EXHIBIT 10(iii)(c)
July 18, 1997
Xx. Xxxxxxx X. Xxxxxx
Dear Xx. Xxxxxx:
This letter sets forth certain terms and conditions which you and
Texaco Inc. ("Texaco" or "the Company") have agreed to in connection with your
employment by Texaco.
1. Employment Term. Your employment is expected to commence on or
about August 1,1997. You shall remain employed by Texaco for at least three
years, unless earlier terminated for cause as defined in paragraph 4, under the
terms and conditions set forth herein.
2. Employment and Duties. Texaco will employ you as Senior Vice
President initially with responsibility for corporate development and reporting
directly to the Chief Executive Officer. In this position, or any other position
to which you may be elected or appointed, you agree that you shall devote
substantially all of your business time and energies to the business of Texaco
and shall perform such services as from time to time are assigned to you by the
Board of Directors (the "Board") or the Executive Management of Texaco, i.e. the
Chief Executive Officer, the President or a Vice Chairman. You shall also be a
member of the Executive Council) for at least the first three years of service,
or so long as that body exists if shorter than three years.
3. Compensation and Benefits.
a. Your annual base salary is initially set at $400,000 and shall be
for no less during the first three years of your employment. It shall be payable
in accordance with Texaco's standard practice for elected officers, and shall be
determined by the Compensation Committee of the Board at such times and in such
manner as is consistent with Texaco's standard practice for elected officers.
b. You shall be eligible to participate in Texaco's Incentive Bonus
Plan (IBP) and Stock Incentive Plan (SIP) in accordance with their respective
terms. Your target bonus for each of the performance years 1997 through 1999
shall be no less
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than $280,032 the current target for Grade IV, the salary grade at your initial
employment. Actual bonus paid will be determined by the performance-based IBP.
Your awards under the SIP for 1998, 1999 and 2000 shall be for no less than the
target award for Grade IV in each year.
c. Except as otherwise provided herein, during your employment with
Texaco you shall be eligible to participate in each of Texaco's existing
employee benefit plans, policies or arrangements and any such plans, policies or
arrangements that Texaco may maintain or establish during your period of
employment (in addition to or in substitution for any existing plan) and to
receive all other benefits for which your position as a corporate officer makes
you eligible in accordance with Texaco's usual policies and with the then
current terms and provisions of each such plan, policy, or arrangement,
including those listed on Appendix A hereto.
d. Texaco shall promptly pay, or reimburse you for, all reasonable
and necessary business expenses incurred by you in the performance of your
duties hereunder, provided that you properly account for them in accordance with
Texaco's standard policy for elected officers.
4. The term "Cause" shall mean: "the transfer by you of confidential
business information of any type concerning Texaco to a competitor of Texaco for
compensation; or the commission of an act by you in the course of your
employment with Texaco which constitutes fraud, dishonesty, or conduct in
violation of Company policy and causes material harm to Texaco, or any conduct
for which you are convicted of intentionally and knowingly committing a crime
against Texaco under federal law or the law of the state in which such action
occurred".
5. Texaco shall not be required to fund or otherwise segregate assets
to be used for the payment of the benefits described in paragraph 3 or in any
other non-qualified benefit plan, except as otherwise required by law. Texaco's
obligation to pay such benefits may be satisfied only out of its general
corporate funds, and, therefore, satisfaction of such obligations will be
subject to any claims of Texaco's other creditors having priority as to Texaco's
assets.
6. Signing Bonus. The Company believes that ownership of the Common
Stock by officers and other employees having substantial responsibilities as to
the conduct and development of the Company's business is important for the
welfare of the stockholders. Texaco Common Stock provides officers and other
employees with: an opportunity to acquire a proprietary interest in the Company;
a strong mutuality of interest with stockholders; and a significant incentive to
use their best efforts for the Company's long-term success. Accordingly, on the
date of your employment, you will be granted, as a signing bonus, 15,834 Stock
Options and 2,262 Performance Restricted Shares. These options and shares will
be subject to the terms and conditions of awards under the SIP and an agreement
to that effect will be executed by you and Texaco to evidence this signing
bonus.
7. MD Account. Texaco recognizes that you may relinquish certain
benefits under the Credit Suisse/First Boston (CS) MD Account and Savings Plan
by accepting employment with Texaco. Texaco will make you whole in 1997 for all
MD Account and
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Savings Plan unvested amounts which CS does not pay to you, as determined
conclusively by MD Account and Savings Plan statements delivered by CS (as of
the date of your resignation from CS). The amounts shall be paid by Texaco by
crediting to your account as of your first day of employment, under Texaco's
existing plans, a number of fully vested deferred stock units with a value equal
to the amount so forfeited.
8. Miscellaneous.
a. This Agreement and the letter agreement (the "Letter Agreement")
of even date herewith between you and the Company shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in that State.
b. Any notice, consent or other communication made or given in
connection with this Agreement or the Letter Agreement shall be in writing and
shall be deemed to have been duly given when delivered by United States
registered or certified mail, return receipt requested, to the parties at the
following addresses or at such other address as a party may specify by written
notice to the other:
To You:
Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
To Texaco:
Corporate Secretary
Texaco Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
c. This Agreement shall supersede any and all existing agreements,
understandings and arrangements between you and Texaco relating to the terms of
your employment; provided, however, that this Agreement shall not supersede the
Letter Agreement or supersede or in any way reduce your right to receive (or
Texaco's obligation to pay) benefits under any employee benefit plan, program or
arrangement maintained by Texaco, including, without limitation, those plans,
programs and arrangements described in paragraph 3 hereof. Neither this
Agreement nor the Letter Agreement may be amended except by a written agreement
signed by both parties.
d. The failure of you or Texaco to insist upon strict adherence to any
term of this Agreement or the Letter Agreement on any occasion shall not be
considered a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement or
the Letter Agreement.
e. Except as otherwise provided in this paragraph 8e., this Agreement
and the Letter Agreement shall inure to the benefit of and be binding upon
Texaco, its successors and assigns, and to you and your heirs, executors,
administrators and legal
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representatives. Neither this Agreement nor the Letter Agreement shall be
assignable by you, and, without your consent, shall be assignable by Texaco only
to any corporation or other entity resulting from the reorganization, merger or
consolidation of Texaco with any other corporation or entity or any corporation
or entity to which Texaco may sell all or substantially all of its business
and/or assets. Texaco will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of its
business and/or assets, by agreement in form and substance satisfactory to you,
to expressly assume and agree to perform this Agreement and the Letter Agreement
in the same manner and to the same extent that Texaco would be required to
perform them if no such succession had taken place. As used in this Agreement
and the Letter Agreement, "Texaco" shall mean Texaco as hereinbefore defined and
any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 8e. or which otherwise
becomes bound by all the terms and provisions of this Agreement and the Letter
Agreement by operation of law.
f. Paragraph headings are used for convenience of reference only and
shall not affect the meanings of any provision of this Agreement or the Letter
Agreement.
g. If any provision of this Agreement or the Letter Agreement is
invalid or unenforceable, the balance of the Agreement and the Letter Agreement
shall remain in effect, and if any provision is inapplicable to any
circumstance, it shall nevertheless remain applicable to all other
circumstances.
h. Texaco shall pay reasonable attorney's fees incurred by you in
negotiating the terms of this Agreement and the Letter Agreement with Texaco.
If you agree that this letter, together with the Letter Agreement,
accurately sets forth your agreement with Texaco, please sign and date each copy
of this letter below in the space provided and return one to me.
Sincerely,
TEXACO INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
Vice President and Secretary
Accepted and Agreed to this
6th day of August, 1997.
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Appendix A
List of Executive Incentive Plans
a. Comprehensive Personal Liability Insurance Program
b. Tax Assistance Plan
c. Country Club Membership
d. Executive Medical Examination
e. Home Computer
July 18, 1997
Xx. Xxxxxxx X. Xxxxxx
Dear Xx. Xxxxxx:
In connection with your employment by Texaco on or about August 1,1997:
1. Unless you are earlier terminated for cause or voluntarily leave the
Company, you shall be employed for no less the three years (the "Term") as a
Senior Vice President at a salary no less than your starting salary.
2. Your Continuous Service Date for any Texaco-sponsored qualified or
non-qualified plan for which service is a determinant for benefits shall be
August 1,1989. These plans, at the present time, are: Vacation; Short-Term
Disability; Long-Term Disability; Separation Pay; Retirement; and two
Supplemental Pension Benefits Plans. The eight years' service credit for the
Retirement Plan is to be provided by a non-qualified pension supplementation.
With reference to the Retirement and Supplemental Pension Benefits
Plans, the Texaco benefits for the period August 1,1989 through July 31,1997
shall be calculated on a non-contributory basis.
If your employment is terminated at any time for "Cause" as defined in
a separate letter agreement (the "Employment Letter") of this date, or if you
voluntarily leave Texaco within three years of your initial employment, the
eight years of service credit for the period August 1, 1989 - July 31,1997 shall
be immediately forfeited in their entirety.
3. Change of Control. If, before you have completed three years of
service there is a "Change of Control" ("COC"), as that term is defined in
Texaco's Separation Pay Plan, at Texaco resulting in
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termination of your employment or suspension/cancellation of the IBP and/or SIP,
or Texaco or its successor unilaterally terminates your employment without cause
or you terminate your employment following a material breach by Texaco of this
Agreement or the Employment Letter, (a) you shall be entitled to receive
immediately (1) a cash lump sum payment equal to the salary you would have
earned during the remainder of the three-year term, less required withholding
deduction for applicable taxes plus (2) IBP and SIP awards (Make-Up Awards)
sufficient to put you in the position of having the equivalent of Stock Options
and Performance Restricted Shares granted to you upon your initial employment
plus three annual IBP and SIP awards and (b) all SIP awards then held by you or
awarded pursuant to this paragraph shall become fully vested and nonforfeitable.
The strike price of the stock options in such Make-Up Awards shall be the price
at the date of grant used for the last SIP awards, adjusted if necessary, in
accordance with the terms of the SIP, prior to the COC or termination of
employment as described in this paragraph. The amount of each annual IBP award
to be made up will be the average of IBP award(s) previously received by you as
a Texaco employee (or, if no such awards have yet been determined, your then
target award).
Sincerely,
Texaco Inc.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxx
Vice President & Secretary
Accepted and Agreed to this
6th day of August,1997
/s/ Xxxxxxx X. Xxxxxx
--------------------------
Xxxxxxx X. Xxxxxx