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.”


 





















 


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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