SEPARATION AGREEMENT AND RELEASE
Exhibit 10.28
This Separation Agreement and Release (the “Agreement”) is made and entered into between Xxxxxxx X.
Xxxx (referred to as “Xx. Xxxx”), a resident of Bexar County, Texas, and Valero Energy Corporation,
a Delaware corporation (“Valero”), as of the 11th day of December, 2007.
WHEREAS, Xx. Xxxx has elected to retire and to resign from any and all positions as an employee,
officer and director with Valero and its subsidiaries and affiliates, and Valero and Xx. Xxxx wish
to confirm through this Agreement the payments and benefits that will be provided to Xx. Xxxx in
full settlement of all matters relating to his employment relationship with Valero and any of its
subsidiaries and affiliates and his termination therefrom.
NOW THEREFORE, in consideration of the foregoing and the material covenants and agreements
contained herein, the parties agree as follows:
1. Resignation and Termination of Employment. As of December 11, 2007, Xx. Xxxx has
resigned, or with the execution of this Agreement will resign, any and all positions as an officer
or director with Valero and any and all subsidiaries or affiliates, all as set forth in the
resignation notice attached as Exhibit A. Effective as of December 31, 2007 (the “Termination
Date”), it is agreed that Xx. Xxxx’x employment with Valero and any and all subsidiaries or
affidavits will terminate.
2. Consideration. Upon the Effective Date of this Agreement, as defined in Section 20
below, Xx. Xxxx will be paid or provided the following as the sole consideration for Xx. Xxxx’x
separation from Valero and his release and other promises and covenants under this Agreement:
(a) Valero will pay Xx. Xxxx an amount equal to the full amount of the 2007 annual bonus
that Xx. Xxxx would have been awarded under the terms of the “Executive Bonus Plan” had he
remained employed. Xx. Xxxx’x target percent for purposes of determining his bonus for 2007
is 120% of his base salary of $905,000. The amount of Xx. Xxxx’x bonus award for 2007 will
be based upon the total percent of target award as approved by Valero’s Compensation
Committee. For example, if Valero’s Compensation Committee approves bonuses to be paid at
200% of target, then Xx. Xxxx’x bonus award would be $2,172,000 ($905,000 base x 120% target
x 2.0 = $2,172,000), less applicable deductions. The 2007 bonus shall be paid on the date
that executive employees receive the bonus.
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(b) (i) Valero shall accelerate the vesting of any and all shares of restricted Valero
common stock awarded to Xx. Xxxx such that any and all of such shares of restricted stock,
to the extent not already fully vested, shall become fully vested as of the Effective Date.
All of such previously unvested shares of restricted stock are described with particularity
on the attached Exhibit B.
(ii) All options to purchase shares of Valero common stock, as identified on the
attached Exhibit B, shall remain outstanding and shall remain subject to vesting and
exercise per the terms of the agreements applicable to such options. Xx. Xxxx shall be
entitled to exercise said options in accordance with the time limit set forth under the
applicable agreements.
(iii) Performance Shares that are scheduled to vest on the Normal Vesting Date in
January 2008 pursuant to the terms of the Performance Award Agreements between Valero and
Xx. Xxxx (capitalized terms herein have the meanings assigned to such terms in the
respective Performance Award Agreements) shall vest on such Normal Vesting Date in January
2008 in accordance with the Performance Award Agreements, even though Xx. Xxxx will not be
an employee of Valero on such date, such vesting being subject to verification by the
Compensation Committee of attainment of the Performance Objectives. Any and all other
Performance Shares, including those that are scheduled to vest on the Normal Vesting Date in
January 2009, 2010 and 2011, respectively, shall be forfeited as of the Termination Date.
(iv) The shares of Common Stock distributable pursuant to the terms of the Performance
Award Agreements between Valero and Xx. Xxxx, as amended by Paragraph 2(b)(iii) of this
Separation Agreement, in connection with the vesting of Performance Shares on the
Termination Date and in January 2008, shall be distributed on July 2, 2008. This delay in
payment is in compliance with the 6-month delay in payment to certain employees upon a
separation from service as required by Section 409A of the Internal Revenue Code of 1986, as
amended and regulations relating thereto (“IRC 409A”).
(c) (i) Xx. Xxxx shall be entitled at his Termination Date to an additional eight (8)
points, to be added to either age or service, to provide enhanced benefits for Xx. Xxxx
under the Valero Supplemental Executive Retirement Plan (“SERP”). The amount of Xx. Xxxx’x
2007 annual bonus referenced in Section 2(a) shall be considered for purposes of calculating
Xx. Xxxx’x compensation that is utilized to determine the amounts payable under the SERP.
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(ii) The commencement of benefits payable under the SERP as contemplated by Paragraph
2(c) of this Separation Agreement shall not begin until July 2, 2008, consistent with the
6-month delay rule under IRC 409A. A one-time lump sum payment representing the
accumulation of payments that would otherwise have been made during the first six months
following the separation from service on the Termination Date shall be made on July 2, 2008.
(d) Xx. Xxxx shall be entitled at his Termination Date to full participation under the
Valero Retiree Medical Plan on the same terms and conditions as similarly situated employees
are eligible for upon early retirement, as such benefits may be amended from time to time.
(e) At Xx. Xxxx’x election prior to the Termination Date, Valero shall either provide Xx.
Xxxx with tax preparation services for 2007 consistent with the offer of such services to
similarly situated Valero employees, or, in the alternative, make a lump sum payment to Xx.
Xxxx in an amount of $8,000 (plus an amount for applicable tax based on a rate of 36.45%)
for tax preparation services as soon as reasonably practicable following the Termination
Date, but in any event no later than March 15, 2008.
(f) Valero shall make available to Xx. Xxxx outplacement services through a provider of Xx.
Xxxx’x choice as may be reasonably required by Xx. Xxxx up to a maximum aggregate cost to
Valero of $25,000.00. The outplacement services made available pursuant to Paragraph 2(f)
of this Separation Agreement shall be fully utilized by Xx. Xxxx and the maximum cost
incurred by Valero no later than December 31, 2009.
(g) Valero will continue to provide at its expense through December 31, 2008 security
monitoring at Xx. Xxxx’x personal residence at 000 Xxxxxxxxx Xxxx, Xxx Xxxxxxx Xxxxx 00000.
(h) Xx. Xxxx will be allowed to permanently retain the personal computer previously set up
at his residence by Valero. Further, Valero’s Information Services department will, with
assistance from Xx. Xxxx, identify personal applications/programs that are now on Xx. Xxxx’x
work computer and will then transfer/install same on Xx. Xxxx’x home computer without charge
to Xx. Xxxx.
Xx. Xxxx acknowledges and agrees that the foregoing payments do not constitute monies, benefits or
rights to which Xx. Xxxx would otherwise be entitled as a result of his prior employment with
Valero, and these monies, benefits and rights constitute fair and adequate consideration and
compensation for the promises and covenants of Xx. Xxxx set forth in this Agreement. Xx. Xxxx
further acknowledges that
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Valero shall be entitled to withhold from the payments and benefits described herein all income and
employment taxes required to be withheld by applicable law.
3. Release of Claims. In consideration of the payments and benefits provided or to be
provided by or through Valero, described above in Section 2, the receipt and sufficiency of which
are hereby acknowledged and confessed:
(a) Xx. Xxxx releases Valero, any subsidiary or other affiliated companies, successors and
assigns, and all of their past, present and future officers, directors, agents,
administrators, trustees, insurers, successors, employees, principals, shareholders, and
attorneys. Collectively, these persons and organizations are referred to in this Agreement
as “Valero” or “Released Parties.”
(b) Xx. Xxxx releases Valero from all existing, past and present, known and unknown claims,
demands, and causes of action of any nature for all existing, past and present, known and
unknown damages and remedies of any nature, which have accrued or, which may ever accrue, to
Xx. Xxxx or to his heirs, executors, administrators, legal representatives, successors or
assigns, resulting from or relating to any act or omission of any kind occurring on or
before the Effective Date of this Agreement.
(c) This release includes but is not limited to all claims under any federal, state, or
local employment law or regulation, including without limitation Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Americans with
Disabilities Act; the Rehabilitation Act of 1973; the Fair Labor Standards Act; the Age
Discrimination in Employment Act, as amended (“ADEA”); the Older Worker Benefits Protection
Act; the Employee Retirement Income Security Act, as amended; the retaliation provisions of
the Texas Workers’ Compensation Act; the Family and Medical Leave Act; and the Texas
Commission on Human Rights Act.
(d) This release also includes but is not limited to all claims under any other state,
federal, or local law or regulation and all claims as common law, including without
limitation negligence, contract, or tort claims, and all claims for backpay, front pay,
damages, liquidated damages, exemplary and punitive damages, injunctive relief, costs, or
attorneys’ fees. It includes but is not limited to all claims Xx. Xxxx could assert
concerning the terms and conditions of his employment, concerning anything that happened to
Xx. Xxxx while he was an employee, or concerning the separation of Xx. Xxxx’x employment.
However, this release is not intended to waive rights or claims, if any, that arise after
the Effective Date of this Agreement, including any claims made by Xx. Xxxx to enforce the
terms of this Agreement. Moreover, nothing in this
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Agreement shall be construed to waive or release any vested rights of Xx. Xxxx under any
retirement, pension, 401(k) or other employee benefit plans. Xx. Xxxx shall be entitled to
rights or distributions, if any, from those plans in accordance with their respective terms
and provisions.
4. No Assignment. Xx. Xxxx represents and warrants that he has not previously filed or
joined in any claims against Valero or any of the Released Parties, and that he has not given,
assigned or sold any portion of any claims released herein to anyone else.
5. Effect of Agreement. Xx. Xxxx acknowledges and agrees that he is entering into this
Agreement and releasing, waiving and discharging rights or claims only in exchange for
consideration that he is not already entitled to receive. Xx. Xxxx acknowledges and agrees that he
has read this release in its entirety and that this release is a full and final release of all
known and unknown claims, including rights and claims arising under the ADEA, that Xx. Xxxx may
have against Valero or any of the Released Parties. Xx. Xxxx acknowledges that, by Xx. Xxxx’x free
and voluntary act of signing below, Xx. Xxxx agrees to all of the terms of this Agreement and
intends to be legally bound thereby. Xx. Xxxx acknowledges and agrees that if he should hereafter
make any claim or demand or commence or threaten to commence any action, claim or proceeding
against Valero or any of the Released Parties with respect to any cause, matter or thing which is
the subject of this release, this release may be raised as a complete bar to any such action, claim
or proceeding, and Valero or the applicable Released Parties may recover from Xx. Xxxx all costs
incurred in connection with such action, claim or proceeding, including attorneys’ fees; provided,
however, that nothing herein is intended to restrict Xx. Xxxx’x rights to enforce the terms of this
Agreement.
6. No Admission of Liability. This Agreement and the payments or provision of benefits
hereunder do not constitute an admission of liability or wrongdoing of any kind by Valero.
7. Indemnification. In consideration of the foregoing, Xx. Xxxx for himself, his heirs,
executors, administrators, legal representatives and assigns, independently covenants to, and does
hereby, indemnify and hold harmless Valero from any and all claims, demands, and causes of actions
listed or otherwise referred to in Section 3 of this Agreement, including without limitation any
and all causes of action arising out of or relating to Xx. Xxxx’x employment with Valero or his
termination or resignation from Valero, arising at any time on or before the Effective Date of this
Agreement, which may hereafter be asserted by any person, firm, government agency, or corporation
whomsoever claiming by, through, or under Xx. Xxxx, individually or collectively, for back wages,
damages (punitive, exemplary, or compensatory), or other relief claimed to be due to Xx. Xxxx.
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This Agreement does not supersede, amend, modify, terminate or have any other effect
whatsoever upon that certain Indemnity Agreement between Valero and Xx. Xxxx, dated effective as of
August 1, 1997, a true and correct copy of which is attached as Exhibit C.
8. Non-Disparagement. Xx. Xxxx agrees not to, directly or indirectly, engage in
communications (oral or written) or conduct that would denigrate or disparage Valero or make any
negative statements to anyone about the business, finances, products, or employment, compensation
and benefit practices of Valero. Valero officers shall not, directly or indirectly, engage in
communications (oral or written) or conduct that would denigrate or disparage Xx. Xxxx to any third
party, or make any negative statements to any third party, about the performance or conduct of Xx.
Xxxx in connection with his employment with Valero.
| 9. | Confidentiality and Other Restrictions. |
(a)
Confidentiality of Agreement. Xx. Xxxx understands that this Agreement is
confidential and agrees that he has not, may not, and will not disclose the existence or
terms of this Agreement (including any amounts paid in consideration of this Agreement) to
any third party, including but not limited to former or current employees of Valero unless
they already have knowledge of the terms of this agreement. Xx. Xxxx understands that he
may disclose the terms of this Agreement to his spouse, attorney, accountant, or tax
advisor, provided he instructs each such person that the information is confidential and not
to be disclosed unless and to the extent required by law or court order.
(b)
Proprietary Information and Trade Secrets. Xx. Xxxx agrees that as an officer
of Valero, he had access to and became informed of confidential, proprietary, and/or trade
secret information of Valero (including, without limitation proprietary and not publicly
available information concerning processes, methods, trade secrets, research, secret data,
costs, names of users or purchasers of its products or services, business methods, operating
procedures or programs or methods of promotion and sale) which Xx. Xxxx obtained during his
employment with Valero (“Confidential Information”). Xx. Xxxx agrees that he will hold in a
fiduciary capacity for the benefit of Valero and will not directly or indirectly disclose or
use any Confidential Information, unless required by law or court order. For the purposes
of this Section 9(b), information will not be deemed to be publicly available merely because
it is embraced by general disclosures or because individual features or combinations thereof
are publicly available.
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(c)
Claims by Others. Xx. Xxxx agrees not to help, encourage, or voluntarily
participate in the asserting or filing of any claim or suit by any third party against
Valero or the Released Parties, except as required by law.
(d)
Remedies for Breach. Xx. Xxxx agrees and consents that if he commits any breach
of a covenant under Sections 8 or 9 of this Agreement, or threatens to commit any such
breach, Valero will have the right (in addition to and not in lieu of any other right or
remedy that may be available) to temporary and permanent injunctive relief from a court of
competent jurisdiction.
10. Return of Valero Property. Xx. Xxxx acknowledges that all records, files, documents
and equipment, and all information relating to Valero, its customers and suppliers, any other
materials that in any way relate to the business of Valero that Xx. Xxxx has accumulated during his
employment with Valero, are the property of Valero and that all such property shall be returned to
the sole possession of Valero, to the extent not already so returned, promptly after the date
hereof.
11. Cooperation with Valero. Xx. Xxxx agrees to reasonably cooperate with Valero and its
representatives, as reasonably requested by Valero, by responding to questions, attending meetings,
depositions, administrative proceedings and court hearings, executing documents and cooperating
with Valero and its legal counsel with respect to business issues and/or claims and litigation of
which he has personal or corporate knowledge as long as such cooperation does not unreasonably
interfere with his responsibility with or to a subsequent employer. Xx. Xxxx further agrees to
maintain in strict confidence any information or knowledge he has regarding current and/or future
claims against or litigation or administrative hearings involving Valero. Xx. Xxxx agrees to
communicate with any party adverse to Valero, or with a representative, agent or legal counsel for
any such party, concerning any such pending or future claims or litigation or administrative
hearing solely through legal counsel for Valero. The payments to be made to Xx. Xxxx under this
Agreement are in part in consideration for Xx. Xxxx’x agreement to cooperate with Valero in
connection with the requirements set forth herein. Valero also agrees to pay all reasonable
expenses of Xx. Xxxx, including attorney fees, incurred while providing any such assistance to
Valero.
12. Legal Consultation. Xx. Xxxx is not relying on any statement or representation of
any kind from Valero but is relying upon his own independent judgment and investigation, and he
fully understands that this Agreement is a FULL and FINAL SETTLEMENT and FULL and FINAL RELEASE of
any and all claims, demands and causes of action against Valero or any of the Released Parties that
have been or could have been asserted by Xx. Xxxx. Xx. Xxxx acknowledges that he has been
encouraged to consult
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with an attorney prior to executing this Agreement and that he has had adequate time and
opportunity to review and consider this Agreement and to confer with his counsel of choice
regarding this Agreement and all related matters. The parties acknowledge and agree that all
parties shall bear their own attorneys’ fees and costs in connection with the review and execution
of this Agreement.
13. Voluntary Waiver of Rights. Xx. Xxxx acknowledges and agrees that he is knowingly and
voluntarily entering into the Agreement after full disclosure of all the facts and circumstances
surrounding the execution of this Agreement and its legal effect.
14. Entire Understanding. This Agreement represents and contains the entire understanding
of the parties hereto, and the terms of this Agreement are contractual and not mere recitals.
Further, this Agreement supersedes any and all prior oral and written agreements and
understandings, and no representation, warranty, condition, understanding or agreement of any kind
with respect to the subject matter hereof shall be relied upon by the undersigned unless expressly
stated herein.
15. Amendment; Waiver. No amendment or waiver of any provision of this Agreement shall be
effective unless approved in writing by both parties. No waiver by either party at any time of any
breach by the other party of compliance with any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or at any prior or subsequent time. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions
and shall not affect the right of either party thereafter to enforce each and every provision
hereof in accordance with its terms.
16. Severability. It is agreed that if any provision or portion of a provision of this
Agreement shall be determined to be void by any court of competent jurisdiction, then such
determination shall not affect any other provision, or the remainder of the affected provision, of
this Agreement, all of which provisions shall remain in full force and effect; and it is the
intention of the parties hereto that if any provision of this Agreement is capable of two
constructions, one of which would render the provision valid, then the provision shall have the
meaning which renders it valid and consistent with the intent of this Agreement.
17. Governing Law. It is agreed that this Agreement will be interpreted and construed in
accordance with the laws of the State of Texas, or federal law where applicable, and that venue
over any disputes arising hereunder or between Xx. Xxxx and Valero will lie exclusively in Bexar
County, Texas.
18. Arbitration. Except with respect to the covenants in Sections 8 and 9, Xx. Xxxx agrees
that any dispute regarding the interpretation or enforcement of this Agreement that cannot be
resolved between the
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parties by direct negotiations shall be resolved in accordance with Valero’s Dialogue Dispute
Resolution Program, which includes binding arbitration.
19. Acceptance of the Agreement. Xx. Xxxx acknowledges that he has had twenty-one (21)
days following his receipt of this Agreement to consider it and sign it, although he may execute it
sooner if he wishes to do so. Xx. Xxxx further acknowledges that he understands that if he fails
to execute and deliver an executed copy of this Agreement to Valero within that twenty-one (21) day
period the Agreement will not be considered accepted and Xx. Xxxx will not be entitled to the
payments and benefits provided hereunder.
20. Revocation. Xx. Xxxx further acknowledges that he has the right to revoke this
Agreement at any time prior to the expiration of seven (7) days after he has executed it, by
providing notice of revocation to Valero (R. Xxxxxxx Xxxxxxxxx, Senior Vice President - Human
Resources, Valero Energy Corporation, Xxx Xxxxxx Xxx, Xxx Xxxxxxx, Xxxxx 00000). To be effective,
such notice of revocation must be received by Valero no later than the seventh (7th) day
after the Agreement is signed. Provided it has not previously been revoked, this Agreement will
become effective, enforceable and irrevocable on the eighth (8th) day after the date on
which it is executed by Xx. Xxxx (the “Effective Date”).
21. Successors. This Agreement shall inure to the benefit of and be enforceable by Xx.
Xxxx’x legal representatives. This Agreement shall inure to the benefit of and be binding upon
Valero and its successors and assigns. As used in this Agreement, the term “affiliate” and
“affiliated company” means an entity controlled by, controlling or under common control with
Valero.
22. Duplicate Originals. This Agreement may be executed in duplicate counterparts, and, if
so, each counterpart shall be deemed an original for all purposes.
ACCEPTED AND AGREED:
| XXXXXXX X. XXXX | VALERO ENERGY CORPORATION | |||||||
/s/ Xxxxxxx X. Xxxx
|
By: | /s/ R. Xxxxxxx Xxxxxxxxx | ||||||
Date Signed: 12/11/2007
|
R. Xxxxxxx Xxxxxxxxx, | |||||||
| Senior Vice President | ||||||||
| Date Signed: 12/11/2007 | ||||||||
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EXHIBIT A
list of subsidiaries and positions held
omitted for SEC filing
omitted for SEC filing
EXHIBIT B
list of restricted stock and stock options
omitted for SEC filing
omitted for SEC filing
EXHIBIT C
text of Indemnity Agreement dated August 1, 1997
omitted for SEC filing
omitted for SEC filing
December 19, 2007
Xx. Xxxx Xxxxxxxxx
Senior Vice President
Valero Energy Corporation
Xxx Xxxxxx Xxx
Xxx Xxxxxxx, Xxxxx 00000
Senior Vice President
Valero Energy Corporation
Xxx Xxxxxx Xxx
Xxx Xxxxxxx, Xxxxx 00000
Re: Separation Agreement and Release dated December 11, 2007 (the “Agreement”)
Dear Xxxx:
On December 11, 2007, Valero and I entered into the Agreement that set forth the agreements between
us in connection with my resignation from Valero. Upon further discussion with Valero, Valero and
I agree to the following modification to the Agreement:
The last sentence of Paragraph 1 of the Agreement is deleted hereby and replaced with the following
revised sentence:
“Effective as of December 28, 2007 (the “Termination Date”), it is agreed that Xx. Xxxx’x
employment with Valero and any and all subsidiaries or affiliates will terminate.”
Except as amended hereby, all other terms and provisions of the Agreement remain in full force and
effect. I understand that this new Termination Date will not reduce the final paycheck owed to me
by Valero. Please sign in the space provided below to evidence the agreement of Valero to the
terms and provisions of this Letter Agreement.
| /s/ Xxxxxxx X. Xxxx | ||||
| Xxxxxxx X. Xxxx | ||||
| Agreed to December 19, 2007 | ||||
AGREED TO THIS 20th DAY OF DECEMBER, 2007
| VALERO ENERGY CORPORATION |
||||
| By: | /s/ Xxxx Xxxxxxxxx | |||
| Xxxx Xxxxxxxxx, | ||||
| Senior Vice President | ||||
