EXHIBIT 10.3
March 5, 2002
Xx. Xxxxx X. Xxxx
Chairman of the Board
Pennzoil-Quaker State Company
P. O. Box 2967
Houston, Texas 77252-2967
Dear Xxx:
In order to take advantage of your substantial expertise, we
propose the following Agreement to be effective as of March 5, 2002, concerning
the provision by you of consulting services to Pennzoil-Quaker State Company
for the period commencing March 5, 2002, and ending December 31, 2003.
In consideration of the mutual promises and understanding
contained in this Agreement, you and Pennzoil-Quaker State Company agree as
follows:
1. The term of this Agreement shall commence on March 5, 2002,
and end on December 31, 2003.
2. You will perform consulting and advisory services on behalf
of Pennzoil-Quaker State Company. Such services shall be
performed at the request of the Board of Directors of
Pennzoil-Quaker State Company, and in connection with your
consulting and advisory duties, you will report to the Board
of Directors of Pennzoil-Quaker State Company.
3. Your services will be rendered primarily in the
Pennzoil-Quaker State Company offices in Houston, Texas, and
you may travel from time to time upon request by
Pennzoil-Quaker State Company.
4. In the performance of your services hereunder, the hours you
are scheduled to work on any given day will be by mutual
agreement with the Board of Directors of Pennzoil-Quaker
State Company and Pennzoil-Quaker State Company will rely
upon you to accommodate such number of hours as is reasonably
necessary to fulfill the spirit and purpose of this
Agreement.
5. Office and secretarial support will be furnished in Houston
as described in Exhibit A to this Agreement. Pennzoil-Quaker
State Company cars and aircraft may be utilized as described
in Exhibit A to this Agreement.
6. During the term of this Agreement, you will not, without the
prior written consent of Pennzoil-Quaker State Company,
engage directly or indirectly in any business
or endeavor (financially as an individual, investor or lenders
or as an employee, director, officer, partner, independent
contractor, consultant or owner or in any other capacity
calling for the rendition of personal services or acts of
management, operation or control) which is in competition or
inconsistent with, or adverse to or opposed to, the interests
of Pennzoil-Quaker State Company. You should contact the
Chief Executive Officer of Pennzoil-Quaker State Company to
request such written consent prior to determining it is
appropriate to engage in any particular business or endeavor.
Notwithstanding the above, you are not prohibited from
investing or trading on your own behalf in publicly traded
securities of other companies.
7. During the term of this Agreement, Pennzoil-Quaker State
Company will pay you at the annual rate of $700,000, but in
equal monthly amounts of $58,333.33 (except that the last
payment shall be $58,333.37) on the first day of the month,
commencing March 5, 2002, and continuing each month
thereafter with the last payment payable on the first day of
December, 2003. In addition, Pennzoil-Quaker State Company
will reimburse you for all reasonable and necessary travel
expenses incurred in performing services under this Agreement
as described in Exhibit A to this Agreement. In the event of
your death or disability, any amount unpaid under the terms
hereof shall be paid to your spouse, if living, or to your
estate, on the same terms as provided hereunder for payment,
or, in the sole discretion of the Board of Directors of
Pennzoil-Quaker State Company, at such earlier date as
determined by the Board of Directors of Pennzoil-Quaker State
Company.
8. In addition to any other benefits to which you are entitled
under this Agreement, during the term of this Agreement,
Pennzoil-Quaker State Company will cover you under, and you
will be a participant in, the Pennzoil-Quaker State Company
Executive Severance Plan ("Executive Severance Plan") and for
purposes of the Executive Severance Plan your Cash Severance
Payment will be determined as the product of your annual rate
of pay in Paragraph 7 above ($700,000) and three and will be
in addition to any other benefits under this Agreement, with
no offsets for benefits provided under any other plan or
program of Pennzoil-Quaker State Company. Upon any Change in
Control (as defined in the Executive Severance Plan), you
shall be deemed to have terminated under conditions entitling
you to immediate payment of the Cash Severance Payment and
there shall be no reduction in your benefit by reason of
attained age.
9. Your Tax Protection Agreement dated as of December 30, 1998,
will continue in effect.
10. Your Excess Benefit Agreement dated as of December 30, 1998,
will continue in effect.
11. Your participation in the 2000 Pennzoil-Quaker State Company
Long-Term Incentive Plan ("2000 LTIP") shall continue and, in
the event of the occurrence of
a Change in Control, as defined in the Executive Severance
Plan, occurring prior to January 1, 2004, you shall receive
upon the consummation of such Change in Control, in lieu of
any amounts to which you would otherwise be entitled under
the 2000 LTIP, a cash payment equal to the product of (x)
your annual salary rate as of December 31, 2000 ($890,000),
and (y) the percentage of salary rate payout applicable under
the 2000 LTIP determined as if the end of the performance
period had occurred as of the day before the later to occur
of (I) the announcement by Pennzoil-Quaker State Company of
its intention to engage in a transaction that would
constitute a Change in Control, or (II) a "person" (as
defined in the Executive Severance Plan) other than
Pennzoil-Quaker State Company announces that it will attempt
a transaction that if consummated would constitute a Change
in Control.
12. Neither you, nor your spouse or other beneficiaries shall
have the right to assign any part of your or their rights
under this Agreement. This Agreement contains the entire
understanding between Pennzoil-Quaker State Company and you
regarding this matter and supersedes any prior agreement
between the parties.
13. This Agreement may not be changed or otherwise amended except
by mutual consent evidenced in writing and executed by both
parties to this Agreement.
14. This Agreement is governed by the laws of the State of Texas.
15. This Agreement supersedes that certain Letter Agreement
between you and Pennzoil-Quaker State Company dated May 4,
2000.
Very truly yours,
/s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
President and Chief Executive Officer
Pennzoil-Quaker State Company
Accepted and agreed to as of the
5th day of March, 2002.
/s/ XXXXX X. XXXX
----------------------
Xxxxx X. Xxxx
EXHIBIT A TO AGREEMENT DATED MARCH 5, 2002
SUPPORT AND EXPENSES
The following are the support and expenses obligations of
Pennzoil-Quaker State Company (the "Company") to Xxxxx X. Xxxx ("Xx. Xxxx")
during the period ending December 31, 2003:
1. Company cars and aircraft may be utilized under the same
terms and conditions as have been applicable immediately
prior to the date of the Agreement, with any personal use of
aircraft subject to IRS imputed income requirements.
2. Expenses incurred by Xx. Xxxx in furtherance of the Company's
business shall be reimbursed in accordance with customary
Company practices and procedures regarding expense
reimbursements as in effect immediately prior to the date of
this Agreement.
The following are the Company's obligations with respect to
retired chief executive officers and will continue throughout Xx. Xxxx'x
retirement:
1. Office space, furniture and equipment appropriate to the
status of a retired chairman of the board of a publicly-held
company will be provided.
2. Company will employ an executive assistant, acceptable to Xx.
Xxxx, who will be an employee of the Company with full
participation in the Company's employee benefit plans,
programs and practices. The executive assistant will report
to Xx. Xxxx and the duties and compensation of that assistant
will be determined by Xx. Xxxx (within the parameters of
overall Company guidelines and policy).
3. Xx. Xxxx and his executive assistant will be provided with
parking spaces acceptable to Xx. Xxxx.
4. Full reimbursement for cost of private ground transportation
service used in lieu of a Company chauffeured car.
