EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 23,
1996, but effective as provided herein, is made and entered into by and between
Diamond Shamrock, Inc., a Delaware corporation (the "Company" or "Diamond
Shamrock, Inc.", as the context requires), and Xxxxxxx X. Xxxxxx (the
"Executive").
WHEREAS, the Executive has been serving as a senior executive
officer of Diamond Shamrock, Inc.;
WHEREAS, the Executive is a party to an Employment Agreement with
Diamond Shamrock, Inc., dated as of February 6, 1996 (the "Prior Agreement");
WHEREAS, pursuant to the Agreement and Plan of Merger between
Ultramar Corporation, a Delaware corporation ("Ultramar Corporation") and
Diamond Shamrock, Inc., dated as of September 22, 1996 (the "Merger Agreement"),
as of the effective time of the Merger (the "Effective Date"), Diamond Shamrock,
Inc. will be merged with and into Ultramar Corporation, with Ultramar
Corporation as the surviving entity (the "Merger");
WHEREAS, pursuant to the Merger Agreement, the Company is authorized
to enter into this Agreement with Executive;
WHEREAS, the Company considers it in the best interests of its
stockholders to xxxxxx the continuous employment of certain key management
personnel;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
herein) exists;
WHEREAS, the Company wishes to assure itself of both present and
future continuation of management in light of the Merger and in the event of a
Change in Control subsequent to the Merger;
WHEREAS, the Company wishes to employ the Executive and the
Executive is willing to render services, both on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
1. Employment.
1.1 The Company hereby agrees to employ the Executive and the
Executive hereby agrees to undertake employment with the Company upon the terms
and conditions herein set forth.
1.2 Employment will be for a term commencing on the Effective Date
and, subject to earlier expiration upon the Executive's termination under
Section 5, expiring three years from the Effective Date (the "Term").
Notwithstanding the previous sentence, this Agreement and the employment of the
Executive will be automatically renewed and the Term extended, subject to
Section 5, for successive one-year periods upon the terms and conditions set
forth herein, commencing on the third anniversary of the date of this Agreement,
and on each anniversary date thereafter, unless either party to this Agreement
gives the other party written notice (in accordance with Section 12.5) of such
party's intention to terminate this Agreement at least three months prior to the
end of such initial or extended term. For purposes of this Agreement, any
reference to the "Term" of this Agreement will include the original term and any
extension thereof.
2. Position and Duties.
2.1 Position and Duties. During the Term, the Executive will serve
as Executive Vice President, Logistics and Supply, of the Company and will have
such duties, functions, responsibilities and authority as are (i) consistent
with the Executive's position as Executive Vice President, Logistics and Supply,
of the Company; or (ii) assigned to his office in the Company's bylaws; or (iii)
reasonably assigned to him by the Company's Board of Directors (the "Board").
2.2 Commitment. During the Term, the Executive will be the Company's
full-time employee and, except as may otherwise be approved in advance in
writing by the Board, and except during vacation periods and reasonable periods
of absence due to sickness, personal injury or other disability, the Executive
will devote substantially all of his business time and attention to the
performance of his duties to the Company.
3. Place of Performance. In connection with his employment during the
Term, unless otherwise agreed by the Executive, the Executive will be based at
the Company's principal executive offices. The Executive will undertake normal
business travel on behalf of the Company.
4. Compensation and Related Matters.
4.1 Compensation and Benefits.
(i) Annual Base Salary. During the Term of this Agreement, the
Company will pay to the Executive an annual base
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salary of not less than $335,000, which annual base salary may be modified from
time to time by the Board (or the Compensation Committee thereof) in its sole
discretion, payable at the times and in the manner consistent with the Company's
general policies regarding compensation of executive employees. The Board may
from time to time authorize such additional compensation to the Executive, in
cash or in property, as the Board may determine in its sole discretion to be
appropriate.
(ii) Annual Incentive Compensation. If the Board (or the
Compensation Committee thereof) authorizes any cash incentive compensation or
approves any other management incentive program or arrangement, the Executive
will be eligible to participate in such plan, program or arrangement under the
general terms and conditions applicable to executive and management employees;
provided, however, that so long as the Executive remains employed by the Company
at the end of the applicable fiscal year, (a) the annual cash incentive
compensation paid by the Company to the Executive for the Company's fiscal year
that includes the Effective Date, aggregated with any other annual incentive
compensation earned by the Executive for calendar year 1996, will be in an
amount not less than the greater of (1) 40% of the Executive's highest annual
base salary rate during the fiscal year to which such incentive compensation
relates, and (2) the Executive's actual annual incentive compensation earned
during such fiscal year, as determined by the Company's Board (or the
Compensation Committee thereof), and (b) the cash incentive compensation paid to
the Executive for the Company's next succeeding fiscal year will be in an amount
not less than the greater of (1) 40% of the Executive's highest annual base
salary rate during the fiscal year to which such incentive compensation relates,
and (2) the Executive's actual annual incentive compensation during such fiscal
year, as determined by the Board (or the Compensation Committee thereof). Except
as set forth in the proviso to the preceding sentence, nothing in this Section
4.1(ii) will guarantee to the Executive any specific amount of incentive
compensation, or prevent the Board (or the Compensation Committee thereof) from
establishing performance goals and compensation targets applicable only to the
Executive.
4.2 Executive Benefits. In addition to the compensation described in
Section 4.1, the Company will make available to the Executive and his eligible
dependents, subject to the terms and conditions of the applicable plans,
including without limitation the eligibility rules, participation in all
Company-sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health,
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medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), expense reimbursement or other employee benefit
policies, plans, programs or arrangements or any equivalent successor policies,
plans, programs or arrangements that may now exist or be adopted hereafter by
the Company.
4.3 Expenses. The Company will promptly reimburse the Executive for
all travel and other business expenses the Executive incurs in order to perform
his duties to the Company under this Agreement in a manner commensurate with the
Executive's position and level of responsibility with the Company, and in
accordance with the Company's policy regarding substantiation of expenses.
5. Termination. Notwithstanding the Term specified in Section 1.2, the
termination of the Executive's employment hereunder will be governed by the
following provisions:
5.1 Death. In the event of the Executive's death during the Term,
the Company will pay to the Executive's beneficiaries or estate, as appropriate,
promptly after the Executive's death, (i) the unpaid annual base salary to which
the Executive is entitled, pursuant to Section 4.1, through the date of the
Executive's death, and (ii) for any accrued but unused vacation days, to the
extent and in the amounts, if any, provided under the Company's usual policies
and arrangements. This Section 5.1 will not limit the entitlement of the
Executive's estate or beneficiaries to any death or other benefits then
available to the Executive under any life insurance, stock ownership, stock
options, or other benefit plan or policy that is maintained by the Company for
the Executive's benefit.
5.2 Disability.
(i) If the Company determines in good faith that the Executive
has incurred a Disability (as defined below) during the Term, the Company may
give the Executive written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company will
terminate effective on the 30th day after receipt of such notice by the
Executive, provided that within the 30 days after such receipt, the Executive
will not have returned to full-time performance of his duties. The Executive
will continue to receive his annual base salary and benefits until the date of
termination. In the event of the Executive's Disability, the Company will pay
the Executive, promptly after the Executive's termination, (a) the unpaid annual
base salary to which he is entitled, pursuant to Section 4.1, through the date
of the Executive's termination, (b) for any accrued but unused vacation days, to
the extent and in the amounts, if any, provided under the Company's usual
policies and arrangements, and (c) a lump sum in cash in an amount equal to 50%
of his annual base salary at the time of termination. This Section 5.2 will not
limit the entitlement of
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the Executive, the Executive's estate or beneficiaries to any disability or
other benefits then available to the Executive under any disability insurance or
other benefit plan or policy that is maintained by the Company for the
Executive's benefit.
(ii) For purposes of this Agreement, "Disability" will mean
the Executive's incapacity due to physical or mental illness substantially to
perform his duties on a full-time basis for six consecutive months and within 30
days after a notice of termination is thereafter given by the Company the
Executive will not have returned to the full-time performance of the Executive's
duties; provided, however, if the Executive disagrees with a determination to
terminate him because of Disability, the question of the Executive's disability
will be subject to the certification of a qualified medical doctor agreed to by
the Company and the Executive or, in the event of the Executive's incapacity to
designate a doctor, the Executive's legal representative. In the absence of
agreement between the Company and the Executive, each party will nominate a
qualified medical doctor and the two doctors will select a third doctor, who
will make the determination as to Disability. In order to facilitate such
determination, the Executive will, as reasonably requested by the Company, (a)
make himself available for medical examinations by a doctor in accordance with
this Section 5.2(ii), and (b) grant the Company and any such doctor access to
all relevant medical information concerning him, arrange to furnish copies of
medical records to such doctor and use his best efforts to cause his own doctor
to be available to discuss his health with such doctor.
5.3 Cause.
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below). In the event of the Executive's
termination for Cause, the Company will promptly pay to the Executive (or his
representative) the unpaid annual base salary to which he is entitled, pursuant
to Section 4.1, through the date the Executive is terminated and the Executive
will be entitled to no other compensation, except as otherwise due to him under
applicable law.
(ii) For purposes of this Agreement, the Company will have
"Cause" to terminate the Executive's employment hereunder upon a finding by the
Board that (a) the Executive committed an illegal act or acts that were intended
to and did defraud the Company, (b) the Executive engaged in gross negligence or
gross misconduct against the Company or another employee, or in carrying out his
duties and responsibilities, or (c) the Executive materially breached any of the
express covenants set forth in Section 9.1, 9.2 or 9.3. The Company will not
have Cause unless and until the Company provides the Executive with written
notice that the Company intends to terminate his employment for Cause. Such
written notice will specify the particular act or acts, or failure to act, that
is or
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are the basis for the decision to so terminate the Executive's employment for
Cause. The Employee will be given the opportunity within 30 calendar days of the
receipt of such notice to meet with the Board to defend such act or acts, or
failure to act. The Executive's employment by the Company automatically will be
terminated under this Section 5.3 for Cause as of the receipt of the written
notice from the Company or, if later, the date specified in such notice. A
notice given under this Section 5.3 must set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment for Cause, and if the termination date is other than the
date of receipt of such notice, specify the date on which the Executive's
employment is to be terminated (which date will not be earlier than the date on
which such notice is given in accordance with Section 13.5). Such notice must be
given no later than 180 business days after a director of the Company (excluding
the Executive, if applicable) first has actual knowledge of the events
justifying the purported termination.
5.4 Termination.
(i) Involuntary Termination. The Executive's employment
hereunder may be terminated by the Company for any reason by written notice as
provided in Section 12.5. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated by the Company other than for
Cause if the Executive terminates his employment with the Company for any of the
following reasons (each, a "Good Reason"): without the Executive's written
consent, (a) the Company has breached any material provision of this Agreement
and within 30 days after notice thereof from the Executive, the Company fails to
cure such breach; (b) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company fails to assume liability under the
Agreement; (c) at any time after the Company has notified the Executive pursuant
to Section 1.2 that the Company does not intend to renew the Agreement and the
Executive's employment at the end of the Term (including any previous renewals)
(rather than to allow the Agreement automatically to renew); (d) a material
reduction in the aggregate benefits described by Section 4.2 (other than
stock-based compensation) provided to the Executive, unless such decrease is
required by law or is applicable to all employees of the Company eligible to
participate in any employee benefit arrangement affected by such reduction; (e)
a significant reduction in the Executive's duties or the addition of duties,
which in either case are materially inconsistent with the Executive's title or
position; or (f) a reduction in the Executive's annual base salary.
(ii) Voluntary Termination. The Executive may voluntarily
terminate the Agreement at any time by notice to the Company as provided in
Section 12.5. The Executive's death or Disability (as defined in Section
5.2(ii)) during the term of the
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Agreement will constitute a voluntary termination of employment for purposes of
eligibility for termination payments and benefits as provided in Section 5.5,
but for no other purpose.
5.5 Termination Payments and Benefits.
(i) Form and Amount. Upon the Executive's involuntary
termination, other than for Cause, (a) subject to Section 5.5(iii), the Company
will pay or provide to the Executive (1) his annual base salary and benefits
until the date of termination, (2) within five business days after termination
of his employment, a lump sum cash payment equal in amount to three times the
sum of (x) the Executive's highest annual base salary in effect during the three
years prior to his date of termination, and (y) the highest annual incentive
compensation earned by the Executive during the same three-year period, (3)
three additional years of age and service credit under the qualified and
nonqualified defined benefit retirement plans of the Company in which the
Executive participates at the time of termination; provided, however, that in
the case of a qualified defined benefit pension plan, the present value of the
additional benefit the Executive would have accrued if he had been credited for
all purposes with the additional years of age and service under such plan as of
the Executive's date of termination with the Company will be paid in a lump sum
in cash within five business days after termination of the Executive's
employment, and (4) for a period of one year after termination of his
employment, the continuation of the employee welfare benefits set forth in
Section 4.2 except as offset by benefits paid by other sources as set forth in
Section 8, or as prohibited by law or as a condition of maintaining the
tax-favored status of any such benefits to the Company or its employees; (b) the
Executive's benefit under the applicable supplemental executive retirement plan
will be not less than the benefit the Executive would have received under the
terms of the corresponding plan (including any individual modifications thereof)
applicable to the Executive as in effect immediately prior to the Effective Date
determined as if the Executive had continued employment under the terms of such
corresponding plan (and modifications) until his actual termination of
employment. For purposes of Section 5.5(i) (a) (2), the three-year period will
include employment with Diamond Shamrock, Inc. or any of its affiliates.
(ii) Maintenance of Benefits. During the period set forth in
Section 5.5(i) (a) (4), the Company will use its best efforts to maintain in
full force and effect for the continued benefit of the Executive all referenced
benefits or will arrange to make available to the Executive benefits
substantially similar to those that the Executive would otherwise have been
entitled to receive if his employment had not been terminated. Such benefits
will be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to his termination.
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(iii) Release. No benefit will be paid or made available under
Section 5.5(i) (a) unless the Executive first executes a release in the form
attached as an exhibit to this Agreement, and (b) to the extent any portion of
such release is subject to the seven-day revocation period prescribed by the Age
Discrimination in Employment Act of 1967, as amended, or to any similar
revocation period in effect on the date of termination of Executive's
employment, such revocation period has expired.
6. Chance in Control Provisions.
6.1 Impact of Change in Control. In the event of a "Change in
Control" of the Company, as defined in Section 6.2, (i) the Company will cause
all cash benefits due under this Agreement to be secured by an irrevocable trust
for the benefit of the Executive, the assets of which will be subject to the
claims of the Company's creditors, and will transfer to such trust cash and
other property adequate to satisfy all of the expenses of the trust for at least
five years after the Change in Control and any of the Company's actual and
potential cash obligations under this Agreement, (ii) if the Executive's
employment is involuntarily terminated without Cause after the Change in
Control, (A) the covenants of Sections 9.1 and 10 will be inapplicable to the
Executive, and (B) the covenant of Section 9.2 will expire on the third
anniversary of the date of termination of the Executive's employment, and (iii)
the definition of Good Reason, as set forth in Section 5.4(i) above, will be
expanded to include the following:
(a) A good faith determination by the Executive that, as a
result of the Change in Control and a change in circumstances thereafter
significantly affecting his positions, including a change in the scope of
business or other activities for which he was responsible, he has been rendered
substantially unable to carry out, has been substantially hindered in the
performance of, or has suffered a substantial reduction in, any of the
authorities, powers, functions, responsibilities or duties attached to any of
the Executive's positions; the Executive's determination will be presumed to
have been made in good faith unless otherwise shown by the Company by clear and
convincing evidence;
(b) The relocation of the Company's principal executive
offices (but only if, immediately prior to the Change in Control, the
Executive's principal place of employment was at the Company's principal
executive offices), or requirement that the Executive have as his principal
location of work any location that is, in excess of 50 miles from the location
thereof immediately preceding the Change in Control or to travel away from his
home or office significantly more often that required immediately prior to the
Change in Control; or
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(c) For any reason, or without reason, during the 30-day
period immediately following the first anniversary of the first occurrence of a
Change in Control.
6.2 Definition of Change in Control. For purposes of this Agreement,
a "Change in Control" will be deemed to occur if at any time during the term of
the Agreement any of the following events will occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization, less than 50% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal person,
and as a result of such sale or transfer, less than 50% of the combined voting
power of the then-outstanding voting securities of such corporation or person
are held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;
(iii) There is a report filed on Schedule 13D or Schedule
14D-l (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing that any
person (as the term "person" is used in Section 13(d) (3) or Section 14(d) (2)
of the Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 20% or more of
the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of Directors of the Company ("Voting
Stock");
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during the period of two consecutive years
individuals who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each Director of the Company first elected during such period
was approved by a vote of at least two-thirds of the Directors of the
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Company then still in office who were Directors of the Company at the beginning
of any such period (excluding for this purpose the election of any new Director
in connection with an actual or threatened election or proxy contest).
Notwithstanding the foregoing provisions of Section 6.2(iii) or (iv) hereof,
unless otherwise determined in a specific case by majority vote of the Board (or
the Compensation Committee thereof), a "Change in Control" will not be deemed to
have occurred for purposes of this Agreement solely because the Company, an
entity in which the Company directly or beneficially owns 50% or more of the
voting securities of such entity, any Company-sponsored employee stock ownership
plan or any other employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of voting securities of the Company, whether in excess
of 20% or otherwise, or because the Company reports that a change in control of
the Company has or may have occurred or will or may occur in the future by
reason of such beneficial ownership. Notwithstanding the foregoing provisions of
Section 6.2, the Merger will not constitute a Change in Control.
7. Certain Additional Payments by the Company:
(i) Anything in this Agreement to the contrary notwithstanding, if
it is determined (as hereafter provided) that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of Diamond Shamrock, Inc. or the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. No Gross-Up Payment will be made with respect to the
Excise Tax, if any, attributable to (a) any incentive
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stock option, as defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement (unless a comparable Gross-Up Payment has
theretofore been made available with respect to such option), or (b) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (a).
(ii) Subject to the provisions of Section 7(vi) hereof, all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by a nationally recognized firm of certified public accountants
(the "Accounting Firm") selected by the Executive in his sole discretion. The
Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within 15
calendar days after the Termination Date, if applicable, and any other such time
or times as may be requested by the Company or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the Company
will pay the required Gross-Up Payment to the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it will, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his federal,
state, local income or other tax return. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code (or any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of
any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to pursue its remedies pursuant
to Section 7(vi) hereof and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive will direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the
Executive as promptly as possible. Any such Underpayment will be promptly paid
by the Company to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations.
(iii) The Company and the Executive will each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm
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in connection with the preparation and issuance of the determination
contemplated by Section 7(ii) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his federal income tax return as filed
with the Internal Revenue Service and corresponding state and local tax returns,
if relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of the Executive's federal income tax return, or corresponding
state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Executive will within
five business days pay to the Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Sections 7(ii) and (iv) hereof will be borne by the Company. If such fees and
expenses are initially paid by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(vi) The Executive will notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification will be given as
promptly as practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive will further apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the Executive). The
Executive will not pay such claim prior to the earlier of (a) the expiration of
the 30-calendar-day period following the date on which he gives such notice to
the Company and (b) the date that any payment of amount with respect to such
claim is due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
will:
(1) provide the Company with any written records or documents
in his possession relating to such claim reasonably requested by the
Company;
(2) take such action in connection with contesting such claim
as the Company will reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such
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claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(3) cooperate with the Company in good faith in order
effectively to contest such claim; and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 7(vi), the Company will control all proceedings taken in connection with
the contest of any claim contemplated by this Section 7(vi) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company will determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company will advance the amount of such payment to the Executive on an
interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(vii) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(vi) hereof, the Executive receives
any refund with respect to such claim, the Executive will (subject to the
Company's complying with the requirements of Section 7(vi) hereof) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company
13
pursuant to Section 7(vi) hereof, a determination is made that the Executive
will not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after such determination,
then such advance will be forgiven and will not be required to be repaid and the
amount of such advance will offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid pursuant to this Section 7.
8. Mitigation and Offset. The Executive is under no obligation to mitigate
damages or the amount of any payment or benefit provided for hereunder by
seeking other employment or otherwise; provided, however, that the Executive's
coverage under the Company's welfare benefit plans will be reduced to the extent
that the Executive becomes covered under any comparable employee benefit plan
made available by another employer and covering the same type of benefits. The
Executive will report to the Company any such benefits actually received by him.
9. Competition; Confidentiality; Nonsolicitation
9.1 (i) Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that during the Term and for one year following the Term he will not,
without the prior written consent of the Company, engage in Competition (as
defined below) with the Company. For purposes of this Agreement, if the
Executive takes any of the following actions he will be engaged in
"Competition": engaging in or carrying on, directly or indirectly, any
enterprise, whether as an advisor, principal, agent, partner, officer, director,
employee, stockholder, associate or consultant to any person, partnership,
corporation or any other business entity, that is principally engaged in the
business of refining and/or marketing oil or related products in States or
Provinces in which the Company (or any division or segment thereof) has
operations; provided, however, that "Competition" will not include (a) the mere
ownership of securities in any enterprise and exercise of rights appurtenant
thereto or (b) participation in management of any enterprise or business
operation thereof other than in connection with the competitive operation of
such enterprise.
(ii) Subject to Section 6.1(ii), the Executive hereby
covenants and agrees that during the Term and for three years following the Term
he will not assist a third party in preparing or making an unsolicited bid for
the Company, engaging in a proxy contest with the Company, or engaging in any
other similar activity.
9.2 During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 9.2) to the extent necessary for Executive to carry out his obligations
under this Agreement. Subject to Section 6.1(ii), the Executive hereby covenants
and
14
agrees that he will not, without the prior written consent of the Company,
during the Term or thereafter disclose to any person not employed by the
Company, or use in connection with engaging in Competition with the Company, any
confidential or proprietary information of the Company. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available or generally known to persons engaged in businesses
similar or related to those of the Company. Confidential information will
include, without limitation, the Company's financial matters, customers,
employees, industry contracts, and all other secrets and all other information
of a confidential or proprietary nature. The foregoing obligations imposed by
this Section 9.2 will cease if such confidential or proprietary information will
have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure (after giving the Company
notice and an opportunity to contest such requirement).
9.3 Subject to Section 6.1(ii), the Executive hereby covenants and
agrees that during the Term and for one year thereafter he will not attempt to
influence, persuade or induce, or assist any other person in so persuading or
inducing, any employee of the Company to give up, or to not commence, employment
or a business relationship with the Company.
9.4 Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his post-termination obligations
under Sections 9.1, 9.2 and 9.3 would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of any such
provision of this Agreement, the Company will be entitled to immediate
injunctive relief and may obtain a temporary order restraining any threatened
or further breach, without the necessity of proof of actual damage.
10. Post-termination Assistance. Subject to Section 6.1(ii), the Executive
agrees that after his employment with the Company has terminated he will
provide, upon reasonable notice, such information and assistance to the Company
as may reasonably be requested by the Company in connection with any audit,
governmental investigation or litigation in which it or any of its affiliates is
or may become a party; provided, however, that (i) the Company agrees to
reimburse the Executive for any related out-of-pocket expenses, including travel
expenses, and to pay the Executive reasonable compensation for his time based on
his rate of annual salary at the time of termination and (ii) any such
assistance may not unreasonably interfere with the then-current employment of
the Executive.
15
11. Survival. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Executive's covenants contained in Sections
9.1, 9.2, 9.3 and 10 and the Company's obligations under Sections 5, 7 and 12.1
will survive the expiration or termination of Executive's employment.
12. Miscellaneous Provisions.
12.1 Legal Fees and Expenses. Without regard to whether the
Executive prevails, in whole or in part, in connection therewith, the Company
will pay and be financially responsible for 100% of any and all attorneys' and
related fees and expenses incurred by the Executive in connection with any
dispute associated with the interpretation, enforcement or defense of the
Executive's rights under this Agreement by litigation or otherwise; provided
that, in regard to such dispute, the Executive has not acted in bad faith or
with no colorable claim of success. All such fees and expenses will be paid by
the Company as incurred by the Executive on a monthly basis upon an undertaking
by the Executive to repay such advanced amounts if a court determines, in a
decision against which no appeal may be taken or with respect to which the time
period to appeal has expired, that he acted in bad faith or with no colorable
claim of success.
12.2 Binding on Successors. This Agreement will be binding upon and
inure to the benefit of the Company, the Executive and each of their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
12.3 Governing Law. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.
12.4 Severability. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
12.5 Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents,
16
requests or approvals, required or permitted to be given hereunder will be in
writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or
three business days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS, or Purolator, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive offices and to the Executive at his principal residence, or to such
other address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address will be effective
only upon receipt.
(i) To The Company. If to the Company, addressed to the
attention of General Counsel at 0000 Xxxxxxxxx Xxxxxxxxx; Xxx Xxxxxxx, Xxxxx
00000.
(ii) To the Executive. If to the Executive, to him in care of
the Company at the above address.
12.6 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.7 Entire Agreement. The terms of this Agreement are intended by
the parties to be the final expression of their agreement with respect to the
Executive's employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.
12.8 Amendments: Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, approved by the
Company and signed by the Executive and the Company. Failure on the part of
either party to complain of any action or omission, breach or default on the
part of the other party, no matter how long the same may continue, will never be
deemed to be a waiver of any rights or remedies hereunder, at law or in equity.
The Executive or the Company may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such
waiver will not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.
12.9 No Inconsistent Actions. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential
17
intent of this Agreement. Furthermore, it is the intent of the parties hereto to
act in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
12.10 Headings and Section References. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
13. Effectiveness. Prior Agreement and Consent. This Agreement will become
effective upon, and the Prior Agreement will terminate immediately prior to, the
Effective Date, whereupon all references to the "Company" herein will be treated
as references to Ultramar Corporation. By executing this Agreement, Executive
hereby consents to the assumption of this Agreement by Ultramar Corporation upon
the Effective Date. Notwithstanding any other provision of this Agreement, if
the Merger Agreement is terminated prior to the Effective Date, this Agreement
will have no further force or effect, and the Prior Agreement will continue in
effect as though this Agreement had not been entered into.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written but effective as provided in Section 13.
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
DIAMOND SHAMROCK, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxxxx
Chief Executive Officer and
President
18
Exhibit
GENERAL RELEASE OF ALL CLAIMS
This General Release of all Claims (this "Agreement") is entered into by
and between ______________ ("Executive") and Ultramar Diamond Shamrock
Corporation (including its subsidiaries) (collectively the "Company") effective
as of _______________________.
In consideration of the promises set forth in the employment agreement
between Executive and the Company, dated ____________ 1996, as amended as of the
effective date hereof (the "Employment Agreement"), as well as any promises set
forth in this Agreement, Executive and the Company agree as follows:
(1) Employment Agreement Entitlements
The Company will provide Executive the post-termination payments and
benefits to which he is entitled under the Employment Agreement.
(2) Return of Property
All Company files, access keys, desk keys, ID badges and credit cards, and
such other property of the Company as the Company may reasonably request,
in Executive's possession must be returned no later than the date of
Executive's termination from the Company (the "Termination Date").
(3) General Release and Waiver of Claims
Except as provided in the last sentence of this paragraph (3), Executive
hereby unconditionally and forever releases, discharges and waives any and
all claims of any nature whatsoever, whether legal, equitable or
otherwise, which Executive may have against the Company arising at any
time on or before the Termination Date, other than with respect to the
obligations of the Company to the Executive under the Employment
Agreement. This release of claims extends to any and all claims of any
nature whatsoever, other than with respect to the obligations of the
Company to the Executive under the Employment Agreement, whether known,
unknown or capable or incapable of being known as of the Termination Date
of thereafter. This Agreement is a release of all claims of any nature
whatsoever by Executive against the Company, other than with respect to
the obligations of the Company to the Executive under the Employment
Agreement, and includes, other than as herein provided, any and all
claims, demands, causes of action, liabilities whether known or unknown
including those caused by, arising from or related to Executive's
employment relationship with the Company
19
including, but without limitation, any and all alleged discrimination or
acts of discrimination which occurred or may have occurred on or before
the Termination Date based upon race, color, sex, creed, national origin,
age, disability or any other violation of any Equal Employment Opportunity
Law, ordinance, rule, regulation or order, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act, as amended (as
further described in Section 7 below); the Americans with Disabilities
Act; claims under the Employee Retirement Income Security Act ("ERISA");
or any other federal, state or local laws or regulations regarding
employment discrimination or termination of employment. This also includes
claims for wrongful discharge, fraud, or misrepresentation under any
statute, rule, regulation or under the common law.
The Executive agrees and understands and knowingly agrees to this release
because it is his intent in executing this Agreement to forever discharge
the Company from any and all present, future, foreseen or unforeseen
causes of action except for the obligations of the Company set forth in
the Employment Agreement.
Notwithstanding the foregoing, Executive does not release, discharge or
waive any rights to indemnification that he may have under the By-Laws of
the Company, the laws of the State of Delaware, any indemnification
agreement between the Executive and the Company or any insurance coverage
maintained by or on behalf of the Company.
(4) Release and Waiver of Claims Under the Age Discrimination in Employment
Act
Executive acknowledges that the Company encouraged him to consult with an
attorney of his choosing, and through this Agreement encourages him to
consult with his attorney with respect to possible claims under the Age
Discrimination in Employment Act of 1967, as amended ("ADEA") and that
Executive acknowledges that he understands that the ADEA is a federal
statute that prohibits discrimination, on the basis of age, in employment,
benefits, and benefit plans. Executive wishes to waive any and all claims
under the ADEA that he may have, as of the Termination Date, against the
Company, its shareholders, employees, or successors and hereby waives such
claims. Executive further understands that by signing this Agreement he is
in fact waiving, releasing and forever giving up any claim under the ADEA
that may have existed on or prior to the Termination Date. Executive
acknowledges that the Company has informed him that he has at his option,
twenty-one (21) days in which to sign the waiver of this claim under ADEA,
and he does hereby knowingly and voluntarily waive said twenty-one (21)
day
20
period. Executive also understands that he has seven (7) days following
the Termination Date within which to revoke the release contained in this
paragraph by providing a written notice of his revocation of the release
and waiver contained in this paragraph to the Company. Executive further
understands that this right to revoke the release contained in this
paragraph relates only to this paragraph and does not act as a revocation
of any other term of this Agreement.
(5) Proceedings
Executive has not filed, and agrees not to initiate or cause to be
initiated on his behalf, any complaint, charge, claim or proceeding
against the Company before any local, state or federal agency, court or
other body relating to his employment or the termination of his employment
(each -individually, a "Proceeding"), and agrees not to voluntarily
participate in any Proceeding. Executive waives any right he may have to
benefit in any manner from any relief (whether monetary or otherwise)
arising out of any Proceeding.
(6) Remedies
In the event Executive initiates or voluntarily participates in any
Proceeding, or if he fails to abide by any of the terms of this Agreement
or his post-termination obligations contained in the Employment Agreement,
or if he revokes the ADEA release contained in Paragraph 4 of this
Agreement within the seven-day period provided under Paragraph 4, the
Company may, in addition to any other remedies it may have, reclaim any
amounts paid to him under the termination provisions of the Employment
Agreement or terminate any benefits or payments that are subsequently due
under the Employment Agreement, without waiving the release granted
herein. Executive acknowledges and agrees that the remedy at law available
to the Company for breach of any of his post-termination obligations under
the Employment Agreement or his obligations under Paragraphs 3, 4, and 5
of this Agreement would be inadequate and that damages flowing from such a
breach may not readily be susceptible to being measured in monetary terms.
Accordingly, Executive acknowledges, consents and agrees that, in addition
to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of
any such provision of this Agreement, the Company shall be entitled to
immediate injunctive relief and may obtain a temporary order restraining
any threatened or further breach, without the necessity of proof of actual
damage.
Executive understands that by entering into this Agreement he will be
limiting the availability of certain remedies
21
that he may have against the Company and limiting also his ability to
pursue certain claims against the Company.
(7) Severability Clause
In the event any provision or part of this Agreement is found to be
invalid or unenforceable, only that particular provision or part so found,
and not the entire agreement, will be inoperative.
(8) Non-Admission
Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company.
(9) Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, applicable to agreements made and to be
performed in that State; and the parties agree to the jurisdiction of the
U.S. District Court for the District of Delaware, and agree to appear in
any action in such courts by service of process by certified mail, return
receipt requested, at the following addresses:
To Company: ULTRAMAR DIAMOND SHAMROCK CORPORATION
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
and
To Executive:
------------------------------------
------------------------------------
------------------------------------
THE EXECUTIVE ACKNOWLEDGES TEAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY
KNOWS, UNDERSTANDS, AND APPRECIATES ITS CONTENTS, AND THAT HE HEREBY EXECUTES
THE SALE AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS PROVIDED FOR
HEREIN VOLUNTARILY AND OF HIS OWN FREE WILL.
22
IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the
date first set forth above.
-----------------------------------
Xxxxxxx X. Xxxxxx
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
a Delaware corporation
By:
------------------------------
Name:
-------------------------
Title:
------------------------
23
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 23,
1996, but effective as provided herein, is made and entered into by and between
Diamond Shamrock, Inc., a Delaware corporation (the "Company" or "Diamond
Shamrock, Inc.", as the context requires), and Xxxxxxx X. Xxxxxxxxx (the
"Executive").
WHEREAS, the Executive has been serving as a senior executive
officer of Diamond Shamrock, Inc.;
WHEREAS, the Executive is a party to an Employment Agreement with
Diamond Shamrock, Inc., dated as of February 6, 1996 (the "Prior Agreement");
WHEREAS, pursuant to the Agreement and Plan of Merger between
Ultramar Corporation, a Delaware corporation ("Ultramar Corporation") and
Diamond Shamrock, Inc., dated as of September 22, 1996 (the "Merger Agreement"),
as of the effective time of the Merger (the "Effective Date"), Diamond Shamrock,
Inc. will be merged with and into Ultramar Corporation, with Ultramar
Corporation as the surviving entity (the "Merger");
WHEREAS, pursuant to the Merger Agreement, the Company is authorized
to enter into this Agreement with Executive;
WHEREAS, the Company considers it in the best interests of its
stockholders to xxxxxx the continuous employment of certain key management
personnel;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
herein) exists;
WHEREAS, the Company wishes to assure itself of both present and
future continuation of management in light of the Merger and in the event of a
Change in Control subsequent to the Merger;
WHEREAS, the Company wishes to employ the Executive and the
Executive is willing to render services, both on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
1. Employment.
1.1 The Company hereby agrees to employ the Executive and the
Executive hereby agrees to undertake employment with the Company upon the terms
and conditions herein set forth.
1.2 Employment will be for a term commencing on the Effective Date
and, subject to earlier expiration upon the Executive's termination under
Section 5, expiring three years from the Effective Date (the "Term").
Notwithstanding the previous sentence, this Agreement and the employment of the
Executive will be automatically renewed and the Term extended, subject to
Section 5, for successive one-year periods upon the terms and conditions set
forth herein, commencing on the third anniversary of the date of this Agreement,
and on each anniversary date thereafter, unless either party to this Agreement
gives the other party written notice (in accordance with Section 12.5) of such
party's intention to terminate this Agreement at least three months prior to the
end of such initial or extended term. For purposes of this Agreement, any
reference to the "Term" of this Agreement will include the original term and any
extension thereof.
2. Position and Duties.
2.1 Position and Duties. During the Term, the Executive will serve
as Executive Vice President and Chief Administrative Officer of the Company and
will have such duties, functions, responsibilities and authority as are (i)
consistent with the Executive's position as Executive Vice President and Chief
Administrative Officer of the Company; or (ii) assigned to his office in the
Company's bylaws; or (iii) reasonably assigned to him by the Company's Board of
Directors (the "Board").
2.2 Commitment. During the Term, the Executive will be the Company's
full-time employee and, except as may otherwise be approved in advance in
writing by the Board, and except during vacation periods and reasonable periods
of absence due to sickness, personal injury or other disability, the Executive
will devote substantially all of his business time and attention to the
performance of his duties to the Company.
3. Place of Performance. In connection with his employment during the
Term, unless otherwise agreed by the Executive, the Executive will be based at
the Company's principal executive offices. The Executive will undertake normal
business travel on behalf of the Company.
4. Compensation and Related Matters.
4.1 Compensation and Benefits.
(i) Annual Base Salary. During the Term of this Agreement, the
Company will pay to the Executive an annual base
2
salary of not less than $335,000, which annual base salary may be modified from
time to time by the Board (or the Compensation Committee thereof) in its sole
discretion, payable at the times and in the manner consistent with the Company's
general policies regarding compensation of executive employees. The Board may
from time to time authorize such additional compensation to the Executive, in
cash or in property, as the Board may determine in its sole discretion to be
appropriate.
(ii) Annual Incentive Compensation. If the Board (or the
Compensation Committee thereof) authorizes any cash incentive compensation or
approves any other management incentive program or arrangement, the Executive
will be eligible to participate in such plan, program or arrangement under the
general terms and conditions applicable to executive and management employees;
provided, however, that so long as the Executive remains employed by the Company
at the end of the applicable fiscal year, (a) the annual cash incentive
compensation paid by the Company to the Executive for the Company's fiscal year
that includes the Effective Date, aggregated with any other annual incentive
compensation earned by the Executive for calendar year 1996, will be in an
amount not less than the greater of (1) 40% of the Executive's highest annual
base salary rate during the fiscal year to which such incentive compensation
relates, and (2) the Executive's actual annual incentive compensation earned
during such fiscal year, as determined by the Company's Board (or the
Compensation Committee thereof), and (b) the cash incentive compensation paid to
the Executive for the Company's next succeeding fiscal year will be in an amount
not less than the greater of (1) 40% of the Executive's highest annual base
salary rate during the fiscal year to which such incentive compensation relates,
and (2) the Executive's actual annual incentive compensation during such fiscal
year, as determined by the Board (or the Compensation Committee thereof). Except
as set forth in the proviso to the preceding sentence, nothing in this Section
4.1(ii) will guarantee to the Executive any specific amount of incentive
compensation, or prevent the Board (or the Compensation Committee thereof) from
establishing performance goals and compensation targets applicable only to the
Executive.
4.2 Executive Benefits. In addition to the compensation described in
Section 4.1, the Company will make available to the Executive and his eligible
dependents, subject to the terms and conditions of the applicable plans,
including without limitation the eligibility rules, participation in all
Company-sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health,
3
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), expense reimbursement or other employee benefit
policies, plans, programs or arrangements or any equivalent successor policies,
plans, programs or arrangements that may now exist or be adopted hereafter by
the Company.
4.3 Expenses. The Company will promptly reimburse the Executive for
all travel and other business expenses the Executive incurs in order to perform
his duties to the Company under this Agreement in a manner commensurate with the
Executive's position and level of responsibility with the Company, and in
accordance with the Company's policy regarding substantiation of expenses.
5. Termination. Notwithstanding the Term specified in Section 1.2, the
termination of the Executive's employment hereunder will be governed by the
following provisions:
5.1 Death. In the event of the Executive's death during the Term,
the Company will pay to the Executive's beneficiaries or estate, as appropriate,
promptly after the Executive's death, (i) the unpaid annual base salary to which
the Executive is entitled, pursuant to Section 4.1, through the date of the
Executive's death, and (ii) for any accrued but unused vacation days, to the
extent and in the amounts, if any, provided under the Company's usual policies
and arrangements. This Section 5.1 will not limit the entitlement of the
Executive's estate or beneficiaries to any death or other benefits then
available to the Executive under any life insurance, stock ownership, stock
options, or other benefit plan or policy that is maintained by the Company for
the Executive's benefit.
5.2 Disability.
(i) If the Company determines in good faith that the Executive
has incurred a Disability (as defined below) during the Term, the Company may
give the Executive written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company will
terminate effective on the 30th day after receipt of such notice by the
Executive, provided that within the 30 days after such receipt, the Executive
will not have returned to full-time performance of his duties. The Executive
will continue to receive his annual base salary and benefits until the date of
termination. In the event of the Executive's Disability, the Company will pay
the Executive, promptly after the Executive's termination, (a) the unpaid annual
base salary to which he is entitled, pursuant to Section 4.1, through the date
of the Executive's termination, (b) for any accrued but unused vacation days, to
the extent and in the amounts, if any, provided under the Company's usual
policies and arrangements, and (c) a lump sum in cash in an amount equal to 50%
of his annual base salary at the time of termination. This Section 5.2 will not
limit the entitlement of
4
the Executive, the Executive's estate or beneficiaries to any disability or
other benefits then available to the Executive under any disability insurance or
other benefit plan or policy that is maintained by the Company for the
Executive's benefit.
(ii) For purposes of this Agreement, "Disability" will mean
the Executive's incapacity due to physical or mental illness substantially to
perform his duties on a full-time basis for six consecutive months and within 30
days after a notice of termination is thereafter given by the Company the
Executive will not have returned to the full-time performance of the Executive's
duties; provided, however, if the Executive disagrees with a determination to
terminate him because of Disability, the question of the Executive's disability
will be subject to the certification of a qualified medical doctor agreed to by
the Company and the Executive or, in the event of the Executive's incapacity to
designate a doctor, the Executive's legal representative. In the absence of
agreement between the Company and the Executive, each party will nominate a
qualified medical doctor and the two doctors will select a third doctor, who
will make the determination as to Disability. In order to facilitate such
determination, the Executive will, as reasonably requested by the Company, (a)
make himself available for medical examinations by a doctor in accordance with
this Section 5.2(ii), and (b) grant the Company and any such doctor access to
all relevant medical information concerning him, arrange to furnish copies of
medical records to such doctor and use his best efforts to cause his own doctor
to be available to discuss his health with such doctor.
5.3 Cause.
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below). In the event of the Executive's
termination for Cause, the Company will promptly pay to the Executive (or his
representative) the unpaid annual base salary to which he is entitled, pursuant
to Section 4.1, through the date the Executive is terminated and the Executive
will be entitled to no other compensation, except as otherwise due to him under
applicable law.
(ii) For purposes of this Agreement, the Company will have
"Cause" to terminate the Executive's employment hereunder upon a finding by the
Board that (a) the Executive committed an illegal act or acts that were intended
to and did defraud the Company, (b) the Executive engaged in gross negligence or
gross misconduct against the Company or another employee, or in carrying out his
duties and responsibilities, or (c) the Executive materially breached any of the
express covenants set forth in Section 9.1, 9.2 or 9.3. The Company will not
have Cause unless and until the Company provides the Executive with written
notice that the Company intends to terminate his employment for Cause. Such
written notice will specify the particular act or acts, or failure to act, that
is or
5
are the basis for the decision to so terminate the Executive's employment for
Cause. The Employee will be given the opportunity within 30 calendar days of the
receipt of such notice to meet with the Board to defend such act or acts, or
failure to act. The Executive's employment by the Company automatically will be
terminated under this Section 5.3 for Cause as of the receipt of the written
notice from the Company or, if later, the date specified in such notice. A
notice given under this Section 5.3 must set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment for Cause, and if the termination date is other than the
date of receipt of such notice, specify the date on which the Executive's
employment is to be terminated (which date will not be earlier than the date on
which such notice is given in accordance with Section 13.5). Such notice must be
given no later than 180 business days after a director of the Company (excluding
the Executive, if applicable) first has actual knowledge of the events
justifying the purported termination.
5.4 Termination.
(i) Involuntary Termination. The Executive's employment
hereunder may be terminated by the Company for any reason by written notice as
provided in Section 12.5. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated by the Company other than for
Cause if the Executive terminates his employment with the Company for any of the
following reasons (each, a "Good Reason"): without the Executive's written
consent, (a) the Company has breached any material provision of this Agreement
and within 30 days after notice thereof from the Executive, the Company fails to
cure such breach; (b) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company fails to assume liability under the
Agreement; (c) at any time after the Company has notified the Executive pursuant
to Section 1.2 that the Company does not intend to renew the Agreement and the
Executive's employment at the end of the Term (including any previous renewals)
(rather than to allow the Agreement automatically to renew); (d) a material
reduction in the aggregate benefits described by Section 4.2 (other than
stock-based compensation) provided to the Executive, unless such decrease is
required by law or is applicable to all employees of the Company eligible to
participate in any employee benefit arrangement affected by such reduction; (e)
a significant reduction in the Executive's duties or the addition of duties,
which in either case are materially inconsistent with the Executive's title or
position; or (f) a reduction in the Executive's annual base salary.
(ii) Voluntary Termination. The Executive may voluntarily
terminate the Agreement at any time by notice to the Company as provided in
Section 12.5. The Executive's death or Disability (as defined in Section
5.2(ii)) during the term of the
6
Agreement will constitute a voluntary termination of employment for purposes of
eligibility for termination payments and benefits as provided in Section 5.5,
but for no other purpose.
5.5 Termination Payments and Benefits.
(i) Form and Amount. Upon the Executive's involuntary
termination, other than for Cause, (a) subject to Section 5.5(iii), the Company
will pay or provide to the Executive (1) his annual base salary and benefits
until the date of termination, (2) within five business days after termination
of his employment, a lump sum cash payment equal in amount to three times the
sum of (x) the Executive's highest annual base salary in effect during the three
years prior to his date of termination, and (y) the highest annual incentive
compensation earned by the Executive during the same three-year period, (3)
three additional years of age and service credit under the qualified and
nonqualified defined benefit retirement plans of the Company in which the
Executive participates at the time of termination; provided, however, that in
the case of a qualified defined benefit pension plan, the present value of the
additional benefit the Executive would have accrued if he had been credited for
all purposes with the additional years of age and service under such plan as of
the Executive's date of termination with the Company will be paid in a lump sum
in cash within five business days after termination of the Executive's
employment, and (4) for a period of one year after termination of his
employment, the continuation of the employee welfare benefits set forth in
Section 4.2 except as offset by benefits paid by other sources as set forth in
Section 8, or as prohibited by law or as a condition of maintaining the
tax-favored status of any such benefits to the Company or its employees; (b) the
Executive's benefit under the applicable supplemental executive retirement plan
will be not less than the benefit the Executive would have received under the
terms of the corresponding plan (including any individual modifications thereof)
applicable to the Executive as in effect immediately prior to the Effective Date
determined as if the Executive had continued employment under the terms of such
corresponding plan (and modifications) until his actual termination of
employment. For purposes of Section 5.5(i)(a)(2), the three-year period will
include employment with Diamond Shamrock, Inc. or any of its affiliates.
(ii) Maintenance of Benefits. During the period set forth in
Section 5.5(i)(a)(4), the Company will use its best efforts to maintain in full
force and effect for the continued benefit of the Executive all referenced
benefits or will arrange to make available to the Executive benefits
substantially similar to those that the Executive would otherwise have been
entitled to receive if his employment had not been terminated. Such benefits
will be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to his termination.
7
(iii) Release. No benefit will be paid or made available under
Section 5.5(i)(a) unless the Executive first executes a release in the form
attached as an exhibit to this Agreement, and (b) to the extent any portion of
such release is subject to the seven-day revocation period prescribed by the Age
Discrimination in Employment Act of 1967, as amended, or to any similar
revocation period in effect on the date of termination of Executive's
employment, such revocation period has expired.
6. Change in Control Provisions.
6.1 Impact of Change in Control. In the event of a "Change in
Control" of the Company, as defined in Section 6.2, (i) the Company will cause
all cash benefits due under this Agreement to be secured by an irrevocable trust
for the benefit of the Executive, the assets of which will be subject to the
claims of the Company's creditors, and will transfer to such trust cash and
other property adequate to satisfy all of the expenses of the trust for at least
five years after the Change in Control and any of the Company's actual and
potential cash obligations under this Agreement, (ii) if the Executive's
employment is involuntarily terminated without Cause after the Change in
Control, (A) the covenants of Sections 9.1 and 10 will be inapplicable to the
Executive, and (B) the covenant of Section 9.2 will expire on the third
anniversary of the date of termination of the Executive's employment, and (iii)
the definition of Good Reason, as set forth in Section 5.4(i) above, will be
expanded to include the following:
(a) A good faith determination by the Executive that, as a
result of the Change in Control and a change in circumstances thereafter
significantly affecting his positions, including a change in the scope of
business or other activities for which he was responsible, he has been rendered
substantially unable to carry out, has been substantially hindered in the
performance of, or has suffered a substantial reduction in, any of the
authorities, powers, functions, responsibilities or duties attached to any of
the Executive's positions; the Executive's determination will be presumed to
have been made in good faith unless otherwise shown by the Company by clear and
convincing evidence;
(b) The relocation of the Company's principal executive
offices (but only if, immediately prior to the Change in Control, the
Executive's principal place of employment was at the Company's principal
executive offices), or requirement that the Executive have as his principal
location of work any location that is, in excess of 50 miles from the location
thereof immediately preceding the Change in Control or to travel away from his
home or office significantly more often that required immediately prior to the
Change in Control; or
8
(c) For any reason, or without reason, during the 30-day
period immediately following the first anniversary of the first occurrence of a
Change in Control.
6.2 Definition of Change in Control. For purposes of this Agreement,
a "Change in Control" will be deemed to occur if at any time during the term of
the Agreement any of the following events will occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization, less than 50% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal person,
and as a result of such sale or transfer, less than 50% of the combined voting
power of the then-outstanding voting securities of such corporation or person
are held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;
(iii) There is a report filed on Schedule 13D or Schedule
14D-l (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing that any
person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 20% or more of
the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of Directors of the Company ("Voting
Stock");
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during the period of two consecutive years individuals
who at the beginning of any such period constitute the Directors of the Company
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's shareholders, of each
Director of the Company first elected during such period was approved by a vote
of at least two-thirds of the Directors of the
9
Company then still in office who were Directors of the Company at the beginning
of any such period (excluding for this purpose the election of any new Director
in connection with an actual or threatened election or proxy contest).
Notwithstanding the foregoing provisions of Section 6.2(iii) or (iv) hereof,
unless otherwise determined in a specific case by majority vote of the Board (or
the Compensation Committee thereof), a "Change in Control" will not be deemed to
have occurred for purposes of this Agreement solely because the Company, an
entity in which the Company directly or beneficially owns 50% or more of the
voting securities of such entity, any Company-sponsored employee stock ownership
plan or any other employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-l, Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of voting securities of the Company, whether in excess
of 20% or otherwise, or because the Company reports that a change in control of
the Company has or may have occurred or will or may occur in the future by
reason of such beneficial ownership. Notwithstanding the foregoing provisions of
Section 6.2, the Merger will not constitute a Change in Control.
7. Certain Additional Payments by the Company:
(i) Anything in this Agreement to the contrary
notwithstanding, if it is determined (as hereafter provided) that any payment or
distribution by the Company to or for the benefit of the Executive, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option,
stock appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of Diamond Shamrock, Inc. or the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. No Gross-Up Payment will be made with respect to the
Excise Tax, if any, attributable to (a) any incentive
10
stock option, as defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement (unless a comparable Gross-Up Payment has
theretofore been made available with respect to such option), or (b) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (a).
(ii) Subject to the provisions of Section 7(vi) hereof, all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by a nationally recognized firm of certified public accountants
(the "Accounting Firm") selected by the Executive in his sole discretion. The
Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within 15
calendar days after the Termination Date, if applicable, and any other such time
or times as may be requested by the Company or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the Company
will pay the required Gross-Up Payment to the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it will, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his federal,
state, local income or other tax return. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code (or any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of
any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to pursue its remedies pursuant
to Section 7(vi) hereof and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive will direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the
Executive as promptly as possible. Any such Underpayment will be promptly paid
by the Company to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations.
(iii) The Company and the Executive will each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm
11
in connection with the preparation and issuance of the determination
contemplated by Section 7(ii) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his federal income tax return as filed
with the Internal Revenue Service and corresponding state and local tax returns,
if relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of the Executive's federal income tax return, or corresponding
state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Executive will within five
business days pay to the Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Sections 7(ii) and (iv) hereof will be borne by the Company. If such fees and
expenses are initially paid by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(vi) The Executive will notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification will be given as
promptly as practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive will further apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the Executive). The
Executive will not pay such claim prior to the earlier of (a) the expiration of
the 30-calendar-day period following the date on which he gives such notice to
the Company and (b) the date that any payment of amount with respect to such
claim is due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
will:
(1) provide the Company with any written records or documents
in his possession relating to such claim reasonably requested by the
Company;
(2) take such action in connection with contesting such claim
as the Company will reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such
12
claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(3) cooperate with the Company in good faith in order
effectively to contest such claim; and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 7(vi), the Company will control all proceedings taken in connection with
the contest of any claim contemplated by this Section 7(vi) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company will determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company will advance the amount of such payment to the Executive on an
interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(vii) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(vi) hereof, the Executive receives
any refund with respect to such claim, the Executive will (subject to the
Company's complying with the requirements of Section 7(vi) hereof) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company
13
pursuant to Section 7(vi) hereof, a determination is made that the Executive
will not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after such determination,
then such advance will be forgiven and will not be required to be repaid and the
amount of such advance will offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid pursuant to this Section 7.
8. Mitigation and Offset. The Executive is under no obligation to mitigate
damages or the amount of any payment or benefit provided for hereunder by
seeking other employment or otherwise; provided, however, that the Executive's
coverage under the Company's welfare benefit plans will be reduced to the extent
that the Executive becomes covered under any comparable employee benefit plan
made available by another employer and covering the same type of benefits. The
Executive will report to the Company any such benefits actually received by him.
9. Competition; Confidentiality; Nonsolicitation
9.1 (i) Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that during the Term and for one year following the Term he will not,
without the prior written consent of the Company, engage in Competition (as
defined below) with the Company. For purposes of this Agreement, if the
Executive takes any of the following actions he will be engaged in
"Competition": engaging in or carrying on, directly or indirectly, any
enterprise, whether as an advisor, principal, agent, partner, officer, director,
employee, stockholder, associate or consultant to any person, partnership,
corporation or any other business entity, that is principally engaged in the
business of refining and/or marketing oil or related products in States or
Provinces in which the Company (or any division or segment thereof) has
operations; provided, however, that "Competition" will not include (a) the mere
ownership of securities in any enterprise and exercise of rights appurtenant
thereto or (b) participation in management of any enterprise or business
operation thereof other than in connection with the competitive operation of
such enterprise.
(ii) Subject to Section 6.1(ii), the Executive hereby
covenants and agrees that during the Term and for three years following the Term
he will not assist a third party in preparing or making an unsolicited bid for
the Company, engaging in a proxy contest with the Company, or engaging in any
other similar activity.
9.2 During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 9.2) to the extent necessary for Executive to carry out his obligations
under this Agreement. Subject to Section 6.1(ii), the Executive hereby covenants
and
14
agrees that he will not, without the prior written consent of the Company,
during the Term or thereafter disclose to any person not employed by the
Company, or use in connection with engaging in Competition with the Company, any
confidential or proprietary information of the Company. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available or generally known to persons engaged in businesses
similar or related to those of the Company. Confidential information will
include, without limitation, the Company's financial matters, customers,
employees, industry contracts, and all other secrets and all other information
of a confidential or proprietary nature. The foregoing obligations imposed by
this Section 9.2 will cease if such confidential or proprietary information will
have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure (after giving the Company
notice and an opportunity to contest such requirement).
9.3 Subject to Section 6.1(ii), the Executive hereby covenants and
agrees that during the Term and for one year thereafter he will not attempt to
influence, persuade or induce, or assist any other person in so persuading or
inducing, any employee of the Company to give up, or to not commence, employment
or a business relationship with the Company.
9.4 Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his post-termination obligations
under Sections 9.1, 9.2 and 9.3 would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of any
such provision of this Agreement, the Company will be entitled to immediate
injunctive relief and may obtain a temporary order restraining any threatened or
further breach, without the necessity of proof of actual damage.
10. Post-termination Assistance. Subject to Section 6.1(ii), the Executive
agrees that after his employment with the Company has terminated he will
provide, upon reasonable notice, such information and assistance to the Company
as may reasonably be requested by the Company in connection with any audit,
governmental investigation or litigation in which it or any of its affiliates is
or may become a party; provided, however, that (i) the Company agrees to
reimburse the Executive for any related out-of-pocket expenses, including travel
expenses, and to pay the Executive reasonable compensation for his time based on
his rate of annual salary at the time of termination and (ii) any such
assistance may not unreasonably interfere with the then-current employment of
the Executive.
15
11. Survival. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Executive's covenants contained in Sections
9.1, 9.2, 9.3 and 10 and the Company's obligations under Sections 5, 7 and 12.1
will survive the expiration or termination of Executive's employment.
12. Miscellaneous Provisions.
12.1 Legal Fees and Expenses. Without regard to whether the
Executive prevails, in whole or in part, in connection therewith, the Company
will pay and be financially responsible for 100% of any and all attorneys' and
related fees and expenses incurred by the Executive in connection with any
dispute associated with the interpretation, enforcement or defense of the
Executive's rights under this Agreement by litigation or otherwise; provided
that, in regard to such dispute, the Executive has not acted in bad faith or
with no colorable claim of success. All such fees and expenses will be paid by
the Company as incurred by the Executive on a monthly basis upon an undertaking
by the Executive to repay such advanced amounts if a court determines, in a
decision against which no appeal may be taken or with respect to which the time
period to appeal has expired, that he acted in bad faith or with no colorable
claim of success.
12.2 Binding on Successors. This Agreement will be binding upon and
inure to the benefit of the Company, the Executive and each of their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
12.3 Governing Law. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.
12.4 Severability. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
12.5 Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents,
16
requests or approvals, required or permitted to be given hereunder will be in
writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or
three business days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS, or Purolator, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive offices and to the Executive at his principal residence, or to such
other address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address will be effective
only upon receipt.
(i) To The Company. If to the Company, addressed to the
attention of Chief Executive Officer at 0000 Xxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx,
Xxxxx 00000.
(ii) To the Executive. If to the Executive, to him in care of
the Company at the above address.
12.6 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.7 Entire Agreement. The terms of this Agreement are intended by
the parties to be the final expression of their agreement with respect to the
Executive's employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.
12.8 Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, approved by the
Company and signed by the Executive and the Company. Failure on the part of
either party to complain of any action or omission, breach or default on the
part of the other party, no matter how long the same may continue, will never be
deemed to be a waiver of any rights or remedies hereunder, at law or in equity.
The Executive or the Company may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such
waiver will not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.
12.9 No Inconsistent Actions. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential
17
intent of this Agreement. Furthermore, it is the intent of the parties hereto to
act in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
12.10 Headings and Section References. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
13. Effectiveness. Prior Agreement and Consent. This Agreement will become
effective upon, and the Prior Agreement will terminate immediately prior to, the
Effective Date, whereupon all references to the "Company" herein will be treated
as references to Ultramar Corporation. By executing this Agreement, Executive
hereby consents to the assumption of this Agreement by Ultramar Corporation upon
the Effective Date. Notwithstanding any other provision of this Agreement, if
the Merger Agreement is terminated prior to the Effective Date, this Agreement
will have no further force or effect, and the Prior Agreement will continue in
effect as though this Agreement had not been entered into.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written but effective as provided in Section 13.
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxx
DIAMOND SHAMROCK, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxxx
Chief Executive Officer and
President
18
Exhibit
GENERAL RELEASE OF ALL CLAIMS
This General Release of all Claims (this "Agreement") is entered into by
and between ______________ ("Executive") and Ultramar Diamond Shamrock
Corporation (including its subsidiaries) (collectively the "Company") effective
as of ___________________.
In consideration of the promises set forth in the employment agreement
between Executive and the Company, dated ______________ 1996, as amended as of
the effective date hereof (the "Employment Agreement"), as well as any promises
set forth in this Agreement, Executive and the Company agree as follows:
(1) Employment Agreement Entitlements
The Company will provide Executive the post-termination payments and
benefits to which he is entitled under the Employment Agreement.
(2) Return of Property
All Company files, access keys, desk keys, ID badges and credit cards, and
such other property of the Company as the Company may reasonably request,
in Executive's possession must be returned no later than the date of
Executive's termination from the Company (the "Termination Date").
(3) General Release and Waiver of Claims
Except as provided in the last sentence of this paragraph (3), Executive
hereby unconditionally and forever releases, discharges and waives any and
all claims of any nature whatsoever, whether legal, equitable or
otherwise, which Executive may have against the Company arising at any
time on or before the Termination Date, other than with respect to the
obligations of the Company to the Executive under the Employment
Agreement. This release of claims extends to any and all claims of any
nature whatsoever, other than with respect to the obligations of the
Company to the Executive under the Employment Agreement, whether known,
unknown or capable or incapable of being known as of the Termination Date
of thereafter. This Agreement is a release of all claims of any nature
whatsoever by Executive against the Company, other than with respect to
the obligations of the Company to the Executive under the Employment
Agreement, and includes, other than as herein provided, any and all
claims, demands, causes of action, liabilities whether known or unknown
including those caused by, arising from or related to Executive's
employment relationship with the Company
19
including, but without limitation, any and all alleged discrimination or
acts of discrimination which occurred or may have occurred on or before
the Termination Date based upon race, color, sex, creed, national origin,
age, disability or any other violation of any Equal Employment Opportunity
Law, ordinance, rule, regulation or order, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act, as amended (as
further described in Section 7 below); the Americans with Disabilities
Act; claims under the Employee Retirement Income Security Act ("ERISA");
or any other federal, state or local laws or regulations regarding
employment discrimination or termination of employment. This also includes
claims for wrongful discharge, fraud, or misrepresentation under any
statute, rule, regulation or under the common law.
The Executive agrees and understands and knowingly agrees to this release
because it is his intent in executing this Agreement to forever discharge
the Company from any and all present, future, foreseen or unforeseen
causes of action except for the obligations of the Company set forth in
the Employment Agreement.
Notwithstanding the foregoing, Executive does not release, discharge or
waive any rights to indemnification that he may have under the By-Laws of
the Company, the laws of the State of Delaware, any indemnification
agreement between the Executive and the Company or any insurance coverage
maintained by or on behalf of the Company.
(4) Release and Waiver of Claims Under the Age Discrimination in Employment
Act
Executive acknowledges that the Company encouraged him to consult with an
attorney of his choosing, and through this Agreement encourages him to
consult with his attorney with respect to possible claims under the Age
Discrimination in Employment Act of 1967, as amended ("ADEA") and that
Executive acknowledges that he understands that the ADEA is a federal
statute that prohibits discrimination, on the basis of age, in employment,
benefits, and benefit plans. Executive wishes to waive any and all claims
under the ADEA that he may have, as of the Termination Date, against the
Company, its shareholders, employees, or successors and hereby waives such
claims. Executive further understands that by signing this Agreement he is
in fact waiving, releasing and forever giving up any claim under the ADEA
that may have existed on or prior to the Termination Date. Executive
acknowledges that the Company has informed him that he has at his option,
twenty-one (21) days in which to sign the waiver of this claim under ADEA,
and he does hereby knowingly and voluntarily waive said twenty-one (21)
day
20
period. Executive also understands that he has seven (7) days following
the Termination Date within which to revoke the release contained in this
paragraph by providing a written notice of his revocation of the release
and waiver contained in this paragraph to the Company. Executive further
understands that this right to revoke the release contained in this
paragraph relates only to this paragraph and does not act as a revocation
of any other term of this Agreement.
(5) Proceedings
Executive has not filed, and agrees not to initiate or cause to be
initiated on his behalf, any complaint, charge, claim or proceeding
against the Company before any local, state or federal agency, court or
other body relating to his employment or the termination of his employment
(each individually, a "Proceeding"), and agrees not to voluntarily
participate in any Proceeding. Executive waives any right he may have to
benefit in any manner from any relief (whether monetary or otherwise)
arising out of any Proceeding.
(6) Remedies
In the event Executive initiates or voluntarily participates in any
Proceeding, or if he fails to abide by any of the terms of this Agreement
or his post-termination obligations contained in the Employment Agreement,
or if he revokes the ADEA release contained in Paragraph 4 of this
Agreement within the seven-day period provided under Paragraph 4, the
Company may, in addition to any other remedies it may have, reclaim any
amounts paid to him under the termination provisions of the Employment
Agreement or terminate any benefits or payments that are subsequently due
under the Employment Agreement, without waiving the release granted
herein. Executive acknowledges and agrees that the remedy at law available
to the Company for breach of any of his post-termination obligations
under the Employment Agreement or his obligations under Paragraphs 3, 4,
and 5 of this Agreement would be inadequate and that damages flowing from
such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies which the Company may have at
law, in equity or under this Agreement, upon adequate proof of his
violation of any such provision of this Agreement, the Company shall be
entitled to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach, without the necessity of
proof of actual damage.
Executive understands that by entering into this Agreement he will be
limiting the availability of certain remedies
21
that he may have against the Company and limiting also his ability to
pursue certain claims against the Company.
(7) Severability Clause
In the event any provision or part of this Agreement is found to be
invalid or unenforceable, only that particular provision or part so found,
and not the entire agreement, will be inoperative.
(8) Non-Admission
Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company.
(9) Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, applicable to agreements made and to be
performed in that State; and the parties agree to the jurisdiction of the
U.S. District Court for the District of Delaware, and agree to appear in
any action in such courts by service of process by certified mail, return
receipt requested, at the following addresses:
To Company: ULTRAMAR DIAMOND SHAMROCK CORPORATION
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
and
To Executive:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY
KNOWS, UNDERSTANDS, AND APPRECIATES ITS CONTENTS, AND THAT HE HEREBY EXECUTES
THE SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS PROVIDED FOR
HEREIN VOLUNTARILY AND OF HIS OWN FREE WILL.
22
IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the
date first set forth above.
----------------------------------------
Xxxxxxx X. Xxxxxxxxx
ULTRAMAR DIAMOND SHAMROCK
CORPORATION,
a Delaware corporation
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
23
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 23,
1996, but effective as provided herein, is made and entered into by and between
Diamond Shamrock, Inc., a Delaware corporation (the "Company" or "Diamond
Shamrock, Inc.", as the context requires), and Xxxx Xxxxxx (the "Executive").
WHEREAS, the Executive has been serving as a senior executive
officer of Diamond Shamrock, Inc.;
WHEREAS, the Executive is a party to an Employment Agreement with
Diamond Shamrock, Inc., dated as of February 6, 1996 (the "Prior Agreement");
WHEREAS, pursuant to the Agreement and Plan of Merger between
Ultramar Corporation, a Delaware corporation ("Ultramar Corporation") and
Diamond Shamrock, Inc., dated as of September 22, 1996 (the "Merger Agreement"),
as of the effective time of the Merger (the "Effective Date"), Diamond Shamrock,
Inc. will be merged with and into Ultramar Corporation, with Ultramar
Corporation as the surviving entity (the "Merger");
WHEREAS, pursuant to the Merger Agreement, the Company is authorized
to enter into this Agreement with Executive;
WHEREAS, the Company considers it in the best interests of its
stockholders to xxxxxx the continuous employment of certain key management
personnel;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
herein) exists;
WHEREAS, the Company wishes to assure itself of both present and
future continuation of management in light of the Merger and in the event of a
Change in Control subsequent to the Merger;
WHEREAS, the Company wishes to employ the Executive and the
Executive is willing to render services, both on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
1. Employment.
1.1 The Company hereby agrees to employ the Executive and the
Executive hereby agrees to undertake employment with the Company upon the terms
and conditions herein set forth.
1.2 Employment will be for a term commencing on the Effective Date
and, subject to earlier expiration upon the Executive's termination under
Section 5, expiring three years from the Effective Date (the "Term").
Notwithstanding the previous sentence, this Agreement and the employment of the
Executive will be automatically renewed and the Term extended, subject to
Section 5, for successive one-year periods upon the terms and conditions set
forth herein, commencing on the third anniversary of the date of this Agreement,
and on each anniversary date thereafter, unless either party to this Agreement
gives the other party written notice (in accordance with Section 12.5) of such
party's intention to terminate this Agreement at least three months prior to the
end of such initial or extended term. For purposes of this Agreement, any
reference to the "Term" of this Agreement will include the original term and any
extension thereof.
2. Position and Duties.
2.1 Position and Duties. During the Term, the Executive will serve
as Senior Vice President, Refining Southwest, of the Company and will have such
duties, functions, responsibilities and authority as are (i) consistent with the
Executive's position as Senior Vice President, Refining Southwest, of the
Company; or (ii) assigned to his office in the Company's bylaws; or (iii)
reasonably assigned to him by the Company's Board of Directors (the "Board").
2.2 Commitment. During the Term, the Executive will be the Company's
full-time employee and, except as may otherwise be approved in advance in
writing by the Board, and except during vacation periods and reasonable periods
of absence due to sickness, personal injury or other disability, the Executive
will devote substantially all of his business time and attention to the
performance of his duties to the Company.
3. Place of Performance. In connection with his employment during the
Term, unless otherwise agreed by the Executive, the Executive will be based at
the Company's principal executive offices. The Executive will undertake normal
business travel on behalf of the Company.
4. Compensation and Related Matters.
4.1 Compensation and Benefits.
(i) Annual Base Salary. During the Term of this Agreement, the
Company will pay to the Executive an annual base
2
salary of not less than $265,000, which annual base salary may be modified from
time to time by the Board (or the Compensation Committee thereof) in its sole
discretion, payable at the times and in the manner consistent with the Company's
general policies regarding compensation of executive employees. The Board may
from time to time authorize such additional compensation to the Executive, in
cash or in property, as the Board may determine in its sole discretion to be
appropriate.
(ii) Annual Incentive Compensation. If the Board (or the
Compensation Committee thereof) authorizes any cash incentive compensation or
approves any other management incentive program or arrangement, the Executive
will be eligible to participate in such plan, program or arrangement under the
general terms and conditions applicable to executive and management employees;
provided, however, that so long as the Executive remains employed by the Company
at the end of the applicable fiscal year, (a) the annual cash incentive
compensation paid by the Company to the Executive for the Company's fiscal year
that includes the Effective Date, aggregated with any other annual incentive
compensation earned by the Executive for calendar year 1996, will be in an
amount not less than the greater of (1) 40% of the Executive's highest annual
base salary rate during the fiscal year to which such incentive compensation
relates, and (2) the Executive's actual annual incentive compensation earned
during such fiscal year, as determined by the Company's Board (or the
Compensation Committee thereof), and (b) the cash incentive compensation paid to
the Executive for the Company's next succeeding fiscal year will be in an amount
not less than the greater of (1) 40% of the Executive's highest annual base
salary rate during the fiscal year to which such incentive compensation relates,
and (2) the Executive's actual annual incentive compensation during such fiscal
year, as determined by the Board (or the Compensation Committee thereof). Except
as set forth in the proviso to the preceding sentence, nothing in this Section
4.1(ii) will guarantee to the Executive any specific amount of incentive
compensation, or prevent the Board (or the Compensation Committee thereof) from
establishing performance goals and compensation targets applicable only to the
Executive.
4.2 Executive Benefits. In addition to the compensation described in
Section 4.1, the Company will make available to the Executive and his eligible
dependents, subject to the terms and conditions of the applicable plans,
including without limitation the eligibility rules, participation in all
Company-sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health,
3
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), expense reimbursement or other employee benefit
policies, plans, programs or arrangements or any equivalent successor policies,
plans, programs or arrangements that may now exist or be adopted hereafter by
the Company.
4.3 Expenses. The Company will promptly reimburse the Executive for
all travel and other business expenses the Executive incurs in order to perform
his duties to the Company under this Agreement in a manner commensurate with the
Executive's position and level of responsibility with the Company, and in
accordance with the Company's policy regarding substantiation of expenses.
5. Termination. Notwithstanding the Term specified in Section 1.2, the
termination of the Executive's employment hereunder will be governed by the
following provisions:
5.1 Death. In the event of the Executive's death during the Term,
the Company will pay to the Executive's beneficiaries or estate, as appropriate,
promptly after the Executive's death, (i) the unpaid annual base salary to which
the Executive is entitled, pursuant to Section 4.1, through the date of the
Executive's death, and (ii) for any accrued but unused vacation days, to the
extent and in the amounts, if any, provided under the Company's usual policies
and arrangements. This Section 5.1 will not limit the entitlement of the
Executive's estate or beneficiaries to any death or other benefits then
available to the Executive under any life insurance, stock ownership, stock
options, or other benefit plan or policy that is maintained by the Company for
the Executive's benefit.
5.2 Disability.
(i) If the Company determines in good faith that the Executive
has incurred a Disability (as defined below) during the Term, the Company may
give the Executive written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company will
terminate effective on the 30th day after receipt of such notice by the
Executive, provided that within the 30 days after such receipt, the Executive
will not have returned to full-time performance of his duties. The Executive
will continue to receive his annual base salary and benefits until the date of
termination. In the event of the Executive's Disability, the Company will pay
the Executive, promptly after the Executive's termination, (a) the unpaid annual
base salary to which he is entitled, pursuant to Section 4.1, through the date
of the Executive's termination, (b) for any accrued but unused vacation days, to
the extent and in the amounts, if any, provided under the Company's usual
policies and arrangements, and (c) a lump sum in cash in an amount equal to 50%
of his annual base salary at the time of termination. This Section 5.2 will not
limit the entitlement of
4
the Executive, the Executive's estate or beneficiaries to any disability or
other benefits then available to the Executive under any disability insurance or
other benefit plan or policy that is maintained by the Company for the
Executive's benefit.
(ii) For purposes of this Agreement, "Disability" will mean
the Executive's incapacity due to physical or mental illness substantially to
perform his duties on a full-time basis for six consecutive months and within 30
days after a notice of termination is thereafter given by the Company the
Executive will not have returned to the full-time performance of the Executive's
duties; provided, however, if the Executive disagrees with a determination to
terminate him because of Disability, the question of the Executive's disability
will be subject to the certification of a qualified medical doctor agreed to by
the Company and the Executive or, in the event of the Executive's incapacity to
designate a doctor, the Executive's legal representative. In the absence of
agreement between the Company and the Executive, each party will nominate a
qualified medical doctor and the two doctors will select a third doctor, who
will make the determination as to Disability. In order to facilitate such
determination, the Executive will, as reasonably requested by the Company, (a)
make himself available for medical examinations by a doctor in accordance with
this Section 5.2(ii), and (b) grant the Company and any such doctor access to
all relevant medical information concerning him, arrange to furnish copies of
medical records to such doctor and use his best efforts to cause his own doctor
to be available to discuss his health with such doctor.
5.3 Cause
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below). In the event of the Executive's
termination for Cause, the Company will promptly pay to the Executive (or his
representative) the unpaid annual base salary to which he is entitled, pursuant
to Section 4.1, through the date the Executive is terminated and the Executive
will be entitled to no other compensation, except as otherwise due to him under
applicable law.
(ii) For purposes of this Agreement, the Company will have
"Cause" to terminate the Executive's employment hereunder upon a finding by the
Board that (a) the Executive committed an illegal act or acts that were intended
to and did defraud the Company, (b) the Executive engaged in gross negligence or
gross misconduct against the Company or another employee, or in carrying out his
duties and responsibilities, or (c) the Executive materially breached any of the
express covenants set forth in Section 9.1, 9.2 or 9.3. The Company will not
have Cause unless and until the Company provides the Executive with written
notice that the Company intends to terminate his employment for Cause. Such
written notice will specify the particular act or acts, or failure to act, that
is or
5
are the basis for the decision to so terminate the Executive's employment for
Cause. The Employee will be given the opportunity within 30 calendar days of the
receipt of such notice to meet with the Board to defend such act or acts, or
failure to act. The Executive's employment by the Company automatically will be
terminated under this Section 5.3 for Cause as of the receipt of the written
notice from the Company or, if later, the date specified in such notice. A
notice given under this Section 5.3 must set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment for Cause, and if the termination date is other than the
date of receipt of such notice, specify the date on which the Executive's
employment is to be terminated (which date will not be earlier than the date on
which such notice is given in accordance with Section 13.5). Such notice must be
given no later than 180 business days after a director of the Company
(excluding the Executive, if applicable) first has actual knowledge of the
events justifying the purported termination.
5.4 Termination.
(i) Involuntary Termination. The Executive's employment
hereunder may be terminated by the Company for any reason by written notice as
provided in Section 12.5. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated by the Company other than for
Cause if the Executive terminates his employment with the Company for any of the
following reasons (each, a "Good Reason"): without the Executive's written
consent, (a) the Company has breached any material provision of this Agreement
and within 30 days after notice thereof from the Executive, the Company fails to
cure such breach; (b) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company fails to assume liability under the
Agreement; (c) at any time after the Company has notified the Executive pursuant
to Section 1.2 that the Company does not intend to renew the Agreement and the
Executive's employment at the end of the Term (including any previous renewals)
(rather than to allow the Agreement automatically to renew); (d) a material
reduction in the aggregate benefits described by Section 4.2 (other than
stock-based compensation) provided to the Executive, unless such decrease is
required by law or is applicable to all employees of the Company eligible to
participate in any employee benefit arrangement affected by such reduction; (e)
a significant reduction in the Executive's duties or the addition of duties,
which in either case are materially inconsistent with the Executive's title or
position; or (f) a reduction in the Executive's annual base salary.
(ii) Voluntary Termination. The Executive may voluntarily
terminate the Agreement at any time by notice to the Company as provided in
Section 12.5. The Executive's death or Disability (as defined in Section 5.2(ii)
during the term of the
6
Agreement will constitute a voluntary termination of employment for purposes of
eligibility for termination payments and benefits as provided in Section 5.5,
but for no other purpose.
5.5 Termination Payments and Benefits.
(i) Form and Amount. Upon the Executive's involuntary
termination, other than for Cause, (a) subject to Section 5.5(iii), the Company
will pay or provide to the Executive (1) his annual base salary and benefits
until the date of termination, (2) within five business days after termination
of his employment, a lump sum cash payment equal in amount to three times the
sum of (x) the Executive's highest annual base salary in effect during the three
years prior to his date of termination, and (y) the highest annual incentive
compensation earned by the Executive during the same three-year period, (3)
three additional years of age and service credit under the qualified and
nonqualified defined benefit retirement plans of the Company in which the
Executive participates at the time of termination; provided, however, that in
the case of a qualified defined benefit pension plan, the present value of the
additional benefit the Executive would have accrued if he had been credited for
all purposes with the additional years of age and service under such plan as of
the Executive's date of termination with the Company will be paid in a lump sum
in cash within five business days after termination of the Executive's
employment, and (4) for a period of one year after termination of his
employment, the continuation of the employee welfare benefits set forth in
Section 4.2 except as offset by benefits paid by other sources as set forth in
Section 8, or as prohibited by law or as a condition of maintaining the
tax-favored status of any such benefits to the Company or its employees; (b) the
Executive's benefit under the applicable supplemental executive retirement plan
will be not less than the benefit the Executive would have received under the
terms of the corresponding plan (including any individual modifications thereof)
applicable to the Executive as in effect immediately prior to the Effective Date
determined as if the Executive had continued employment under the terms of such
corresponding plan (and modifications) until his actual termination of
employment. For purposes of Section 5.5(i) (a) (2), the three-year period will
include employment with Diamond Shamrock, Inc. or any of its affiliates.
(ii) Maintenance of Benefits. During the period set forth in
Section 5.5(i)(a)(4), the Company will use its best efforts to maintain in full
force and effect for the continued benefit of the Executive all referenced
benefits or will arrange to make available to the Executive benefits
substantially similar to those that the Executive would otherwise have been
entitled to receive if his employment had not been terminated. Such benefits
will be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to his termination.
7
(iii) Release. No benefit will be paid or made available under
Section 5.5(i) (a) unless the Executive first executes a release in the form
attached as an exhibit to this Agreement, and (b) to the extent any portion of
such release is subject to the seven-day revocation period prescribed by the Age
Discrimination in Employment Act of 1967, as amended, or to any similar
revocation period in effect on the date of termination of Executive's
employment, such revocation period has expired.
6. Change in Control Provisions.
6.1 Impact of Change in Control. In the event of a "Change in
Control" of the Company, as defined in Section 6.2, (i) the Company will cause
all cash benefits due under this Agreement to be secured by an irrevocable trust
for the benefit of the Executive, the assets of which will be subject to the
claims of the Company's creditors, and will transfer to such trust cash and
other property adequate to satisfy all of the expenses of the trust for at least
five years after the Change in Control and any of the Company's actual and
potential cash obligations under this Agreement, (ii) if the Executive's
employment is involuntarily terminated without Cause after the Change in
Control, (A) the covenants of Sections 9.1 and 10 will be inapplicable to the
Executive, and (B) the covenant of Section 9.2 will expire on the third
anniversary of the date of termination of the Executive's employment, and (iii)
the definition of Good Reason, as set forth in Section 5.4(i) above, will be
expanded to include the following:
(a) A good faith determination by the Executive that, as a
result of the Change in Control and a change in circumstances thereafter
significantly affecting his positions, including a change in the scope of
business or other activities for which he was responsible, he has been rendered
substantially unable to carry out, has been substantially hindered in the
performance of, or has suffered a substantial reduction in, any of the
authorities, powers, functions, responsibilities or duties attached to any of
the Executive's positions; the Executive's determination will be presumed to
have been made in good faith unless otherwise shown by the Company by clear and
convincing evidence;
(b) The relocation of the Company's principal executive
offices (but only if, immediately prior to the Change in Control, the
Executive's principal place of employment was at the Company's principal
executive offices), or requirement that the Executive have as his principal
location of work any location that is, in excess of 50 miles from the location
thereof immediately preceding the Change in Control or to travel away from his
home or office significantly more often that required immediately prior to the
Change in Control; or
8
(c) For any reason, or without reason, during the 30-day
period immediately following the first anniversary of the first occurrence of a
Change in Control.
6.2 Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" will be deemed to occur if at any time during
the term of the Agreement any of the following events will occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization, less than 50% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal person,
and as a result of such sale or transfer, less than 50% of the combined voting
power of the then-outstanding voting securities of such corporation or person
are held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing that any
person (as the term "person" is used in Section 13(d) (3) or Section 14(d) (2)
of the Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 20% or more of
the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of Directors of the Company ("Voting
Stock");
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during the period of two consecutive years
individuals who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each Director of the Company first elected during such period
was approved by a vote of at least two-thirds of the Directors of the
9
Company then still in office who were Directors of the Company at the beginning
of any such period (excluding for this purpose the election of any new Director
in connection with an actual or threatened election or proxy contest).
Notwithstanding the foregoing provisions of Section 6.2(iii) or (iv) hereof,
unless otherwise determined in a specific case by majority vote of the Board (or
the Compensation Committee thereof), a "Change in Control" will not be deemed to
have occurred for purposes of this Agreement solely because the Company, an
entity in which the Company directly or beneficially owns 50% or more of the
voting securities of such entity, any Company-sponsored employee stock ownership
plan or any other employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-l, Form 8-K or Schedule 14A (or any successor schedule, form
or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of voting securities of the Company, whether in excess
of 20% or otherwise, or because the Company reports that a change in control of
the Company has or may have occurred or will or may occur in the future by
reason of such beneficial ownership. Notwithstanding the foregoing provisions of
Section 6.2, the Merger will not constitute a Change in Control.
7. Certain Additional Payments by the Company:
(i) Anything in this Agreement to the contrary notwithstanding, if
it is determined (as hereafter provided) that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of Diamond Shamrock, Inc. or the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. No Gross-Up Payment will be made with respect to the
Excise Tax, if any, attributable to (a) any incentive
10
stock option, as defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement (unless a comparable Gross-Up Payment has
theretofore been made available with respect to such option), or (b) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (a).
(ii) Subject to the provisions of Section 7(vi) hereof, all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by a nationally recognized firm of certified public accountants
(the "Accounting Firm") selected by the Executive in his sole discretion. The
Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within
15 calendar days after the Termination Date, if applicable, and any other such
time or times as may be requested by the Company or the Executive. If the
Accounting Firm determines that any Excise Tax is payable by the Executive, the
Company will pay the required Gross-Up Payment to the Executive within five
business days after receipt of such determination and calculations. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
will, at the same time as it makes such determination, furnish the Executive
with an opinion that he has substantial authority not to report any Excise Tax
on his federal, state, local income or other tax return. Any determination by
the Accounting Firm as to the amount of the Gross-Up Payment will be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or fails
to pursue its remedies pursuant to Section 7(ii) hereof and the Executive
thereafter is required to make a payment of any Excise Tax, the Executive will
direct the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations to
both the Company and the Executive as promptly as possible. Any such
Underpayment will be promptly paid by the Company to, or for the benefit of, the
Executive within five business days after receipt of such determination and
calculations.
(iii) The Company and the Executive will each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm
11
in connection with the preparation and issuance of the determination
contemplated by Section 7(ii) hereof.
(iv) The federal, state and local income or other tax returns filed
by the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his federal income tax return as filed
with the Internal Revenue Service and corresponding state and local tax returns,
if relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of the Executive's federal income tax return, or corresponding
state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Executive will within
five business days pay to the Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated by Sections
7(ii) and (iv) hereof will be borne by the Company. If such fees and expenses
are initially paid by the Executive, the Company will reimburse the Executive
the full amount of such fees and expenses within five business days after
receipt from the Executive of a statement therefor and reasonable evidence of
his payment thereof.
(vi) The Executive will notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification will be given as
promptly as practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive will further apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the Executive). The
Executive will not pay such claim prior to the earlier of (a) the expiration of
the 30-calendar-day period following the date on which he gives such notice to
the Company and (b) the date that any payment of amount with respect to such
claim is due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
will:
(1) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the Company;
(2) take such action in connection with contesting such claim as
the Company will reasonably request in writing from time to time,
including without limitation accepting legal representation with respect
to such
12
claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(3) cooperate with the Company in good faith in order effectively to
contest such claim; and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 7(vi), the Company will control all proceedings taken in connection
with the contest of any claim contemplated by this Section 7(vi) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein at his
own cost and expense) and may, at its option, either direct the Executive to pay
the tax claimed and xxx for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company will determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and xxx for a
refund, the Company will advance the amount of such payment to the Executive on
an interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(vii) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 7(vi) hereof, the Executive receives any
refund with respect to such claim, the Executive will (subject to the Company's
complying with the requirements of Section 7(vi) hereof) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after any taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company
13
pursuant to Section 7(vi) hereof, a determination is made that the Executive
will not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after such determination,
then such advance will be forgiven and will not be required to be repaid and the
amount of such advance will offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid pursuant to this Section 7.
8. Mitigation and Offset. The Executive is under no obligation to mitigate
damages or the amount of any payment or benefit provided for hereunder by
seeking other employment or otherwise; provided, however, that the Executive's
coverage under the Company's welfare benefit plans will be reduced to the extent
that the Executive becomes covered under any comparable employee benefit plan
made available by another employer and covering the same type of benefits. The
Executive will report to the Company any such benefits actually received by him.
9. Competition: Confidentiality: Nonsolicitation
9.1 (i) Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that during the Term and for one year following the Term he will not,
without the prior written consent of the Company, engage in Competition (as
defined below) with the Company. For purposes of this Agreement, if the
Executive takes any of the following actions he will be engaged in
"Competition": engaging in or carrying on, directly or indirectly, any
enterprise, whether as an advisor, principal, agent, partner, officer, director,
employee, stockholder, associate or consultant to any person, partnership,
corporation or any other business entity, that is principally engaged in the
business of refining and/or marketing oil or related products in States or
Provinces in which the Company (or any division or segment thereof) has
operations; provided, however, that "Competition" will not include (a) the mere
ownership of securities in any enterprise and exercise of rights appurtenant
thereto or (b) participation in management of any enterprise or business
operation thereof other than in connection with the competitive operation of
such enterprise.
(ii) Subject to Section 6.1(ii), the Executive hereby
covenants and agrees that during the Term and for three years following the Term
he will not assist a third party in preparing or making an unsolicited bid for
the Company, engaging in a proxy contest with the Company, or engaging in any
other similar activity.
9.2 During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 9.2) to the extent necessary for Executive to carry out his obligations
under this Agreement. Subject to Section 6.1(ii), the Executive hereby covenants
and
14
agrees that he will not, without the prior written consent of the Company,
during the Term or thereafter disclose to any person not employed by the
Company, or use in connection with engaging in Competition with the Company, any
confidential or proprietary information of the Company. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available or generally known to persons engaged in businesses
similar or related to those of the Company. Confidential information will
include, without limitation, the Company's financial matters, customers,
employees, industry contracts, and all other secrets and all other information
of a confidential or proprietary nature. The foregoing obligations imposed by
this Section 9.2 will cease if such confidential or proprietary information will
have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure (after giving the Company
notice and an opportunity to contest such requirement).
9.3 Subject to Section 6.1(ii), the Executive hereby covenants and
agrees that during the Term and for one year thereafter he will not attempt to
influence, persuade or induce, or assist any other person in so persuading or
inducing, any employee of the Company to give up, or to not commence, employment
or a business relationship with the Company.
9.4 Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his post-termination obligations
under Sections 9.1, 9.2 and 9.3 would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of any such
provision of this Agreement, the Company will be entitled to immediate
injunctive relief and may obtain a temporary order restraining any threatened or
further breach, without the necessity of proof of actual damage.
10. Post-termination Assistance. Subject to Section 6.1(ii), the Executive
agrees that after his employment with the Company has terminated he will
provide, upon reasonable notice, such information and assistance to the Company
as may reasonably be requested by the Company in connection with any audit,
governmental investigation or litigation in which it or any of its affiliates is
or may become a party; provided, however, that (i) the Company agrees to
reimburse the Executive for any related out-of-pocket expenses, including travel
expenses, and to pay the Executive reasonable compensation for his time based on
his rate of annual salary at the time of termination and (ii) any such
assistance may not unreasonably interfere with the then-current employment of
the Executive.
15
11. Survival. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Executive's covenants contained in Sections
9.1, 9.2, 9.3 and 10 and the Company's obligations under Sections 5, 7 and 12.1
will survive the expiration or termination of Executive's employment.
12. Miscellaneous Provisions.
12.1 Legal Fees and Expenses. Without regard to whether the
Executive prevails, in whole or in part, in connection therewith, the Company
will pay and be financially responsible for 100% of any and all attorneys' and
related fees and expenses incurred by the Executive in connection with any
dispute associated with the interpretation, enforcement or defense of the
Executive's rights under this Agreement by litigation or otherwise; provided
that, in regard to such dispute, the Executive has not acted in bad faith or
with no colorable claim of success. All such fees and expenses will be paid by
the Company as incurred by the Executive on a monthly basis upon an undertaking
by the Executive to repay such advanced amounts if a court determines, in a
decision against which no appeal may be taken or with respect to which the time
period to appeal has expired, that he acted in bad faith or with no colorable
claim of success.
12.2 Binding on Successors. This Agreement will be binding upon and
inure to the benefit of the Company, the Executive and each of their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
12.3 Governing Law. This Agreement will be governed construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.
12.4 Severability. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
12.5 Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents,
16
requests or approvals, required or permitted to be given hereunder will be in
writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or
three business days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS, or Purolator, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive offices and to the Executive at his principal residence, or to such
other address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address will be effective
only upon receipt.
(i) To The Company. If to the Company, addressed to the
attention of General Counsel at 0000 Xxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxx
00000.
(ii) To the Executive. If to the Executive, to him in care of
the Company at the above address.
12.6 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.7 Entire Agreement. The terms of this Agreement are intended by
the parties to be the final expression of their agreement with respect to the
Executive's employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.
12.8 Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, approved by the
Company and signed by the Executive and the Company. Failure on the part of
either party to complain of any action or mission, breach or default on the
part of the other party, no matter how long the same may continue, will never be
deemed to be a waiver of any rights or remedies hereunder, at law or in equity.
The Executive or the Company may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such
waiver will not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.
12.9 No Inconsistent Actions. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential
17
intent of this Agreement. Furthermore, it is the intent of the parties hereto to
act in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
12.10 Headings and Section References. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
13. Effectiveness. Prior Agreement and Consent. This Agreement will become
effective upon, and the Prior Agreement will terminate immediately prior to, the
Effective Date, whereupon all references to the "Company" herein will be treated
as references to Ultramar Corporation. By executing this Agreement, Executive
hereby consents to the assumption of this Agreement by Ultramar Corporation upon
the Effective Date. Notwithstanding any other provision of this Agreement, if
the Merger Agreement is terminated prior to the Effective Date, this Agreement
will have no further force or effect, and the Prior Agreement will continue in
effect as though this Agreement had not been entered into.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written but effective as provided in Section 13.
/s/ Xxxx Xxxxxx
----------------------------------
Xxxx Xxxxxx
DIAMOND SHAMROCK, INC.,
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------
Xxxxx Xxxxxxxxxxx
Chief Executive Officer and President
18
Exhibit
GENERAL RELEASE OF ALL CLAIMS
This General Release of all Claims (this "Agreement") is entered into by
and between ____________ ("Executive") and Ultramar Diamond Shamrock Corporation
(including its subsidiaries) (collectively the "Company") effective as of
________________.
In consideration of the promises set forth in the employment agreement
between Executive and the Company, dated _______________________ 1996, as
amended as of the effective date hereof (the "Employment Agreement"), as well as
any promises set forth in this Agreement, Executive and the Company agree as
follows:
(1) Employment Agreement Entitlements
The Company will provide Executive the post-termination payments and
benefits to which he is entitled under the Employment Agreement.
(2) Return of Property
All Company files, access keys, desk keys, ID badges and credit cards, and
such other property of the Company as the Company may reasonably request,
in Executive's possession must be returned no later than the date of
Executive's termination from the Company (the "Termination Date").
(3) General Release and Waiver of Claims
Except as provided in the last sentence of this paragraph (3), Executive
hereby unconditionally and forever releases, discharges and waives any and
all claims of any nature whatsoever, whether legal, equitable or
otherwise, which Executive may have against the Company arising at any
time on or before the Termination Date, other than with respect to the
obligations of the Company to the Executive under the Employment
Agreement. This release of claims extends to any and all claims of any
nature whatsoever, other than with respect to the obligations of the
Company to the Executive under the Employment Agreement, whether known,
unknown or capable or incapable of being known as of the Termination Date
of thereafter. This Agreement is a release of all claims of any nature
whatsoever by Executive against the Company, other than with respect to
the obligations of the Company to the Executive under the Employment
Agreement, and includes, other than as herein provided, any and all
claims, demands, causes of action, liabilities whether known or unknown
including those caused by, arising from or related to Executive's
employment relationship with the Company
19
including, but without limitation, any and all alleged discrimination or
acts of discrimination which occurred or may have occurred on or before
the Termination Date based upon race, color, sex, creed, national origin,
age, disability or any other violation of any Equal Employment Opportunity
Law, ordinance, rule, regulation or order, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act, as amended (as
further described in Section 7 below); the Americans with Disabilities
Act; claims under the Employee Retirement Income Security Act ("ERISA");
or any other federal, state or local laws or regulations regarding
employment discrimination or termination of employment. This also includes
claims for wrongful discharge, fraud, or misrepresentation under any
statute, rule, regulation or under the common law.
The Executive agrees and understands and knowingly agrees to this release
because it is his intent in executing this Agreement to forever discharge
the Company from any and all present, future, foreseen or unforeseen
causes of action except for the obligations of the Company set forth in
the Employment Agreement.
Notwithstanding the foregoing, Executive does not release, discharge or
waive any rights to indemnification that he may have under the By-Laws of
the Company, the laws of the State of Delaware, any indemnification
agreement between the Executive and the Company or any insurance coverage
maintained by or on behalf of the Company.
(4) Release and Waiver of Claims Under the Age Discrimination in Employment
Act
Executive acknowledges that the Company encouraged him to consult with an
attorney of his choosing, and through this Agreement encourages him to
consult with his attorney with respect to possible claims under the Age
Discrimination in Employment Act of 1967, as amended ("ADEA") and that
Executive acknowledges that he understands that the ADEA is a federal
statute that prohibits discrimination, on the basis of age, in employment,
benefits, and benefit plans. Executive wishes to waive any and all claims
under the ADEA that he may have, as of the Termination Date, against the
Company, its shareholders, employees, or successors and hereby waives such
claims. Executive further understands that by signing this Agreement he is
in fact waiving, releasing and forever giving up any claim under the ADEA
that may have existed on or prior to the Termination Date. Executive
acknowledges that the Company has informed him that he has at his option,
twenty-one (21) days in which to sign the waiver of this claim under ADEA,
and he does hereby knowingly and voluntarily waive said twenty-one (21)
day
20
period. Executive also understands that he has seven (7) days following
the Termination Date within which to revoke the release contained in this
paragraph by providing a written notice of his revocation of the release
and waiver contained in this paragraph to the Company. Executive further
understands that this right to revoke the release contained in this
paragraph relates only to this paragraph and does not act as a revocation
of any other term of this Agreement.
(5) Proceedings
Executive has not filed, and agrees not to initiate or cause to be
initiated on his behalf, any complaint, charge, claim or proceeding
against the Company before any local, state or federal agency, court or
other body relating to his employment or the termination of his employment
(each individually, a "Proceeding"), and agrees not to voluntarily
participate in any Proceeding. Executive waives any right he may have to
benefit in any manner from any relief (whether monetary or otherwise)
arising out of any Proceeding.
(6) Remedies
In the event Executive initiates or voluntarily participates in any
Proceeding, or if he fails to abide by any of the terms of this Agreement
or his post-termination obligations contained in the Employment Agreement,
or if he revokes the ADEA release contained in Paragraph 4 of this
Agreement within the seven-day period provided under Paragraph 4, the
Company may, in addition to any other remedies it may have, reclaim any
amounts paid to him under the termination provisions of the Employment
Agreement or terminate any benefits or payments that are subsequently due
under the Employment Agreement, without waiving the release granted
herein. Executive acknowledges and agrees that the remedy at law available
to the Company for breach of any of his post-termination obligations under
the Employment Agreement or his obligations under Paragraphs 3, 4, and 5
of this Agreement would be inadequate and that damages flowing from such a
breach may not readily be susceptible to being measured in monetary terms.
Accordingly, Executive acknowledges, consents and agrees that, in addition
to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of
any such provision of this Agreement, the Company shall be entitled to
immediate injunctive relief and may obtain a temporary order restraining
any threatened or further breach, without the necessity of proof of actual
damage.
Executive understands that by entering into this Agreement he will be
limiting the availability of certain remedies
21
that he may have against the Company and limiting also his ability to
pursue certain claims against the Company.
(7) Severability Clause
In the event any provision or part of this Agreement is found to be
invalid or unenforceable, only that particular provision or part so found,
and not the entire agreement, will be inoperative.
(8) Non-Admission
Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company.
(9) Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, applicable to agreements made and to be
performed in that State; and the parties agree to the jurisdiction of the
U.S. District Court for the District of Delaware, and agree to appear in
any action in such courts by service of process by certified mail, return
receipt requested, at the following addresses:
To Company:
ULTRAMAR DIAMOND SHAMROCK CORPORATION
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
and
To Executive:
--------------------------------------
--------------------------------------
--------------------------------------
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY
KNOWS, UNDERSTANDS, AND APPRECIATES ITS CONTENTS, AND THAT HE HEREBY EXECUTES
THE SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS PROVIDED FOR
HEREIN VOLUNTARILY AND OF HIS OWN FREE WILL.
22
IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the
date first set forth above.
-------------------------------------------
Xxxx Xxxxxx
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
a Delaware corporation
By:
---------------------------------------
Name:
------------------------------
Title:
------------------------------
23
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November
22, 1996, but effective as provided herein, is made and entered into by and
between Diamond Shamrock, Inc., a Delaware corporation (the "Company" or
"Diamond Shamrock, Inc.", as the context requires), and Xxxxxx Xxxxxx (the
"Executive").
WHEREAS, the Executive has been serving as a senior executive
officer of Diamond Shamrock, Inc.;
WHEREAS, the Executive is a party to an Employment Agreement with
Diamond Shamrock, Inc., dated as of February 6, 1996 (the "Prior Agreement");
WHEREAS, pursuant to the Agreement and Plan of Merger between
Ultramar Corporation, a Delaware corporation ("Ultramar Corporation") and
Diamond Shamrock, Inc., dated as of September 22, 1996 (the "Merger Agreement"),
as of the effective time of the Merger (the "Effective Date"), Diamond Shamrock,
Inc. will be merged with and into Ultramar Corporation, with Ultramar
Corporation as the surviving entity (the "Merger");
WHEREAS, the Company considers it in the best interests of its
stockholders to xxxxxx the continuous employment of certain key management
personnel;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
herein) exists;
WHEREAS, the Company wishes to assure itself of both present and
future continuation of management in light of the Merger and in the event of a
Change in Control subsequent to the Merger;
WHEREAS, the Company wishes to employ the Executive and the
Executive is willing to render services, both on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
1. Employment.
1.1 The Company hereby agrees to employ the Executive and the
Executive hereby agrees to undertake employment with the Company upon the terms
and conditions herein set forth.
1.2 Employment will be for a term commencing on the Effective Date
and, subject to earlier expiration upon the Executive's termination under
Section 5, expiring three years from the Effective Date (the "Term").
Notwithstanding the previous sentence, this Agreement and the employment of the
Executive will be automatically renewed and the Term extended, subject to
Section 5, for successive one-year periods upon the terms and conditions set
forth herein, commencing on the third anniversary of the Effective Date, and on
each anniversary date thereafter, unless either party to this Agreement gives
the other party written notice (in accordance with Section 12.5) of such party's
intention to terminate this Agreement at least three months prior to the end of
such initial or extended term. For purposes of this Agreement, any reference to
the "Term" of this Agreement will include the original term and any extension
thereof.
2. Position and Duties.
2.1 Position and Duties. During the Term, the Executive will serve
as Senior Vice President-Retail Marketing of the Company and will have such
duties, functions, responsibilities and authority as are (i) consistent with the
Executive's position as Senior Vice President-Retail Marketing of the Company;
or (ii) assigned to his office in the Company's bylaws; or (iii) reasonably
assigned to him by the Company's Board of Directors (the "Board").
2.2 Commitment. During the Term, the Executive will be the Company's
full-time employee and, except as may otherwise be approved in advance in
writing by the Board, and except during vacation periods and reasonable periods
of absence due to sickness, personal injury or other disability, the Executive
will devote substantially all of his business time and attention to the
performance of his duties to the Company.
3. Place of Performance. In connection with his employment during the
Term, unless otherwise agreed by the Executive, the Executive will be based at
the Company's principal executive offices. The Executive will undertake normal
business travel on behalf of the Company.
4. Compensation and Related Matters.
4.1 Compensation and Benefits.
(i) Annual Base Salary. During the Term of this Agreement, the
Company will pay to the Executive an annual base
2
salary of not less than $265,000, which annual base salary may be modified from
time to time by the Board (or the Compensation Committee thereof) in its sole
discretion, payable at the times and in the manner consistent with the Company's
general policies regarding compensation of executive employees. The Board may
from time to time authorize such additional compensation to the Executive, in
cash or in property, as the Board may determine in its sole discretion to be
appropriate.
(ii) Annual Incentive Compensation. If the Board (or the
Compensation Committee thereof) authorizes any cash incentive compensation or
approves any other management incentive program or arrangement, the Executive
will be eligible to participate in such plan, program or arrangement under the
general terms and conditions applicable to executive and management employees;
provided, however, that so long as the Executive remains employed by the
Company at the end of the applicable fiscal year, (a) the annual cash incentive
compensation paid by the Company to the Executive for the Company's fiscal year
that includes the Effective Date aggregated with any other annual incentive
compensation earned by the Executive for calendar year 1996, will be in an
amount not less than the greater of (1) 40% of the Executive's highest annual
base salary rate during the fiscal year to which such incentive compensation
relates, and (2) the Executive's actual annual incentive compensation earned
during such fiscal year, as determined by the Company's Board (or the
Compensation Committee thereof), and (b) the cash incentive compensation paid to
the Executive for the Company's next succeeding fiscal year will be in an amount
not less than the greater of (1) 40% of the Executive's highest annual base
salary rate during the fiscal year to which such incentive compensation relates,
and (2) the Executive's actual annual incentive compensation during such fiscal
year, as determined by the Board (or the Compensation Committee thereof). Except
as set forth in the proviso to the preceding sentence, nothing in this Section
4.1(ii) will guarantee to the Executive any specific amount of incentive
compensation, or prevent the Board (or the Compensation Committee thereof) from
establishing performance goals and compensation targets applicable only to the
Executive.
4.2 Executive Benefits. In addition to the compensation described in
Section 4.1, the Company will make available to the Executive and his eligible
dependents, subject to the terms and conditions of the applicable plans,
including without limitation the eligibility rules, participation in all
Company--sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health,
3
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), expense reimbursement or other employee benefit
policies, plans, programs or arrangements or any equivalent successor policies,
plans, programs or arrangements that may now exist or be adopted hereafter by
the Company.
4.3 Expenses. The Company will promptly reimburse the Executive for
all travel and other business expenses the Executive incurs in order to perform
his duties to the Company under this Agreement in a manner commensurate with the
Executive's position and level of responsibility with the Company, and in
accordance with the Company's policy regarding substantiation of expenses.
5. Termination. Notwithstanding the Term specified in Section 1.2, the
termination of the Executive's employment hereunder will be governed by the
following provisions:
5.1 Death. In the event of the Executive's death during the Term,
the Company will pay to the Executive's beneficiaries or estate, as appropriate,
promptly after the Executive's death, (i) the unpaid annual base salary to which
the Executive is entitled, pursuant to Section 4.1, through the date of the
Executive's death, and (ii) for any accrued but unused vacation days, to the
extent and in the amounts, if any, provided under the Company's usual policies
and arrangements. This Section 5.1 will not limit the entitlement of the
Executive's estate or beneficiaries to any death or other benefits then
available to the Executive under any life insurance, stock ownership, stock
options, or other benefit plan or policy that is maintained by the Company for
the Executive's benefit.
5.2 Disability.
(i) If the Company determines in good faith that the Executive
has incurred a Disability (as defined below) during the Term, the Company may
give the Executive written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company will
terminate effective on the 30th day after receipt of such notice by the
Executive, provided that within the 30 days after such receipt, the Executive
will not have returned to full-time performance of his duties. The Executive
will continue to receive his annual base salary and benefits until the date of
termination. In the event of the Executive's Disability, the Company will pay
the Executive, promptly after the Executive's termination, (a) the unpaid annual
base salary to which he is entitled, pursuant to Section 4.1, through the date
of the Executive's termination, (b) for any accrued but unused vacation days, to
the extent and in the amounts, if any, provided under the Company's usual
policies and arrangements, and (c) a lump sum in cash in an amount equal to 50%
of his annual base salary at the time of termination. This Section 5.2 will not
limit the entitlement of
4
the Executive, the Executive's estate or beneficiaries to any disability or
other benefits then available to the Executive under any disability insurance or
other benefit plan or policy that is maintained by the Company for the
Executive's benefit.
(ii) For purposes of this Agreement, "Disability" will mean
the Executive's incapacity due to physical or mental illness substantially to
perform his duties on a full-time basis for six consecutive months and within 30
days after a notice of termination is thereafter given by the Company the
Executive will not have returned to the full-time performance of the
Executive's duties; provided, however, if the Executive disagrees with a
determination to terminate him because of Disability, the question of the
Executive's disability will be subject to the certification of a qualified
medical doctor agreed to by the Company and the Executive or, in the event of
the Executive's incapacity to designate a doctor, the Executive's legal
representative. In the absence of agreement between the Company and the
Executive, each party will nominate a qualified medical doctor and the two
doctors will select a third doctor, who will make the determination as to
Disability. In order to facilitate such determination, the Executive will, as
reasonably requested by the Company, (a) make himself available for medical
examinations by a doctor in accordance with this Section 5.2(ii), and (b) grant
the Company and any such doctor access to all relevant medical information
concerning him, arrange to furnish copies of medical records to such doctor and
use his best efforts to cause his own doctor to be available to discuss his
health with such doctor.
5.3 Cause.
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below). In the event of the Executive's
termination for Cause, the Company will promptly pay to the Executive (or his
representative) the unpaid annual base salary to which he is entitled, pursuant
to Section 4.1, through the date the Executive is terminated and the Executive
will be entitled to no other compensation, except as otherwise due to him under
applicable law.
(ii) For purposes of this Agreement, the Company will have
"Cause" to terminate the Executive's employment hereunder upon a finding by the
Board that (a) the Executive committed an illegal act or acts that were intended
to and did defraud the Company, (b) the Executive engaged in gross negligence or
gross misconduct against the Company or another employee, or in carrying out his
duties and responsibilities, or (c) the Executive materially breached any of the
express covenants set forth in Section 9.1, 9.2 or 9.3. The Company will not
have Cause unless and until the Company provides the Executive with written
notice that the Company intends to terminate his employment for Cause. Such
written notice will specify the particular act or acts, or failure to act, that
is or
5
are the basis for the decision to so terminate the Executive's employment for
Cause. The Employee will be given the opportunity within 30 calendar days of the
receipt of such notice to meet with the Board to defend such act or acts, or
failure to act. The Executive's employment by the Company automatically will be
terminated under this Section 5.3 for Cause as of the receipt of the written
notice from the Company or, if later, the date specified in such notice. A
notice given under this Section 5.3 must set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment for Cause, and if the termination date is other than the
date of receipt of such notice, specify the date on which the Executive's
employment is to be terminated (which date will not be earlier than the date on
which such notice is given in accordance with Section 13.5). Such notice must be
given no later than 180 business days after a director of the Company
(excluding the Executive, if applicable) first has actual knowledge of the
events justifying the purported termination.
5.4 Termination.
(i) Involuntary Termination. The Executive's employment
hereunder may be terminated by the Company for any reason by written notice as
provided in Section 12.5. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated by the Company other than for
Cause if the Executive terminates his employment with the Company for any of the
following reasons (each, a "Good Reason"): without the Executive's written
consent, (a) the Company has breached any material provision of this Agreement
and within 30 days after notice thereof from the Executive, the Company fails to
cure such breach; (b) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company fails to assume liability under the
Agreement; (c) at any time after the Company has notified the Executive pursuant
to Section 1.2 that the Company does not intend to renew the Agreement and the
Executive's employment at the end of the Term (including any previous renewals)
(rather than to allow the Agreement automatically to renew); (d) a material
reduction in the aggregate benefits described by Section 4.2 (other than
stock-based compensation) provided to the Executive, unless such decrease is
required by law or is applicable to all employees of the Company eligible to
participate in any employee benefit arrangement affected by such reduction; (e)
a significant reduction in the Executive's duties or the addition of duties,
which in either case are materially inconsistent with the Executive's title or
position; or (f) a reduction in the Executive's annual base salary.
(ii) Voluntary Termination. The Executive may voluntarily
terminate the Agreement at any time by notice to the Company as provided in
Section 12.5. The Executive's death or Disability (as defined in Section
5.2(ii)) during the term of the
6
Agreement will constitute a voluntary termination of employment for purposes of
eligibility for termination payments and benefits as provided in Section 5.5,
but for no other purpose.
5.5 Termination Payments and Benefits.
(i) Form and Amount. Upon the Executive's involuntary
termination, other than for Cause, (a) subject to Section 5.5(iii), the Company
will pay or provide to the Executive (1) his annual base salary and benefits
until the date of termination, (2) within five business days after termination
of his employment, a lump sum cash payment equal in amount to three times the
sum of (x) the Executive's highest annual base salary in effect during the three
years prior to his date of termination, and (y) the highest annual incentive
compensation earned by the Executive during the same three-year period, (3)
three additional years of age and service credit under the qualified and
nonqualified defined benefit retirement plans of the Company in which the
Executive participates at the time of termination; provided, however, that in
the case of a qualified defined benefit pension plan, the present value of the
additional benefit the Executive would have accrued if he had been credited for
all purposes with the additional years of age and service under such plan as of
the Executive's date of termination with the Company will be paid in a lump sum
in cash within five business days after termination of the Executive's
employment, and (4) for a period of one year after termination of his
employment, the continuation of the employee welfare benefits set forth in
Section 4.2 except as offset by benefits paid by other sources as set forth in
Section 8, or as prohibited by law or as a condition of maintaining the
tax-favored status of any such benefits to the Company or its employees; (b)
the Executive's benefit under the applicable supplemental executive retirement
plan will be not less than the benefit the Executive would have received under
the terms of the corresponding plan (including any individual modifications
thereof) applicable to the Executive as in effect immediately prior to the
Effective Date determined as if the Executive had continued employment under the
terms of such corresponding plan (and modifications) until his actual
termination of employment. For purposes of Section 5.5(i) (a) (2), the
three-year period will include employment with Diamond Shamrock, Inc. or any of
its affiliates.
(ii) Maintenance of Benefits. During the period set forth in
Section 5.5(i) (a) (4), the Company will use its best efforts to maintain in
full force and effect for the continued benefit of the Executive all referenced
benefits or will arrange to make available to the Executive benefits
substantially similar to those that the Executive would otherwise have been
entitled to receive if his employment had not been terminated. Such benefits
will be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to his termination.
7
(iii) Release. No benefit will be paid or made available under
Section 5.5(i) (a) unless the Executive first executes a release in the form
attached as an exhibit to this Agreement, and (b) to the extent any portion of
such release is subject to the seven-day revocation period prescribed by the
Age Discrimination in Employment Act of 1967, as amended, or to any similar
revocation period in effect on the date of termination of Executive's
employment, such revocation period has expired.
6. Chancre in Control Provisions.
6.1 Impact of Change in Control. In the event of a "Change in
Control" of the Company, as defined in Section 6.2, (i) the Company will cause
all cash benefits due under this Agreement to be secured by an irrevocable trust
for the benefit of the Executive, the assets of which will be subject to the
claims of the Company's creditors, and will transfer to such trust cash and
other property adequate to satisfy all of the expenses of the trust for at least
five years after the Change in Control and any of the Company's actual and
potential cash obligations under this Agreement, (ii) if the Executive's
employment is involuntarily terminated without Cause after the Change in
Control, (A) the covenants of Sections 9.1 and 10 will be inapplicable to the
Executive, and (B) the covenant of Section 9.2 will expire on the third
anniversary of the date of termination of the Executive's employment, and (iii)
the definition of Good Reason, as set forth in Section 5.4(i) above, will be
expanded to include the following:
(a) A good faith determination by the Executive that, as a
result of the Change in Control and a change in circumstances thereafter
significantly affecting his positions, including a change in the scope of
business or other activities for which he was responsible, he has been rendered
substantially unable to carry out, has been substantially hindered in the
performance of, or has suffered a substantial reduction in, any of the
authorities, powers, functions, responsibilities or duties attached to any of
the Executive's positions; the Executive's determination will be presumed to
have been made in good faith unless otherwise shown by the Company by clear and
convincing evidence;
(b) The relocation of the Company's principal executive
offices (but only if, immediately prior to the Change in Control, the
Executive's principal place of employment was at the Company's principal
executive offices), or requirement that the Executive have as his principal
location of work any location that is, in excess of 50 miles from the location
thereof immediately preceding the Change in Control or to travel away from his
home or office significantly more often that required immediately prior to the
Change in Control; or
8
(c) For any reason, or without reason, during the 30-day
period immediately following the first anniversary of the first occurrence of a
Change in Control.
6.2 Definition of Chancre in Control. For purposes of this
Agreement, a "Change in Control" will be deemed to occur if at any time during
the term of the Agreement any of the following events will occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization, less than 50% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal person,
and as a result of such sale or transfer, less than 50% of the combined voting
power of the then-outstanding voting securities of such corporation or person
are held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;
(iii) There is a report filed on Schedule 13D or Schedule
14D--l (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), disclosing that any
person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities representing 20% or more of
the combined voting power of the then-outstanding securities of the Company
entitled to vote generally in the election of Directors of the Company ("Voting
Stock");
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during the period of two consecutive years
individuals who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each Director of the Company first elected during such period
was approved by a vote of at least two-thirds of the Directors of the
9
Company then still in office who were Directors of the Company at the beginning
of any such period (excluding for this purpose the election of any new Director
in connection with an actual or threatened election or proxy contest).
Notwithstanding the foregoing provisions of Section 6.2(iii) or (iv) hereof,
unless otherwise determined in a specific case by majority vote of the Board (or
the Compensation Committee thereof), a "Change in Control" will not be deemed to
have occurred for purposes of this Agreement solely because the Company, an
entity in which the Company directly or beneficially owns 50% or more of the
voting securities of such entity, any Company-sponsored employee stock
ownership plan or any other employee benefit plan of the Company either files or
becomes obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-l, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Exchange Act, disclosing
beneficial ownership by it of shares of voting securities of the Company,
whether in excess of 20% or otherwise, or because the Company reports that a
change in control of the Company has or may have occurred or will or may occur
in the future by reason of such beneficial ownership. Notwithstanding the
foregoing provisions of Section 6.2, the Merger will not constitute a Change in
Control.
7. Certain Additional Payments by the Company:
(i) Anything in this Agreement to the contrary notwithstanding, if
it is determined (as hereafter provided) that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of Diamond Shamrock, Inc. or the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. No Gross-Up Payment will be made with respect to the
Excise Tax, if any, attributable to (a) any incentive
10
stock option, as defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement (unless a comparable Gross-Up Payment has
theretofore been made available with respect to such option), or (b) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (a).
(ii) Subject to the provisions of Section 7(vi) hereof, all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by a nationally recognized firm of certified public accountants
(the "Accounting Firm") selected by the Executive in his sole discretion. The
Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within
15 calendar days after the Termination Date, if applicable, and any other such
time or times as may be requested by the Company or the Executive. If the
Accounting Firm determines that any Excise Tax is payable by the Executive, the
Company will pay the required Gross-Up Payment to the Executive within five
business days after receipt of such determination and calculations. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
will, at the same time as it makes such determination, furnish the Executive
with an opinion that he has substantial authority not to report any Excise Tax
on his federal, state, local income or other tax return. Any determination by
the Accounting Firm as to the amount of the Gross-Up Payment will be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or fails
to pursue its remedies pursuant to Section 7(vi) hereof and the Executive
thereafter is required to make a payment of any Excise Tax, the Executive will
direct the Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting calculations to
both the Company and the Executive as promptly as possible. Any such
Underpayment will be promptly paid by the Company to, or for the benefit of, the
Executive within five business days after receipt of such determination and
calculations.
(iii) The Company and the Executive will each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm
11
in connection with the preparation and issuance of the determination
contemplated by Section 7(ii) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his federal income tax return as filed
with the Internal Revenue Service and corresponding state and local tax returns,
if relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of the Executive's federal income tax return, or corresponding
state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Executive will within five
business days pay to the Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Sections 7(ii) and (iv) hereof will be borne by the Company. If such fees and
expenses are initially advanced by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(vi) The Executive will notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification will be given as
promptly as practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive will further apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the Executive). The
Executive will not pay such claim prior to the earlier of (a) the expiration of
the 30-calendar-day period following the date on which he gives such notice to
the Company and (b) the date that any payment of amount with respect to such
claim is due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
will:
(1) provide the Company with any written records or documents
in his possession relating to such claim reasonably requested by the
Company;
(2) take such action in connection with contesting such claim
as the Company will reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such
12
claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(3) cooperate with the Company in good faith in order
effectively to contest such claim; and
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 7(vi), the Company will control all proceedings taken in connection
with the contest of any claim contemplated by this Section 7(vi) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein at his
own cost and expense) and may, at its option, either direct the Executive to pay
the tax claimed and xxx for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company will determine; provided, however,
that if the Company directs the Executive to pay the tax claimed and xxx for a
refund, the Company will advance the amount of such payment to the Executive on
an interest-free basis and will indemnify and hold the Executive harmless, on an
after--tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(vii) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(vi) hereof, the Executive receives
any refund with respect to such claim, the Executive will (subject to the
Company's complying with the requirements of Section 7(vi) hereof) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company
13
pursuant to Section 7(vi) hereof, a determination is made that the Executive
will not be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after such determination,
then such advance will be forgiven and will not be required to be repaid and the
amount of such advance will offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid pursuant to this Section 7.
8. Mitigation and Offset. The Executive is under no obligation to mitigate
damages or the amount of any payment or benefit provided for hereunder by
seeking other employment or otherwise; provided, however, that the Executive's
coverage under the Company's welfare benefit plans will be reduced to the extent
that the Executive becomes covered under any comparable employee benefit plan
made available by another employer and covering the same type of benefits. The
Executive will report to the Company any such benefits actually received by him.
9. Competition; Confidentiality; Nonsolicitation
9.1 (i) Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that during the Term and for one year following the Term he will not,
without the prior written consent of the Company, engage in Competition (as
defined below) with the Company. For purposes of this Agreement, if the
Executive takes any of the following actions he will be engaged in
"Competition": engaging in or carrying on, directly or indirectly, any
enterprise, whether as an advisor, principal, agent, partner, officer, director,
employee, stockholder, associate or consultant to any person, partnership,
corporation or any other business entity, that is principally engaged in the
business of refining and/or marketing oil or related products in States or
Provinces in which the Company (or any division or segment thereof) has
operations; provided, however, that "Competition" will not include (a) the mere
ownership of securities in any enterprise and exercise of rights appurtenant
thereto or (b) participation in management of any enterprise or business
operation thereof other than in connection with the competitive operation of
such enterprise.
(ii) Subject to Section 6.1(ii), the Executive hereby
covenants and agrees that during the Term and for three years following the Term
he will not assist a third party in preparing or making an unsolicited bid for
the Company, engaging in a proxy contest with the Company, or engaging in any
other similar activity.
9.2 During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 9.2) to the extent necessary for Executive to carry out his obligations
under this Agreement. Subject to Section 6.1(ii), the Executive hereby covenants
and
14
agrees that he will not, without the prior written consent of the Company,
during the Term or thereafter disclose to any person not employed by the
Company, or use in connection with engaging in Competition with the Company, any
confidential or proprietary information of the Company. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available or generally known to persons engaged in businesses
similar or related to those of the Company. Confidential information will
include, without limitation, the Company's financial matters, customers,
employees, industry contracts, and all other secrets and all other information
of a confidential or proprietary nature. The foregoing obligations imposed by
this Section 9.2 will cease if such confidential or proprietary information will
have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure (after giving the Company
notice and an opportunity to contest such requirement).
9.3 The Executive hereby covenants and agrees that during the Term
and for one year thereafter he will not attempt to influence, persuade or
induce, or assist any other person in so persuading or inducing, any employee of
the Company to give up, or to not commence, employment or a business
relationship with the Company.
9.4 Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his post-termination obligations
under Sections 9.1, 9.2 and 9.3 would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of any such
provision of this Agreement, the Company will be entitled to immediate
injunctive relief and may obtain a temporary order restraining any threatened or
further breach, without the necessity of proof of actual damage.
10. Post-termination Assistance. Subject to Section 6.1(ii), the Executive
agrees that after his employment with the Company has terminated he will
provide, upon reasonable notice, such information and assistance to the Company
as may reasonably be requested by the Company in connection with any audit,
governmental investigation or litigation in which it or any of its affiliates is
or may become a party; provided, however, that (i) the Company agrees to
reimburse the Executive for any related out-of-pocket expenses, including
travel expenses, and to pay the Executive reasonable compensation for his time
based on his rate of annual salary at the time of termination and (ii) any such
assistance may not unreasonably interfere with the then-current employment of
the Executive.
15
11. Survival. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Executive's covenants contained in Sections
9.1, 9.2, 9.3 and 10 and the Company's obligations under Sections 5, 7 and 12.1
will survive the expiration or termination of Executive's employment.
12. Miscellaneous Provisions.
12.1 Legal Fees and Expenses. Without regard to whether the
Executive prevails, in whole or in part, in connection therewith, the Company
will pay and be financially responsible for 100% of any and all attorneys' and
related fees and expenses incurred by the Executive in connection with
any dispute associated with the interpretation, enforcement or defense of the
Executive's rights under this Agreement by litigation or otherwise; provided
that, in regard to such dispute, the Executive has not acted in bad faith or
with no colorable claim of success. All such fees and expenses will be paid by
the Company as incurred by the Executive on a monthly basis upon an undertaking
by the Executive to repay such advanced amounts if a court determines, in a
decision against which no appeal may be taken or with respect to which the time
period to appeal has expired, that he acted in bad faith or with no colorable
claim of success.
12.2 Binding on Successors. This Agreement will be binding upon and
inure to the benefit of the Company, the Executive and each of their respective
successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
12.3 Governing Law. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.
12.4 Severability. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
12.5 Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents,
16
requests or approvals, required or permitted to be given hereunder will be in
writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof
confirmed), or five business days after having been mailed by United States
registered or certified mail, return receipt requested, postage prepaid, or
three business days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS, or Purolator, addressed to the
Company (to the attention of the Secretary of the Company) at its principal
executive offices and to the Executive at his principal residence, or to such
other address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address will be effective
only upon receipt.
(i) To The Company. If to the Company, addressed to the
attention of General Counsel at 0000 Xxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxx
00000.
(ii) To the Executive. If to the Executive, to him in care of
the Company at the above address.
12.6 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.7 Entire Agreement. The terms of this Agreement are intended by
the parties to be the final expression of their agreement with respect to the
Executive's employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.
12.8 Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, approved by the
Company and signed by the Executive and the Company. Failure on the part of
either party to complain of any action or omission, breach or default on the
part of the other party, no matter how long the same may continue, will never be
deemed to be a waiver of any rights or remedies hereunder, at law or in equity.
The Executive or the Company may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such
waiver will not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.
12.9 No Inconsistent Actions. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential
17
intent of this Agreement. Furthermore, it is the intent of the parties hereto to
act in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
12.10 Headings and Section References. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
13. Effectiveness, Prior Agreement and Consent. This Agreement will become
effective upon, and the Prior Agreement will terminate immediately prior to, the
Effective Date, whereupon all references to the "Company" herein will be
treated as references to Ultramar Corporation. By executing this Agreement,
Executive hereby consents to the assumption of this Agreement by Ultramar
Corporation upon the Effective Date. Notwithstanding any other provision of this
Agreement, if the Merger Agreement is terminated prior to the Effective Date,
this Agreement will have no further force or effect, and the Prior Agreement
will continue in effect as though this Agreement had not been entered into.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written but effective as provided in Section 13.
/s/ Xxxxxx Xxxxxx
----------------------------------------
Xxxxxx Xxxxxx
DIAMOND SHAMROCK, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Heimminghaus
Chief Executive Officer and
President
18
Exhibit
GENERAL RELEASE OF ALL CLAIMS
This General Release of all Claims (this "Agreement") is entered into by
and between _____________________ ("Executive") and Ultramar Diamond Shamrock
Corporation (including its subsidiaries) (collectively the "Company") effective
as of ______________________.
In consideration of the promises set forth in the employment agreement
between Executive and the Company, dated _____________, 1996, as amended as of
the effective date hereof (the "Employment Agreement"), as well as any promises
set forth in this Agreement, Executive and the Company agree as follows:
(1) Employment Agreement Entitlements
The Company will provide Executive the post-termination payments and
benefits to which he is entitled under the Employment Agreement.
(2) Return of Property
All Company files, access keys, desk keys, ID badges and credit cards, and
such other property of the Company as the Company may reasonably request,
in Executive's possession must be returned no later than the date of
Executive's termination from the Company (the "Termination Date").
(3) General Release and Waiver of Claims
Except as provided in the last sentence of this paragraph (3), Executive
hereby unconditionally and forever releases, discharges and waives any and
all claims of any nature whatsoever, whether legal, equitable or
otherwise, which Executive may have against the Company arising at any
time on or before the Termination Date, other than with respect to the
obligations of the Company to the Executive under the Employment
Agreement. This release of claims extends to any and all claims of any
nature whatsoever, other than with respect to the obligations of the
Company to the Executive under the Employment Agreement, whether known,
unknown or capable or incapable of being known as of the Termination Date
of thereafter. This Agreement is a release of all claims of any nature
whatsoever by Executive against the Company, other than with respect to
the obligations of the Company to the Executive under the Employment
Agreement, and includes, other than as herein provided, any and all
claims, demands, causes of action, liabilities whether known or unknown
including those caused by, arising from or related to Executive's
employment relationship with the Company
19
including, but without limitation, any and all alleged discrimination or
acts of discrimination which occurred or may have occurred on or before
the Termination Date based upon race, color, sex, creed, national origin,
age, disability or any other violation of any Equal Employment Opportunity
Law, ordinance, rule, regulation or order, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act, as amended (as
further described in Section 7 below); the Americans with Disabilities
Act; claims under the Employee Retirement Income Security Act ("ERISA");
or any other federal, state or local laws or regulations regarding
employment discrimination or termination of employment. This also includes
claims for wrongful discharge, fraud, or misrepresentation under any
statute, rule, regulation or under the common law.
The Executive agrees and understands and knowingly agrees to this release
because it is his intent in executing this Agreement to forever discharge
the Company from any and all present, future, foreseen or unforeseen
causes of action except for the obligations of the Company set forth in
the Employment Agreement.
Notwithstanding the foregoing, Executive does not release, discharge or
waive any rights to indemnification that he may have under the By-Laws of
the Company, the laws of the State of Delaware, any indemnification
agreement between the Executive and the Company or any insurance coverage
maintained by or on behalf of the Company.
(4) Release and Waiver of Claims Under the Age Discrimination in Employment Act
Executive acknowledges that the Company encouraged him to consult with an
attorney of his choosing, and through this Agreement encourages him to
consult with his attorney with respect to possible claims under the Age
Discrimination in Employment Act of 1967, as amended ("ADEA") and that
Executive acknowledges that he understands that the ADEA is a federal
statute that prohibits discrimination, on the basis of age, in employment,
benefits, and benefit plans. Executive wishes to waive any and all claims
under the ADEA that he may have, as of the Termination Date, against the
Company, its shareholders, employees, or successors and hereby waives such
claims. Executive further understands that by signing this Agreement he is
in fact waiving, releasing and forever giving up any claim under the ADEA
that may have existed on or prior to the Termination Date. Executive
acknowledges that the Company has informed him that he has at his option,
twenty-one (21) days in which to sign the waiver of this claim under ADEA,
and he does hereby knowingly and voluntarily waive said twenty-one (21)
day
20
period. Executive also understands that he has seven (7) days following
the Termination Date within which to revoke the release contained in this
paragraph by providing a written notice of his revocation of the release
and waiver contained in this paragraph to the Company. Executive further
understands that this right to revoke the release contained in this
paragraph relates only to this paragraph and does not act as a revocation
of any other term of this Agreement.
(5) Proceedings
Executive has not filed, and agrees not to initiate or cause to be
initiated on his behalf, any complaint, charge, claim or proceeding
against the Company before any local, state or federal agency, court or
other body relating to his employment or the termination of his
employment, other than with respect to the obligations of the Company to
the Executive under the Employment Agreement (each individually, a
"Proceeding"), and agrees not to voluntarily participate in any
Proceeding. Executive waives any right he may have to benefit in any
manner from any relief (whether monetary or otherwise) arising out of any
Proceeding.
(6) Remedies
In the event Executive initiates or voluntarily participates in any
Proceeding, or if he fails to abide by any of the terms of this Agreement
or his post-termination obligations contained in the Employment Agreement,
or if he revokes the ADEA release contained in Paragraph 4 of this
Agreement within the seven-day period provided under Paragraph 4, the
Company may, in addition to any other remedies it may have, reclaim any
amounts paid to him under the termination provisions of the Employment
Agreement or terminate any benefits or payments that are subsequently due
under the Employment Agreement, without waiving the release granted
herein. Executive acknowledges and agrees that the remedy at law available
to the Company for breach of any of his post-termination obligations under
the Employment Agreement or his obligations under Paragraphs 3, 4, and 5
of this Agreement would be inadequate and that damages flowing from such a
breach may not readily be susceptible to being measured in monetary terms.
Accordingly, Executive acknowledges, consents and agrees that, in addition
to any other rights or remedies which the Company may have at law, in
equity or under this Agreement, upon adequate proof of his violation of
any such provision of this Agreement, the Company shall be entitled to
immediate injunctive relief and may obtain a temporary order restraining
any threatened or further breach, without the necessity of proof of actual
damage.
21
Executive understands that by entering into this Agreement he will be
limiting the availability of certain remedies that he may have against the
Company and limiting also his ability to pursue certain claims against the
Company.
(7) Severability Clause
In the event any provision or part of this Agreement is found to be
invalid or unenforceable, only that particular provision or part so found,
and not the entire agreement, will be inoperative.
(8) Non-Admission
Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company.
(9) Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, applicable to agreements made and to be
performed in that State; and the parties agree to the jurisdiction of the
U.S. District Court for the District of Delaware, and agree to appear in
any action in such courts by service of process by certified mail, return
receipt requested, at the following addresses:
To Company: ULTRAMAR DIAMOND SHAMROCK CORPORATION
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
and
To Executive: ________________________________________
________________________________________
________________________________________
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY
KNOWS, UNDERSTANDS, AND APPRECIATES ITS CONTENTS, AND THAT HE HEREBY EXECUTES
THE SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS PROVIDED FOR
HEREIN VOLUNTARILY AND OF HIS OWN FREE WILL.
22
IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the
date first set forth above.
----------------------------------------
Xxxxxx Xxxxxx
ULTRAMAR DIAMOND SHAMROCK CORPORATION,
a Delaware corporation
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
23
