Exhibit 10.4
GENERAL MARITIME CORPORATION CHANGE OF CONTROL SEVERANCE
PROGRAM FOR U.S. EMPLOYEES
The Board of Directors of General Maritime Corporation ("General
Maritime") recognizes that the possibility of a Change of Control and the
uncertainty it creates may result in the inability to recruit qualified
employees or the loss or distraction of qualified employees of the Company to
the detriment of General Maritime and its shareholders.
The Board considers the avoidance of such inability, loss and
distraction to be essential to protecting and enhancing the best interests of
General Maritime and its shareholders. The Board also believes that when a
Change of Control is perceived as imminent, or is occurring, the Board should
be able to receive and rely on disinterested service from employees regarding
the best interests of General Maritime and its shareholders without risk that
employees might be distracted or concerned by the personal uncertainties
created by the perception of an imminent or occurring Change of Control.
In addition, the Board believes that it is consistent with the
Company's employment practices and policies and in the best interests of
General Maritime and its shareholders to treat fairly its employees whose
employment terminates in connection with or following a Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to assure the Company of the continued employment and attention and
dedication to duty of its employees and to seek to ensure the availability of
their continued service, notwithstanding the possibility or occurrence of a
Change of Control.
Therefore, in order to fulfill the above purposes, the following plan
has been developed and is hereby adopted.
1. Establishment of Plan. As of the Effective Date, the General Maritime
Change of Control Severance Program for U.S. Employees (the "Plan") is hereby
established as set forth in this document.
2. Definitions. As used herein the following words and phrases shall have
the following respective meanings:
(a) "Associate" means any regular, full-time, shore-based employee of
the Company based in an office in the United States.
(b) "Base Salary" means the amount a Participant is entitled to receive
as salary on an annualized basis, excluding all bonus, overtime and incentive
compensation, payable by the Company as consideration for the Participant's
services.
(c) "Board" means the Board of Directors of General Maritime.
(d) "Bonus Amount" means the cash bonus on an annualized basis earned
by the Participant in the fiscal year immediately preceding the year in which
his or her employment was terminated, including any amounts which are deferred.
(e) "Cause" means any termination of a Participant's employment because
of any of the following events:
(i) any act or failure to act by the Participant involving
fraud, theft or embezzlement;
(ii) the willful and continued failure of the Participant to
(A) perform substantially the Participant's duties with
the Company (other than any such failure resulting from
incapacity due to physical or mental illness) or (B) the
Participant's failure to follow the directions of an
officer of the Company to whom such Participant reports or
of the Board of Directors;
(iii) the willful engagement by the Participant in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company; or
(iv) the Participant's conviction of (or a plea of nolo
contendere to) a crime that constitutes a felony or other
crime involving moral turpitude, in either case within the
meaning of applicable law.
(f) "Change of Control" means the first to occur of any of the
following events:
(i) any "person" (as such term is used in Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act), other than Peter C.
Georgiopoulos or entities which he directly or indirectly
controls (as defined in Rule 12b-2 under the Exchange
Act), acquiring "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
thirty percent (30%) or more of the Voting Stock of
General Maritime;
(ii) the sale of all or substantially all of General Maritime's
assets in one or more related transactions to a "person"
(as such term is used in Sections 3(a)(9) and 13(d) of the
Exchange Act) other than such a sale (x) to a subsidiary
of General Maritime which does not involve a change in the
equity holdings of General Maritime or (y) to Peter C.
Georgiopoulos or entities which he directly or indirectly
controls;
(iii) any merger, consolidation, reorganization or similar event
of General Maritime, as a result of which the holders of
the Voting Stock of General Maritime immediately prior to
such merger,
2
consolidation, reorganization or similar event do not
directly or indirectly hold at least fifty-one percent
(51%) of the Voting Stock of the surviving entity;
(iv) a majority of the members of the Board of Directors are no
longer Continuing Directors; as used herein, a "Continuing
Director" means any member of the Board of Directors who
was a member of such Board of Directors as of the
Effective Date; provided that any person becoming a
director subsequent to such date whose election or
nomination for election was supported by a majority of the
directors who then comprised the Continuing Directors
shall be considered to be a Continuing Director; or
(v) General Maritime adopts any plan of liquidation or
dissolution providing for the distribution of all or
substantially all of its assets.
For purposes of the Change of Control definition, "General
Maritime" shall include any entity that succeeds to all or
substantially all of the business of General Maritime and "Voting
Stock" shall mean capital stock of any class or classes having
general voting power, in the absence of specified contingencies, to
elect the directors of a corporation.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means, subject to Section 13, the Compensation
Committee of the Board.
(i) "Company" means General Maritime and its direct and indirect
subsidiaries and their respective successor entities.
(j) "Date of Termination" shall have the meaning given in Section 4(b).
(k) "Disability" means, in connection with any termination of a
Participant's employment, a disability entitling him or her to long-term
disability benefits under any applicable long-term disability plan of the
Company, or in the absence of any such plan, the Participant's inability to
perform his or her duties and responsibilities customary for an employee in the
Participant's position for such period or periods as the Committee may
determine, whether or not continuous, due to physical or mental incapacity or
impairment as reasonably determined by a qualified physician.
(l) "Effective Date" means April 25, 2005.
(m) "Good Reason" means, with respect to any Participant, the
occurrence of any of the following events after a Change of Control, without the
Participant's prior written consent: (i) a reduction in the Participant's Base
Salary; (ii) a material diminution in the Participant's positions, duties,
reporting relationships or authorities in comparison to the positions, duties,
reporting relationships or authorities of the Participant immediately prior to
the Change of
3
Control; (iii) an assignment of the Participant to an office more than fifty
(50) miles from the location where the Participant was based and performed
services immediately prior to the Change of Control, or (iv) a breach by the
Company of any material provision of the Plan.
(n) "Participant" means an Associate who meets the eligibility
requirements of Section 3.
(o) "Plan" means the General Maritime Corporation Change of Control
Severance Program for U.S. Employees.
(p) "Qualifying Termination" means a termination of a Participant's
employment within two (2) years following a Change of Control, in the case of
Tier 1 Participants and, within one (1) year following a Change of Control, in
the case of Tier 2 Participants, (i) by the Company other than for Cause, death
or Disability or (ii) by the Participant for Good Reason.
(q) "Release" shall have the meaning given in Section 4(h).
(r) "Severance Benefit" shall have the meaning given in Section 4(b).
(s) "Tier 1 Participants" means the Associates designated on Schedule I
attached hereto.
(t) "Tier 2 Participants" means all Associates other than (i) Tier 1
Participants and (ii) Associates who have entered into a written employment
agreement with the Company as of the date of a Change of Control which provides
for Associate compensation in the event of any termination of the Associate's
employment following a change of control by the Company without cause or by the
Associate for good reason, each as defined in such agreement.
(u) "Year of Service" means a twelve (12) month continuous period of
employment or a portion of such period, including periods of authorized
vacation, authorized leave of absence and short-term disability leave, with the
Company or its predecessors or successors rounded up to the nearest whole
number.
3. Eligibility. Unless otherwise determined by the Committee, each
Associate (other than Associates who have entered into a written employment
agreement with the Company as of the date of a Change of Control which provides
for Associate compensation in the event of any termination of the Associate's
employment following a change of control by the Company without cause or by the
Associate for good reason, each as defined in such agreement) who is an
Associate on the date of a Change of Control shall be a Participant in the Plan.
4. Severance Benefits.
(a) Right to Severance Benefit. A Participant shall be entitled to
receive from the Company a Severance Benefit in the amount provided in Section
4(b) if a Participant's employment is terminated due to a Qualifying
Termination.
(b) Severance Benefits. In the event that a Participant's employment is
terminated due to a Qualifying Termination, the Company shall pay such
Participant, within fifteen (15)
4
days of the date such termination takes effect (the "Date of Termination") or,
if later, on the date the Participant's Release ceases to be revocable, a lump
sum in cash (the "Severance Benefit") equal to (i) the sum of such Participant's
then current Base Salary and Bonus Amount multiplied by (ii) 2 for Tier 1
Participants and 1 for Tier 2 Participants. For purposes of this Section 4(b),
the then current Base Salary shall be determined immediately prior to the
Qualifying Termination (without regard to any reductions therein which
constitute Good Reason for termination by such Participant).
(c) Key Employees. Notwithstanding anything herein to the contrary,
with respect to any Participant who is a "specified employee" within the meaning
of Section 409A(a)(2)(b)(i) of the Code, the benefit under Section 4(b) hereof
shall be paid no earlier than the six-month anniversary of such Participant's
termination of employment.
(d) Maximum Severance Benefit. Notwithstanding Section 4(b) above, the
maximum amount payable under Sections 4(b) and (c) shall be the amount required
in order for the Plan to comply with Section 2510.3-2(b)(1)(ii) of the
Department of Labor Regulations.
(e) Other Benefits Payable. Nothing in the Plan shall prevent or limit
a Participant's continuing or future participation in any benefit, bonus,
incentive or other plan, program, arrangement or policy provided by the Company
for which a Participant and/or a Participant's dependents may qualify. Amounts
that are vested benefits or that a Participant and/or a Participant's dependents
are otherwise entitled to receive under any plan, program, arrangement, or
policy of the Company shall be payable in accordance with such plan, program,
arrangement or policy. The Severance Benefit provided pursuant to Section 4(b)
above shall be provided in addition to, and not in lieu of, all other accrued or
vested or earned but deferred compensation, rights, options or other benefits
which may be owed to a Participant upon or following termination, including but
not limited to accrued vacation or sick pay, amounts or benefits payable under
any bonus or other compensation plans, stock incentive plans, life insurance
plans, health plans, disability plans or similar or successor plans.
(f) Certain Reduction of Payments by the Company.
(i) For purposes of this Section 4(g): (i) a "Payment" shall mean
any payment or distribution in the nature of compensation to or for the benefit
of a Participant, whether paid or payable pursuant to the Plan or otherwise;
(ii) "Severance Payment" shall mean a Payment paid or payable pursuant to the
Plan (disregarding this Section 4(g)); (iii) "Present Value" shall mean such
value determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of
the Code; and (iv) "Reduced Amount" shall mean an amount expressed in Present
Value that maximizes the aggregate Present Value of Severance Payments without
causing any Payment to be nondeductible because of Section 280G of the Code.
(ii) The Committee shall select, in its discretion, a nationally
recognized accounting firm (the "Accounting Firm") to make the determinations
contemplated by this Section 4(g). Anything in the Plan to the contrary
notwithstanding, in the event that the Accounting Firm determines that receipt
of all Payments would subject a Participant to tax under
5
Section 4999 of the Code, the aggregate Severance Payments to the Participant
shall be reduced (but not below zero) to meet the definition of Reduced Amount.
(iii) If the Accounting Firm determines that aggregate Severance
Payments to the Participant should be reduced to the Reduced Amount, the Company
shall promptly give the Participant notice to that effect and a copy of the
detailed calculation thereof, and the Participant may then elect, in his or her
sole discretion, which and how much of the Severance Payments shall be
eliminated or reduced (as long as after such election the Present Value of the
aggregate Severance Payments equals the Reduced Amount), and shall advise the
Company in writing of his or her election within fifteen (15) days of his or her
receipt of notice. If no such election is made by the Participant within such
fifteen (15)-day period, the Company may elect which of such Severance Payments
shall be eliminated or reduced (as long as after such election the Present Value
of the aggregate Severance Payments equals the Reduced Amount) and shall notify
the Participant promptly of such election. All determinations made by the
Accounting Firm under this Section 4(g) shall be binding upon the Company and
the Participant and shall be made within 60 days of a termination of employment
of the Participant. As promptly as practicable following such determination, the
Company shall pay to or distribute for the benefit of the Participant such
Severance Payments as are then due to the Participant under the Plan and shall
promptly pay to or distribute for the benefit of the Participant in the future
such Severance Payments as become due to the Participant under the Plan.
(iv) As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that amounts will have been paid or distributed by the
Company to or for the benefit of a Participant pursuant to the Plan which should
not have been so paid or distributed ("Overpayment") or that additional amounts
which will have not been paid or distributed by the Company to or for the
benefit of a Participant pursuant to the Plan could have been so paid or
distributed ("Underpayment"), in each case, consistent with the calculation of
the Reduced Amount hereunder. In the event that the Accounting Firm, based upon
the assertion of a deficiency by the Internal Revenue Service against either the
Company or the Participant which the Accounting Firm believes has a high
probability of success determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of a
Participant shall be repaid to the Company together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no such amount shall be payable by a Participant to the
Company if and to the extent such repayment would not either reduce the amount
on which the Participant is subject to tax under Section 1 and Section 4999 of
the Code or result in a refund of such taxes. In the event that the Accounting
Firm, based upon controlling precedent or substantial authority, determines that
an Underpayment has occurred, any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Participant together with interest at
the applicable federal rate provided for in Section 7872(f)(2) of the Code.
(v) All fees and expenses of the Accounting Firm in implementing
the provisions of this Section 4(g) shall be borne by the Company.
6
(g) Release and Waiver. Notwithstanding any other provision of the
Plan, the right of a Participant to receive severance benefits hereunder shall
be subject to the execution and non-revocation by the Participant of a release
and waiver substantially in the form attached hereto as Exhibit A (a "Release")
within twenty-one (21) days or, if applicable, forty-five (45) days after
receipt of such Release from the Company.
5. Full Settlement. Subject to Section 4(g), the Company's obligation to
make the payments provided for in the Plan and otherwise to perform its
obligations hereunder shall be absolute and unconditional and shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against a Participant or others. In no
event shall a Participant be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to such Participant
under any of the provisions of the Plan. The Company shall pay as incurred
(within fifteen (15) days following the Company's receipt of an invoice from a
Participant), to the full extent permitted by law, all legal fees and expenses
that the Participant may reasonably incur as a result of any contest by the
Company, the Participant or others of the validity or enforceability of, or
liability under, any provision of the Plan or any guarantee of performance
thereof (including as a result of any contest by the Participant about the
amount of any payment pursuant to the Plan), plus, in each case, interest on any
delayed payment at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code; provided, that the Company shall not be obligated to
reimburse a Participant for legal fees and expenses incurred in connection with
a claim that is frivolous or maintained in bad faith and in such event the
Company shall be entitled to recoup any such fees and expenses which it has
already paid on behalf of the Participant.
6. Controlling Law. The Plan shall be governed by the laws of the State of
New York, without reference to the principles of conflicts of law.
7. Amendments; Termination. General Maritime and the Board reserve the
right to amend, modify, suspend or terminate the Plan at any time; provided that
no such amendment, modification, suspension or termination after the occurrence
of a Change of Control that has the effect of reducing or diminishing the right
of any Associate, shall be effective without the written consent of the
Associate.
8. Assignment. General Maritime shall require any corporation, entity,
individual or other person who is the successor (whether direct or indirect by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all the business and/or assets of General Maritime to expressly
assume and agree to perform, by a written agreement in form and in substance
satisfactory to General Maritime, all of the obligations of General Maritime
under the Plan. It is a condition of the Plan, and all rights of each person
eligible to receive benefits under the Plan shall be subject hereto, that no
right or interest of any such person in the Plan shall be assignable or
transferable in whole or in part, except by operation of law, including, but not
by way of limitation, lawful execution, levy, garnishment, attachment, pledge,
bankruptcy, alimony, child support or qualified domestic relations order.
7
9. Withholding. The Company may withhold from any amount payable or
benefit provided under the Plan such federal, state, local, foreign and other
taxes as are required to be withheld pursuant to any applicable law or
regulation.
10. Gender and Plurals. Wherever used in the Plan document, words in the
masculine gender shall include masculine or feminine gender, and, unless the
context otherwise requires, words in the singular shall include the plural, and
words in the plural shall include the singular.
11. Plan Controls. In the event of any inconsistency between the Plan
document and any other communication regarding the Plan, the Plan document
controls.
12. Terms of Employment. Until the occurrence of a Change of Control,
neither the establishment of the Plan, nor any modification thereof, nor the
creation of any fund, trust or account, nor the payment of any benefits shall be
construed as giving any Associate, or any person whomsoever, the right to be
retained in the service of the Company, and all Associates shall remain subject
to discharge to the same extent as if the Plan had never been adopted.
13. Post-Change of Control Committee. The Plan shall be administered by
the Committee, provided that in the event of an impending Change of Control, the
Committee may appoint a person independent of the Company or persons operating
under its control or on its behalf to be the Committee effective upon the
occurrence of a Change of Control and such Committee shall not be removed
following a Change of Control. The decision of the Committee upon all matters
within the scope of its authority shall be conclusive and binding on all
parties.
14. Benefits Claims and Appeals. The Committee shall establish a claims
and appeals procedure. The Committee shall have full discretionary authority to
determine the amount and timing of any benefit to be paid under the Plan. Unless
otherwise required by applicable law, such procedures will provide that the
Participant has not less than sixty (60) days following receipt of any adverse
benefit determination within which to appeal the determination in writing with
the Committee, and that the Committee must respond in writing within sixty (60)
days of receiving the appeal, specifically identifying those Plan provisions on
which the benefit denial was based and indicating what, if any, information the
Participant must supply in order to perfect a claim for benefits.
15. Indemnification. To the extent permitted by law, the Company shall
indemnify the Committee from all claims for liability, loss, or damage
(including the payment of expenses in connection with defense against such
claims) arising from any act or failure to act in connection with the Plan.
16. Joint and Several Liability. General Maritime and each of its direct
and indirect subsidiaries shall be jointly and severally liable for all
obligations of the Company under the Plan.
8
Exhibit A
- ---------
Release
(a) General Release. In consideration for the Severance Benefit and the
other benefits provided to the Participant under the General Maritime Change of
Control Severance Program (the "Plan"), the Participant, to the fullest extent
permitted by law, hereby waives, releases, and discharges the Company, together
with its current and former officers, directors, agents, employees,
subsidiaries, affiliated entities, related entities, attorneys, any other
representatives, and successors in interest (collectively referred to as the
"Company"), jointly and severally, from any claims and any causes of action
arising in the course of or out of or otherwise relating to the Participant's
employment with the Company or the termination of the Participant's employment
with the Company under any state and federal statutes, including the Age
Discrimination in Employment Act, 29 USC Sec. 621 et seq., and under the common
law. The Participant and the Company intend that, to the fullest extent
permitted by law, these waivers, releases, and discharges will be a general
release, will extinguish any claims and any causes of action, will preclude any
lawsuit or any other legal claim by the Participant against the Company about
anything that occurred before the date of this release. This release includes a
release of the Participant's right to file a lawsuit or to seek individual
remedies or damages in any EEOC-filed court action, and this release will apply
to any charge of discrimination about any events that occurred up to the date of
the signing of this release. The only claims and causes of action that the
Participant is not waiving, releasing, and discharging are for the Severance
Benefit and the other benefits to which the Participant is entitled under the
Plan, any vested benefits to which the Participant may be entitled under the
Company's plans listed in Annex A hereto, and any claims and causes of action
that, as a matter of law, cannot be waived, released, and discharged.
(b) Advice of Counsel. The Company advises the Participant to consult
with an attorney of the Participant's choice before signing this release.
(c) Sufficient Time to Review Agreement. The Participant has had a
sufficient amount of time totaling at least [twenty-one (21) or forty-five (45)
days] (the "Review Period") to consider the terms of this release, to discuss
all aspects of this release with the Participant's attorney, if the Participant
chose to do that and to decide whether to accept it. No change to this release,
whether material or immaterial, will initiate a new Review Period.
(d) Early Submission of Release. The Participant may voluntarily and
knowingly sign, but is not required to sign, this release before the end of the
Review Period. The Company has made no promises, inducements, representations,
or threats to cause the Participant to sign this release before the end of the
Review Period. If the Participant voluntarily and knowingly signs this release
before the end of the Review Period, the mandatory seven (7) day revocation
period set forth below will start on the day after the day on which the
Participant signs this release.
(e) Knowing and Voluntary Acceptance. The Participant has carefully
read this release, understands it, and is entering it knowingly and voluntarily,
which means no one is forcing or pressuring the Participant to sign it.
9
(f) No Reliance on Any Other Representation. In signing this release,
the Participant has not relied upon any representation or statement by the
Company, either oral or written, about the subject matter of this release that
is not set forth in this release.
(g) Right to Revoke. The Participant is entitled to revoke this release
within seven (7) days after the date on which the Participant signs it. The
seven (7) days will start on the day after the day on which the Participant
signs this release. This release will not become effective or enforceable unless
and until this revocation period has expired without any revocation having
occurred. The Company will not pay the Participant the Severance Benefit or
provide any other benefits under the Plan unless and until this revocation
period has expired without any revocation having occurred. If the Participant
revokes this release during the seven (7) day revocation period, the Agreement
will not be effective or enforceable, and the Participant will not receive the
Severance Benefit or any of the other benefits under the Plan.
(h) Revocation Procedure. To be effective, any revocation must be in
writing, addressed to the Company [address or name], and received on or before
the expiration of the seven (7) day revocation period.
(i) Effect of Failure to Revoke. The Participant understands that by
signing this release and by not revoking the release during the seven (7) day
revocation period, the Participant agrees to be bound by this release.
10