Exhibit 10.3

 

US SHIPPING GENERAL PARTNER LLC
ANNUAL INCENTIVE PLAN

 

1.          PURPOSE.

 

The purpose of the US Shipping General Partner LLC Annual Incentive Plan (the
“Plan”) is to motivate management and the employees of US Shipping General
Partner LLC, a Delaware limited liability company (the “Company”), and its
affiliates who perform services for the Company, its affiliates and U.S.
Shipping Partners L.P., a Delaware limited liability partnership (the
“Partnership”), and its subsidiaries to collectively produce outstanding
results, encourage superior performance, increase productivity, and aid in
attracting and retaining key employees.

 

2.          PLAN GUIDELINES.

 

The administration of the Plan and any potential awards granted pursuant to the
Plan is subject to the determination by the Compensation Committee (the
“Compensation Committee” ) of the Company’s Board of Directors (the “Board”)
that the performance goals for the applicable periods have been achieved.  The
Plan is an additional compensation program designed to encourage Plan
participants (designated by the Compensation Committee) to exceed specified
objective performance targets for the designated period.  The Compensation
Committee will review performance results for the designated performance period,
and thereafter will determine whether or not to approve awards under the Plan.

 

3.          PERFORMANCE TARGETS.

 

(A)        DESIGNATION OF PERFORMANCE TARGETS.  THE COMPANY’S CHIEF EXECUTIVE
OFFICER SHALL RECOMMEND, SUBJECT TO THE COMPENSATION COMMITTEE’S APPROVAL, THE
PERFORMANCE MEASURES AND PERFORMANCE TARGETS TO BE USED FOR EACH FISCAL YEAR (A
“PLAN YEAR”) IN DETERMINING THE BONUS AMOUNTS TO BE PAID AS A RESULT OF THE
PLAN.  PERFORMANCE TARGETS MAY BE BASED ON PARTNERSHIP, BUSINESS UNIT AND/OR
INDIVIDUAL ACHIEVEMENTS, OR ANY COMBINATION OF THESE, OR ON SUCH OTHER FACTORS
AS THE COMPANY’S CHIEF EXECUTIVE OFFICER, SUBJECT TO THE APPROVAL OF THE
COMPENSATION COMMITTEE, MAY DETERMINE.  DIFFERENT PERFORMANCE TARGETS MAY BE
ESTABLISHED FOR DIFFERENT PARTICIPANTS FOR ANY PLAN YEAR.  SATISFACTORY RESULTS,
AS DETERMINED BY THE COMPENSATION COMMITTEE IN ITS SOLE DISCRETION, MUST BE
ACHIEVED IN ORDER FOR AN AWARD TO BE MADE PURSUANT TO THE PLAN.

 

(B)       EQUITABLE ADJUSTMENT TO PERFORMANCE TARGETS.  AT ITS DISCRETION, THE
COMPENSATION COMMITTEE MAY ADJUST PERFORMANCE MEASURE RESULTS FOR EXTRAORDINARY
EVENTS OR ACCOUNTING ADJUSTMENTS RESULTING FROM SIGNIFICANT ASSET PURCHASES OR
DISPOSITIONS OR OTHER EVENTS NOT CONTEMPLATED OR OTHERWISE CONSIDERED BY THE
COMPENSATION COMMITTEE WHEN THE PERFORMANCE MEASURES AND TARGETS WERE SET.

 

4.          PARTICIPANTS.

 

The Compensation Committee, in consultation with the Company’s Chief Executive
Officer, will designate members of management and employees of the Company and
its affiliates as eligible to participate in the Plan.  Employees so designated
shall be referred to as “Participants.”

 

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5.          PARTICIPATION LEVELS.

 

A Participant’s designated level of participation in the Plan, or target bonus,
will be determined under criteria established or approved by the Compensation
Committee for that Plan Year or designated performance period.  Levels of
participation in the Plan may vary according to a Participant’s position and the
relative impact such Participant can have on the Partnership’s and/or
affiliates’ operations.  The amount of target bonus a participant may receive
for any Plan Year, if any, will depend upon the performance level achieved
(unless waived) for that Plan Year, as determined by the Compensation
Committee.  No Participant shall have any claim to be granted any award under
the Plan, and there is no obligation for uniformity of treatment of
Participants.  The terms and conditions of awards need not be the same
respecting each Participant.

 

6.          AWARD PAYOUT.

 

Awards typically will be determined after the end of the Plan Year or designated
performance period.  Awards will be paid in cash annually, unless otherwise
determined by the Compensation Committee. The Compensation Committee will have
the discretion, by Participant and by grant, to reduce (but not to increase)
some or all of the amount of any award that otherwise would be payable by reason
of the satisfaction of the applicable performance targets.  In making any such
determination, the Compensation Committee is authorized to take into account any
such factor or factors it determines are appropriate, including but not limited
to Company, business unit and individual performance; provided, however, that
the exercise of such negative discretion with respect to one Participant may not
be used to increase the amount of any award otherwise payable to another
Participant.

 

7.          TERMINATION OF EMPLOYMENT.

 

Termination of a Participant’s employment for any reason prior to payout of an
award under the Plan will result in the Participant’s forfeiture of any right,
title or interest in any such award, unless and to the extent waived by the
Compensation Committee in its sole discretion.

 

8.          AMENDMENT AND TERMINATION.

 

The Board, in its sole discretion, may amend or terminate the Plan at any time.

 

9.          ADMINISTRATION.

 

The Plan shall be administered by the Compensation Committee.  The Compensation
Committee shall have the authority to interpret and construe any and all
provisions of the Plan, including all performance targets and whether and to
what extent achieved.  Any determination made by the Compensation Committee
shall be final and conclusive and binding on all persons.

 

10.        INDEMNIFICATION.

 

Neither the Company, nor any affiliate, nor the Board, nor the Compensation
Committee, nor any member of the Board or the Compensation Committee, nor any
employee of the Company or any affiliate shall be liable for any act, omission,
interpretation, construction or

 

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determination made in connection with the Plan in good faith; and the members of
the Board, the Compensation Committee and/or the employees of the Company or any
affiliate shall be entitled to indemnification and reimbursement by the Company
to the maximum extent permitted by law in respect of any claim, loss, damage or
expense (including reasonable attorney’s fees) arising from their acts, omission
and conduct in their official capacity with respect to the Plan.

 

11.        GENERAL PROVISIONS.

 

(A)        NON-GUARANTEE OF EMPLOYMENT.  NOTHING CONTAINED IN THE PLAN SHALL BE
CONSTRUED AS A CONTRACT OF EMPLOYMENT BETWEEN THE COMPANY AND/OR AN AFFILIATE
AND A PARTICIPANT, AND NOTHING IN THE PLAN SHALL CONFER UPON ANY PARTICIPANT ANY
RIGHT TO CONTINUED EMPLOYMENT WITH THE COMPANY OR AN AFFILIATE, OR TO INTERFERE
WITH THE RIGHT OF THE COMPANY OR AN AFFILIATE TO TERMINATE A PARTICIPANT’S
EMPLOYMENT, WITH OR WITHOUT CAUSE.

 

(B)       INTERESTS NOT TRANSFERABLE.  NO BENEFITS UNDER THE PLAN SHALL BE
SUBJECT IN ANY MANNER TO ALIENATION, SALE, TRANSFER, ASSIGNMENT, PLEDGE,
ATTACHMENT OR OTHER LEGAL PROCESS, OR ENCUMBRANCE OF ANY KIND, AND ANY ATTEMPT
TO DO SO SHALL BE VOID.

 

(C)        FACILITY PAYMENT.  ANY AMOUNTS PAYABLE HEREUNDER TO ANY PERSON UNDER
LEGAL DISABILITY OR WHO, IN THE JUDGMENT OF THE COMPENSATION COMMITTEE OR ITS
DESIGNEE, IS UNABLE TO PROPERLY MANAGE HIS OR HER FINANCIAL AFFAIRS, MAY BE PAID
TO THE LEGAL REPRESENTATIVE OF SUCH PERSON, OR MAY BE APPLIED FOR THE BENEFIT OF
SUCH PERSON IN ANY MANNER WHICH THE COMPENSATION COMMITTEE OR ITS DESIGNEE MAY
SELECT, AND EACH AFFILIATE SHALL BE RELIEVED OF ANY FURTHER LIABILITY FOR
PAYMENT OF SUCH AMOUNTS.

 

(D)       GOVERNING LAW.  THE PLAN AND ALL MATTERS RELATING TO THE PLAN SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CHOICE OF
LAW PRINCIPLES.

 

(E)        NO RIGHTS TO AWARD.  NO PERSON SHALL HAVE ANY CLAIM TO BE GRANTED ANY
AWARD UNDER THE PLAN, AND THERE IS NO OBLIGATION FOR UNIFORMITY OF TREATMENT OF
PARTICIPANTS.  THE TERMS AND CONDITIONS OF AWARDS NEED NOT BE THE SAME WITH
RESPECT TO EACH RECIPIENT.

 

(F)        SEVERABILITY.  IF ANY PLAN PROVISION OR ANY AWARD IS OR BECOMES OR IS
DEEMED TO BE INVALID, ILLEGAL, OR UNENFORCEABLE IN ANY JURISDICTION OR AS TO ANY
PERSON OR AWARD, OR WOULD DISQUALIFY THE PLAN OR ANY AWARD UNDER THE LAW DEEMED
APPLICABLE BY THE COMPENSATION COMMITTEE, SUCH PROVISION SHALL BE CONSTRUED OR
DEEMED AMENDED TO CONFORM TO THE APPLICABLE LAWS, OR IF IT CANNOT BE CONSTRUED
OR DEEMED AMENDED WITHOUT, IN THE DETERMINATION OF THE COMPENSATION COMMITTEE,
MATERIALLY ALTERING THE INTENT OF THE PLAN OR THE AWARD, SUCH PROVISION SHALL BE
STRICKEN AS TO SUCH JURISDICTION, PERSON OR AWARD AND THE REMAINDER OF THE PLAN
AND ANY SUCH AWARD SHALL REMAIN IN FULL FORCE AND EFFECT.

 

(G)       NO TRUST OR FUND CREATED.  NEITHER THE PLAN NOR ANY AWARD SHALL CREATE
OR BE CONSTRUED TO CREATE A TRUST OR SEPARATE FUND OF ANY KIND OR A FIDUCIARY
RELATIONSHIP BETWEEN THE COMPANY OR ANY AFFILIATE AND A PARTICIPANT OR ANY OTHER
PERSON.  TO THE EXTENT THAT ANY PERSON ACQUIRES A RIGHT TO RECEIVE PAYMENTS FROM
THE COMPANY OR ANY AFFILIATE PURSUANT TO AN AWARD, SUCH RIGHT SHALL BE NO
GREATER THAN THE RIGHT OF ANY GENERAL UNSECURED CREDITOR OF THE COMPANY OR ANY
AFFILIATE.

 

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(H)       HEADINGS.  HEADINGS ARE GIVEN TO THE SECTIONS OF THE PLAN SOLELY AS A
CONVENIENCE TO FACILITATE REFERENCE.  SUCH HEADINGS SHALL NOT BE DEEMED IN ANY
WAY MATERIAL OR RELEVANT TO THE CONSTRUCTION OR INTERPRETATION OF THE PLAN OR
ANY PROVISION OF IT.

 

(I)         TAX WITHHOLDING.  THE COMPANY AND/OR ANY AFFILIATE MAY DEDUCT FROM
ANY PAYMENT DUE UNDER THE PLAN OR OTHERWISE TO A PARTICIPANT (OR BENEFICIARY)
AMOUNTS REQUIRED BY LAW TO BE WITHHELD FOR PURPOSES OF FEDERAL, STATE OR LOCAL
TAXES.

 

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