EXECUTIVE SEVERANCE AGREEMENT
Exhibit 10.2 - Form of Executive Severance Agreement
THIS
EXECUTIVE SEVERANCE AGREEMENT (“Agreement”),
effective as of May 30, 2006 (the “Effective Date”), by and between Frontier Oil
Corporation, a Wyoming corporation (the “Company”), and ____________ (the
“Executive”).
WITNESSETH:
WHEREAS,
the
parties desire to enter into this Agreement to provide the Executive with
certain benefits upon a Qualified Termination of Employment, as defined below;
NOW,
THEREFORE,
in
consideration of the premises and covenants herein contained and other good,
valuable and binding consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Term
of Agreement.
1.01 This
Agreement is effective as of the Effective Date and, unless terminated earlier
as provided herein, shall terminate on the first anniversary of the Effective
Date; provided, however, on each anniversary of the Effective Date the term
of
this Agreement (“Term”) shall be extended automatically for an additional
one-year period unless the Company shall have delivered to the Executive written
notice of non-renewal at least 90 days prior to the applicable
anniversary.
1.02 Notwithstanding
any provision of this Agreement to the contrary, termination of this Agreement
shall not alter or impair any rights, benefits or obligations of the Executive
(or his estate or beneficiaries) that have arisen under this Agreement on or
prior to such termination.
1.03 Nothing
in this Agreement shall operate or be construed to create any right or duty
on
the part of the Company or the Executive to remain in the employment of the
Company for any period of time, each reserving all rights to terminate the
“at
will” employment relationship of the Executive at any time.
2. Qualified
Termination of Employment.
2.01 In
the
event of the Executive’s Qualified Termination of Employment, as defined in
paragraph 2.02 below, during the Term of this Agreement, the Executive shall
be
entitled to receive the following payments and benefits, provided the Executive
timely executes and returns to the Company a Waiver and Release in the form
attached hereto as Attachment A and does not revoke such Waiver and
Release:
(a) Continuation
of Base Salary:
the
Company shall pay to the Executive, beginning on the 15th day of the calendar
month that is 60 days after such Qualified Termination of Employment occurs
and
continuing thereafter on the last day of such initial calendar month and on
the
15th day and the last day of each calendar month thereafter until the earlier
of
the Executive’s date of death or the [24th
/
36th]
payment
has been made under this paragraph 2.01(a) in an amount equal to 50% of the
Executive’s monthly base salary, as determined immediately prior to the
Qualified Termination of Employment, but disregarding any reductions in such
monthly base salary made in the preceding three months unless equal percentage
reductions were made in the base salaries of all other comparable executives
of
the Company.
(b) Pro
Rated Bonus:
the
Company shall pay the Executive an amount equal to the product of (1) his annual
base salary (his monthly base salary as determined above multiplied by 12)
and
(2) his target bonus percentage for the bonus year in which the Qualified
Termination of Employment occurs or for the immediately preceding bonus year,
if
a higher target percentage, with such product prorated based on the number
of
days the Executive was an employee of the Company during the bonus year in
which
his employment terminated over 365. Such prorated bonus shall be paid on the
60th day after the Qualified Termination of Employment.
(c) COBRA
Premiums:
if the
Executive timely elects COBRA continuation coverage, then, until the earliest
of
(i) the end of the [12/18] -month period following the Qualified Termination,
(ii) the termination of COBRA continuation coverage for the Executive, whether
by the Executive or as a result of his becoming covered under another employer’s
group health plan, or (iii) the Executive becomes employed by another employer,
regardless of whether he is covered under a group health plan of such other
employer, the Company shall remit on behalf of the Executive the full monthly
premium for the COBRA coverage elected by the Executive under the Company’s
plan; provided, however, such premium payment by the Company on behalf of the
Executive shall constitute and be treated by the parties as additional taxable
severance compensation to the Executive for all purposes.
(d) Outplacement:
the
Company will provide up to $15,000 of outplacement services to the Executive
within the [12/18]-month period following the Qualified Termination of
Employment, through an outplacement services provider selected or approved
by
the Company.
(e) Company
Equity Awards: all Company stock options and stock appreciation rights (“SARs”)
granted to the Executive during the Term shall, upon a Qualified Termination
of
Employment, become fully vested upon such Qualified Termination of Employment
and shall remain exercisable until the earliest of (i) the third anniversary
of
the date of the Qualified Termination of Employment, (ii) the date the Option
or
SAR would have expired by its terms if the Executive had not incurred a
termination of employment, and (iii) the date options and SARs granted under
the
Company’s equity plan are terminated in connection with a change of control of
the Company. All other Company equity-based awards granted to the Executive
during the Term shall vest in full upon a Qualified Termination of Employment
(at their target level for those awards with target levels and/or performance
criteria) and shall be exercisable by the Executive on the 60th day after the
Qualified Termination of Employment. The provisions of this paragraph shall
be
deemed a part of any option, SAR or equity award grant agreement made to the
Executive during the Term and shall control over any provisions in such grant
agreements that conflict with this paragraph.
(f) Life
Insurance: if provided to the Executive immediately prior to the Qualified
Termination of Employment, the Company shall continue the Executive’s
coverage(s) in the Company’s basic and/or executive life insurance program(s)
for [12/18] months or until the Executive becomes employed by another employer,
whichever occurs first, provided such continued coverage(s) of the Executive
is
permitted by the term(s) of the life insurance contract(s) issued to the Company
with respect to such program(s).
2.02 A
“Qualified Termination of Employment,” for purposes of this Agreement,
means:
(a) a
termination of the Executive’s employment by the Company during the Term for any
reason other than for (i) Cause, as defined in paragraph 2.03 below, or (ii)
a
disability that is anticipated to be permanent and total, as determined by
the
Company’s long-term disability insurance carrier, and entitles the Executive to
receive benefits under the long-term disability plan of the Company or its
affiliates, or
(b) a
termination by the Executive of his employment with the Company during the
Term
based upon the occurrence of any of the following events:
(i) a
material reduction in the Executive’s monthly base salary, unless comparable
reductions are made in the base salaries of all similar executives by the
Company,
(ii) a
material reduction in the annual target percentage or bonus opportunities
provided to the Executive, as compared against those in effect in the
immediately preceding bonus year, unless comparable reductions are made in
the
annual target percentages or bonus opportunities of all similar executives
by
the Company, or
(iii) a
written
notice to the Executive of the relocation of his principal office location
by
more than 50 miles from its then location, unless the Executive is provided
with
relocation benefits and reimbursements by the Company that are comparable to
the
relocation package customarily provided by the Company to similarly situated
executives of the Company and provides for the payment by the Company of the
costs for the relocation of the Executive’s household goods and for the
reimbursement of the costs of selling the Executive’s residence, if any, but
excluding any costs of repairs, improvements, income taxes or other similar
non-realtor selling or closing expenses.
2.03 For
purposes of this Agreement, the termination of the Executive’s employment by the
Company shall be deemed to have been for “Cause” only if:
(a) such
termination shall have been the result of an act or acts of dishonesty on the
part of the Executive resulting or intended to result, directly or indirectly,
in gain or personal enrichment to the Executive at the expense of the Company
or
an affiliate;
(b) the
Executive’s unwillingness to perform his duties in a satisfactory manner, as
determined in good faith by the Board of Directors of the Company (the “Board”);
or
(c) the
Executive, after written notice from the Company, shall have failed, within
the
period provided in such notice, to perform his duties at a level consistent
with
his performance prior to the failure that gave rise to the notice from the
Company, as determined in good faith by the Board.
2.04 If
the
Executive’s employment with the Company and its affiliates is terminated for any
reason other than a Qualified Termination of Employment, this Agreement shall
automatically terminate on such termination of employment without any payments
or benefits due the Executive under this Agreement.
2.05 Notwithstanding
anything in this Section 2 to the contrary, if any payment to the Executive
under this Agreement would subject the Executive to the additional tax provided
by Section 409A of the Internal Revenue Code if made before the date that is
six
months after the Qualified Termination of Employment, such payment(s) shall
be
deferred (and accumulated without interest if more than one) and paid in a
single sum on the first business day of the seventh month following the date
of
the Qualified Termination of Employment or on such earlier date, if any, as
would not subject the Executive to such additional tax.
3. Confidential
Information
3.01 The
Executive agrees not to disclose, either while in the Company’s employ or at any
time thereafter, to any person not employed by the Company or an affiliate,
or
not engaged to render services to the Company or an affiliate, or any person
who
is not authorized to receive such disclosure, any confidential information
concerning the Company’s businesses, operations, financial affairs, policies,
procedures, personnel, business plans or any other confidential information
relating to the business of the Company or an affiliate obtained by him while
in
the employ of the Company or an affiliate; provided, however, that this
provision shall not preclude the Executive from use or disclosure of information
known generally to the public or of information not considered confidential
by
persons engaged in the business conducted by the Company or an affiliate or
from
disclosure required by law.
3.02 The
Executive agrees that upon leaving the Company’s employ he will not take with
him, without the prior written consent of an officer authorized to act in the
matter by the Board, any document, notes, disc, tape, or electronic medium
or
other property, including copies thereof, containing any information of the
Company or its affiliates that is of a confidential nature.
3.03 The
Executive shall not, for his own account or the account of any other person
or
entity, during his employment with the Company and the one-year period following
the termination of his employment for any reason, solicit or in any manner
induce or attempt to induce any employee of the Company or an affiliate to
terminate his or her employment or interfere in any manner with any such
employment relationship.
3.04 The
Company and the Executive agree that neither party shall at any time during
or
after the termination of the Executive’s employment disparage the other party in
any manner, including any parent, subsidiary, affiliate, director, agent,
officer, employee, agent or shareholder of the Company.
3.05 The
foregoing obligations of this Section 3 will survive and remain binding and
enforceable on the parties, notwithstanding the termination of this Agreement,
the Executive’s termination of employment and without regard to the reason for
such termination.
4. Notices
All
notices, requests, demands and other communications provided for by this
Agreement shall be deemed to have been duly given if and when mailed in the
continental United States by registered or certified mail, return receipt
requested, postage prepaid, or personally delivered or sent by telex or other
telegraphic means to the party entitled thereto at the address stated below
or
to such changed address as the addressee may have given by a similar
notice:
To
the
Company: Frontier
Oil Corporation
00000
Xxxxxxxx Xxxxx
Xxxxx
000
Xxxxxxx,
Xxxxx 00000
Attn:
General Counsel
To
the
Executive:
5. General
Provisions
5.01 Except
as
provided in paragraph 5.11, there shall be no right of set-off, mitigation
or
counterclaim in respect of any claim, debt or obligation, against any payments
to the Executive, his dependents, beneficiaries or estate provided for in this
Agreement.
5.02 The
Company and the Executive recognize that each party will have no adequate remedy
at law for breach by the other of any of the agreements contained herein and,
in
the event of any such breach, the Company and the Executive hereby agree and
consent that the other shall be entitled to a decree of specific performance,
mandamus, injunction or other appropriate remedy to enforce performance of
such
agreements.
5.03 No
right
or interest or in any payments under this Agreement shall be assignable by
the
Executive; provided, however, that this provision shall not preclude the legal
representative of his estate from assigning any right hereunder to the person
or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to
his
estate.
5.04 No
right,
benefit or interest hereunder shall be subject to anticipation, alienation,
sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in
respect of any claim, debt or obligation, or to execution, attachment, levy
or
similar process, or assignment by operation of law, except as provided in
paragraph 5.03. Any attempt, voluntary or involuntary, to effect any action
specified in the immediately preceding sentence shall, to the full extent
permitted by law, be null, void and of no effect.
5.05 In
the
event of the Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where appropriate,
to his beneficiary or beneficiaries. This Agreement shall inure to the benefit
of and be enforceable by Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
5.06 The
titles to sections in this Agreement are intended solely for convenience and
no
provision of this Agreement is to be construed by reference to the title of
any
section.
5.07 No
provision of this Agreement may be amended, modified or waived unless such
amendment, modification or waiver shall be authorized by the Board or any
authorized committee of the Board and shall be agreed to in writing, signed
by
the Executive and by an officer of the Company thereunto duly
authorized.
5.08
Except
as otherwise specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision
of
this Agreement to be performed by such other party shall be deemed a waiver
of a
subsequent breach of such condition or provision or a waiver of a similar or
dissimilar provision or condition at the same or at any prior or subsequent
time.
5.09 In
the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions and portions
of this Agreement shall be unaffected thereby and shall remain in full force
and
effect to the fullest extent permitted by law.
5.10 This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Texas. THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMIT TO
THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS IN XXXXXX COUNTY, TEXAS
FOR THE PURPOSES OF ANY PROCEEDING ARISING OUT OF THIS AGREEMENT.
5.11 If
the
Executive is entitled to severance payments or benefits pursuant to an
individual employment agreement or change of control agreement with the Company,
the parties hereto intend for there not to be a duplication of such payments
or
benefits with any payments or benefits to which the Executive may be entitled
to
receive under this Agreement and the payments and benefits under such other
agreement shall reduce or offset any similar payment or benefit to which the
Executive is entitled to receive under this Agreement.
5.12 The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise.
5.13 Nothing
in this Agreement shall limit or otherwise adversely effect such rights as
the
Executive may have under the terms of any equity award, employee benefit plan,
incentive compensation arrangement or other agreement with the Company or any
of
its affiliates.
5.14 The
Company shall withhold from all payments and benefits provided under this
Agreement all taxes required to be withheld by the Company by applicable
law.
5.15 For
purposes of this Agreement, “employment with the Company” shall include any
employment of the Executive with a parent, subsidiary or affiliate of the
Company.
5.16 It
is the
intent of the parties that payments under this Agreement constitute separation
pay and comply with the requirements of Section 409A of the Internal Revenue
Code so that the Executive is not subject to the additional tax provided under
said section. In the event a payment to the Executive pursuant to this Agreement
would nonetheless be subject to the six-month delay provision applicable to
“specified employees” under Section 409A, any payments otherwise due hereunder
during the six-month period following the Executive’s Qualified Termination of
Employment shall be accumulated (without interest) and shall be paid in a lump
sum to the Executive on the first day of the seventh month following the
Qualified Termination of Employment. The parties agree that the Agreement shall
be interpreted and modified as necessary to comply with Section
409A.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement effective for all purposes as of
the
Effective Date.
FRONTIER
OIL CORPORATION
By:
Name:
Xxxxx X. Xxxxx
Title:
Chairman, President & CEO
EXECUTIVE
