EXHIBIT 10.32
MANAGEMENT STABILITY AGREEMENT
This Management Stability Agreement is dated December 1, 2003, between
Tesoro Petroleum Corporation, a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxxxxxx ("Employee").
Recitals:
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interest of the Company to reduce uncertainty to certain key
employees of the Company in the event of certain fundamental events involving
the control or existence of the Company;
WHEREAS, the Board of Directors of the Company has determined that an
agreement protecting certain interests of key employees of the Company in the
event of certain fundamental events involving the control or existence of the
Company is in the best interest of the Company because it will assist the
Company in attracting and retaining key employees such as this Employee; and
WHEREAS, the Employee is relying on this Agreement and the obligations
of the Company hereunder in continuing to work for the Company.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Termination Following Change of Control.
Should Employee at any time within two years of a change of control
cease to be an employee of the Company (or its successor), by reason of (i)
involuntary termination by the Company (or its successor) other than for "cause"
(following a change of control), "cause" shall be limited to the conviction of
or a plea of nolo contendere to the charge of a felony (which, through lapse of
time or otherwise, is not subject to appeal), a material breach of fiduciary
duty to the Company through the misappropriation of Company funds or property)
or (ii) voluntary termination by Employee for "good reason upon change of
control" (as defined below), the Company (or its successor) shall pay to
Employee within ten days of such termination the following severance payments
and benefits:
(a) A lump-sum payment equal to two times the base salary of
the Employee at the then current rate; and
(b) A lump-sum payment equal to (i) two times the sum of the
target bonuses under all of the Company's incentive bonus
plans applicable to the Employee for the year in which the
termination occurs or the year in which the change of control
occurred, whichever is greater, and (ii) if termination occurs
in the fourth quarter of a calendar year, the sum of the
target bonuses under all of the Company's incentive bonus
plans applicable to Employee for the year in which the
termination occurs prorated daily based on the number of days
from
the beginning of the calendar year in which the termination
occurs to and including the date of termination.
The Company (or its successor) shall also provide continuing coverage and
benefits comparable to all life, health and disability plans of the Company for
a period of 24 months from the date of termination and shall receive two years
additional service credit under the current non-qualified supplemental pension
plans, or successors thereto, of the Company applicable to the Employee on the
date of termination.
For purposes of this Agreement, a "change of control"
shall be deemed to have occurred if (i) there shall be
consummated (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other
property, other than a merger of the Company where a majority
of the Board of Directors of the surviving corporation are,
and for a two year period after the merger continue to be,
persons who were directors of the Company immediately prior to
the merger or were elected as directors, or nominated for
election as directors, by a vote of at least two-thirds of the
directors then still in office who were directors of the
Company immediately prior to the merger, or (B) any sale,
lease, exchange or transfer (in one transaction or a series of
related transactions) of all or substantially all of the
assets of the Company, or (ii) the shareholders of the Company
shall approve any plan or proposal for the liquidation or
dissolution of the Company, or (iii) (A) any "person" (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), other
than the Company or a subsidiary thereof or any employee
benefit plan sponsored by the Company or a subsidiary thereof,
shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company
representing 20 percent or more of the combined voting power
of the Company's then outstanding securities ordinarily (and
apart from rights accruing in special circumstances) having
the right to vote in the election of directors, as a result of
a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, and (B) at any time during
a period of one year thereafter, individuals who immediately
prior to the beginning of such period constituted the Board of
Directors of the Company shall cease for any reason to
constitute at least a majority thereof, unless the election or
the nomination by the Board of Directors for election by the
Company's shareholders of each new director during such period
was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of such period.
For purposes of this Section 1, "good reason upon change of
control" shall exist if any of the following occurs:
(i) without Employee's express written consent, the assignment
to Employee of any duties inconsistent with the employment of
Employee immediately prior to the change of control, or a
significant diminution of Employee's positions, duties,
responsibilities and status with the Company from those
immediately prior to a change of control or a diminution in
Employee's titles or offices as in effect immediately prior to
a change of control, or any removal of Employee from, or any
failure to reelect Employee to, any of such positions;
(ii) a reduction by the Company in Employee's base salary in
effect immediately prior to a change of control;
(iii) the failure by the Company to continue in effect any
thrift, stock ownership, pension, life insurance, health,
dental and accident or disability plan in which Employee is
participating or is eligible to participate at the time of the
change of control (or plans providing Employee with
substantially similar benefits), except as otherwise required
by the terms of such plans as in effect at the time of any
change of control or the taking of any action by the Company
which would adversely affect Employee's participation in or
materially reduce Employee's benefits under any of such plans
or deprive Employee of any material fringe benefits enjoyed by
Employee at the time of the change of control or the failure
by the Company to provide the Employee with the number of paid
vacation days to which Employee is entitled in accordance with
the vacation policies of the Company in effect at the time of
a change of control;
(iv) the failure by the Company to continue in effect any
incentive plan or arrangement (including without limitation,
the Company's Incentive Compensation Plan and similar
incentive compensation benefits) in which Employee is
participating at the time of a change of control (or to
substitute and continue other plans or arrangements providing
the Employee with substantially similar benefits), except as
otherwise required by the terms of such plans as in effect at
the time of any change of control;
(v) the failure by the Company to continue in effect any plan
or arrangement with respect to securities of the Company
(including, without limitation, any plan or arrangement to
receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof or to acquire stock or
other securities of the Company) in which Employee is
participating at the time of a change of control (or to
substitute and continue plans or arrangements providing the
Employee with substantially similar benefits), except as
otherwise required by the terms of such plans as in effect at
the time of any change of control or the taking of any action
by the Company which would adversely affect Employee's
participation in or materially reduce Employee's benefits
under any such plan;
(vi) the relocation of the Company's offices where Employee is
presently based to a location outside that office area, or the
Company's requiring Employee to be based anywhere other than
at the location of the Company's offices where Employee is
presently based, except for required travel on the Company's
business to an extent substantially consistent with Employee's
present business travel obligations, or, in the event Employee
consents to any such relocation of the Company's offices where
Employee is presently based, the failure by the Company to pay
(or reimburse Employee for) all reasonable moving expenses
incurred by Employee relating to a change of Employee's
principal residence in connection with such relocation and to
indemnify Employee against any loss (defined as the difference
between the actual sale price of such residence and the higher
of (a) Employee's aggregate investment in such residence or
(b) the fair market value thereof as determined by a real
estate appraiser reasonably satisfactory to both Employee and
the Company at the time the Employee's principal residence is
offered for sale in connection with any such change of
residence;
(vii) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company;
In the event of a change of control as "change of control" is defined
in any stock option plan or stock option agreement pursuant to which the
Employee holds options to purchase common stock of the Company, Employee shall
retain the rights to all accelerated vesting and other benefits under the terms
thereof.
The Company shall pay any attorney fees incurred by Employee in
reasonably seeking to enforce the terms of this Paragraph 1.
2. Complete Agreement.
This Agreement constitutes the entire agreement between the parties and
cancels and supersedes all other agreements between the parties which may have
related to the subject matter contained in this Agreement.
3. Modification; Amendment; Waiver.
No modification, amendment or waiver of any provisions of this
Agreement shall be effective unless approved in writing by both parties. The
failure at any time to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of either party thereafter to enforce each and every provision hereof in
accordance with its terms.
4. Governing Law; Jurisdiction.
This Agreement and performance under it, and all proceedings that may
ensue from its breach, shall be construed in accordance with and under the laws
of the State of Texas.
5. Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
6. Assignment.
The rights and obligations of the parties under this Agreement shall be
binding upon and inure to the benefit of their respective successors, assigns,
executors, administrators and heirs, provided, however, that the Company may not
assign any duties under this Agreement without the prior written consent of the
Employee.
7. Limitation.
This Agreement shall not confer any right or impose any obligation on
the Company to continue the employment of Employee in any capacity, or limit the
right of the Company or Employee to terminate Employee's employment.
8. Notices.
All notices and other communications under this Agreement shall be in
writing and shall be given in person or by telegraph, facsimile or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given when delivered personally or three days after mailing or
one day after transmission of a telegram or facsimile, as the case may be, to
the representative persons named below:
If to the Company: Corporate Secretary
Tesoro Petroleum Corporation
000 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000-0000
If to the Employee: Xxxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: TESORO PETROLEUM CORPORATION
By : /s/ Xxxxx X. Xxxxx
--------------------------
Xxxxx X. Xxxxx
Chairman of the Board of Directors,
President and Chief Executive Officer
EMPLOYEE: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
