months following a "change in control" of the Company, or who
shall have terminated his or her employment because of a "change in
employment conditions" (as defined in Section 5) within twenty-four months
following a "change in control," shall be entitled to receive a severance
payment in an amount equal to his or her average base salary for the
immediately preceding three fiscal years of the Company (or such lesser
number of whole fiscal years as he or she shall have been in the employ of
the Company), multiplied by 2.0 (the "Severance Payment"). Upon
entitlement, the Severance Payment will be payable in cash or by certified
check within thirty (30) days following termination of the Participant's
employment. For purposes of this Agreement, a "change of control" shall
be deemed to have occurred upon the occurrence of any of the following
events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") but excluding any employee benefit plan of the
Company) becomes after the Effective Date of the Plan the
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"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the
Company's outstanding securities then entitled ordinarily (and apart
from rights accruing under special circumstances) to vote for the
election of directors; or
(ii) Individuals who are "Continuing Directors" (as
hereinafter defined) cease for any reason to constitute at least a
majority of the Board of Directors; or
(iii) The Board of Directors shall approve a sale of all or
substantially all of the assets of the Company; or
(iv) The Board of Directors shall approve any merger,
consolidation, or like business combination or reorganization of the
Company the consummation of which would result in the occurrence of
any event described in clause (i) or (ii) above.
For purposes of the foregoing, "Continuing Directors" shall mean (a)
the directors of the Company in office on the date of the Severance
Agreement between the Company and the Participant and (b) any successor to
any such director (and any additional director) who after the date of the
relevant Severance Agreement was nominated or selected by a majority of
the Continuing Directors in office at the time of his or her nomination or
selection.
Notwithstanding anything to the contrary contained herein, in the
event that any portion of the Severance Payment received or to be received
by a Participant, together with any other payments received by him or her,
whether paid or payable pursuant to the terms of this Plan or any other
plan, arrangement or agreement with the Company or any other person or
entity, would not be deductible in whole or in part by the Company in the
calculation of its federal income tax by reason of Section 280G of the
Internal Revenue Code or would cause, either directly or indirectly, an
"excess parachute payment" to exist within the meaning of said Section
280G, the Severance Payment payable shall be reduced until no portion of
the Severance Payment would fail to be deductible by reason of being an
"excess parachute payment." In the event that any dispute arises as to
whether an "excess parachute payment" exists, the appropriate calculations
shall be made by the Company's regularly employed independent public
auditors and delivered to the Participant in writing within 30 days
following the date for payment of the Severance Payment, and the Company
will warrant to the Participant the accuracy of the calculations and the
information on which they are based.
4. DEFINITION OF "WITHOUT CAUSE." Termination of the
Participant's employ by the Company following a "change in control" for
any reason other than one of the following shall be deemed to be
termination "without cause": (i) continued neglect of duties for which he
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or she was employed after receipt of written notice thereof from the Board
of Directors or its Compensation Committee or from the President of the
Company, (ii) continued insubordination after receipt of a written warning
with respect thereto, (iii) misconduct involving moral turpitude in the
performance of duties for which employed, including, without limitation,
the commission of fraud, misappropriation or embezzlement by the
Participant, (iv) the Participant's being accused of committing any felony
for which he or she is indicted, or (v) disability of the Participant,
whether mental or physical, which renders him or her substantially unable
to render the services for which he or she is employed for more than 90
days (in which event the Participant shall be entitled to the benefits of
any applicable employee benefit plan).
5. CHANGE IN EMPLOYMENT CONDITIONS. The Participant shall be
deemed to have had a "change in employment conditions" upon the
occurrence, within twenty-four months following a "change in control" of
the Company, without the consent of the Participant, of any one of the
following events: (a) his or her base salary is reduced, below that in
existence immediately prior to the occurrence of the "change in control,"
or (b) the Participant is required to change his or her residence or
principal place of business from Chapel Hill, North Carolina, or such
other location as shall be his or her residence or principal place of
business immediately prior to the "change in control."
6. COVENANTS RELATING TO COMPETITION. Participation in the Plan
is conditioned upon the Participant's agreement, which agreement shall be
confirmed by his or her entering into the Severance Agreement that during
the term of his or her employment with the Company and for a period of one
year following the termination of such employment:
(a) He or she will not, directly or indirectly, influence or
attempt to influence any customer of the Company to discontinue its
use of the Company's services or to divert such business to any
other person, firm or corporation;
(b) He or she will not, directly or indirectly, interfere
with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Company and any of its respective suppliers,
principals, distributors, lessors or licensors; and
(c) He or she will not, directly or indirectly, solicit any
employee of the Company, whose base annual salary at the time of the
Participant's termination was $30,000 or more, to work for any
person, firm or corporation.
7. EMPLOYMENT RIGHTS. Neither the adoption of this Plan nor the
execution by the Company of a Severance Agreement shall be deemed to
confer upon any Participant the right to continued employment with the
Company or to interfere in any way with the right of the Company to
terminate the employment of any employee at any time.
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8. BINDING EFFECT. This Plan shall be binding upon and enure to
the benefit of the Company and its successors and assigns, including any
company with which the Company shall merge or to which the Company shall
transfer all or substantially all of its assets.
9. AMENDMENT OR TERMINATION. This Plan may be amended or
terminated at any time by the Board of Directors of the Company, provided,
however, that no amendment or termination shall adversely affect the
rights of any Participant who shall have entered into a Severance
Agreement prior to the time of such amendment or termination without his
or her written consent.
10. EFFECTIVE DATE. The effective date of this Plan shall be May
5, 1997.
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