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EXHIBIT 10(i)
TERMINATION AGREEMENT
TERMINATION AGREEMENT (the "Termination Agreement"), dated
September 26, 1995, among TESORO PETROLEUM CORPORATION, a Delaware corporation
(the "Company"), and XXXXXXX X. XXXXX (the "Executive").
WHEREAS, the Company and the Executive are parties to an
employment agreement, dated July 27, 1992, as amended on December 14, 1994 (the
"Employment Agreement");
WHEREAS, effective as of September 29, 1995 (the "Termination
Date"), the Executive's employment with the Company shall terminate, which
termination shall constitute a termination by the Company "without cause" under
the Employment Agreement;
WHEREAS, the parties wish to settle their mutual rights and
obligations arising from such termination under the Employment Agreement;
WHEREAS, the parties have entered into a Consulting Agreement,
dated as of the date hereof (the "Consulting Agreement"), pursuant to which the
Executive has agreed to perform consulting services for the Company following
the Termination Date and the Company has agreed to compensate the Executive for
such services;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein and in the Consulting Agreement, and other good and
valuable consideration, the receipt of which are hereby acknowledged, the
Company and the Executive hereby agree as follows:
Section 1. Termination Payment. The Company agrees to pay
the Executive, within five business days of the date hereof, the net amount of
$970,966, after withholding $407,761 in accordance with federal and state tax
withholding laws, in immediately available funds by wire transfer to the
account of the Executive specified by him to the Company. Such amount
represents the full settlement of all the Executive's rights with respect to
(i) the severance payment provided under Section 6 of the Employment Agreement,
(ii) a pro-rata 1995 target bonus, (iii) accrued but unpaid base salary and
accrued but unused vacation days to the Termination Date, minus (iv) the amount
deducted from the foregoing payments in accordance with applicable federal and
state tax withholding laws. The amount of payments to be made pursuant to the
Consulting Agreement shall be in addition to the foregoing. The calculation of
the dollar amount specified above is set forth in Exhibit A hereto. Such
amount is in
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full settlement of the lump-sum cash amounts that may otherwise be required
under Section 6 of the Employment Agreement. The Company further agrees to
reimburse the Executive for his reasonable attorney's fees and costs incurred
in connection with this Termination Agreement, up to a maximum amount of
$10,000.
Section 2. Supplemental Retirement Benefit. The Executive is
currently a participant in the Company's Funded Executive Security Plan (the
"Security Plan"). In accordance with Section 6 of the Employment Agreement,
effective as of the Termination Date, the Executive will receive two years of
service credit for purposes of determining the amount of the supplemental
retirement benefit that would otherwise be paid to him under the Security Plan,
in addition to those periods of service credited to the Executive under the
Security Plan through the Termination Date. The calculation of the Executive's
supplemental retirement benefit shall otherwise be made by reference to the
terms of the Security Plan as in effect on the Termination Date, it being
specifically understood that the pro-rata 1995 target bonus referred to in
Section 1 hereof shall be included as compensation taken into account for
purposes of determining the supplemental retirement benefit hereunder. Such
calculation results in a net payment of $581,530, after withholding $404,950 in
accordance with federal and state tax withholding laws, to be made within five
business days of the date hereof by wire transfer as specified above. The
Executive acknowledges that he is not entitled to additional benefits under the
Company's unfunded Executive Security Plan and the Company's retirement plan.
Section 3. Continued Welfare Benefits. In accordance with
Section 6 of the Employment Agreement, the Executive shall, for a period of two
years following the Termination Date, be entitled to continuing coverage and
benefits comparable to all life, health and disability insurance plans which
the Company from time to time makes available to its management executives and
their families.
Section 4. Stock Options and Restricted Stock. In accordance
with Section 6 of the Employment Agreement, effective as of the Termination
Date, (i) each outstanding stock option to purchase shares of the Company's
common stock held by the Executive that is not vested on the Termination Date
shall become immediately vested and exercisable and shall remain exercisable
until the expiration of three months following the Termination Date, and (ii)
all shares of the Company's common stock which the Executive has the right to
acquire as restricted stock on the Termination Date shall become fully vested
and all restrictions thereon relating to continued employment shall immediately
lapse. Except as set forth in this Section 4, such stock options and
restricted
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stock shall continue to be subject to the terms and conditions of the
applicable plans and agreements pursuant to which such rights were awarded to
the Executive. On or within five business days following the Termination Date,
the Executive shall satisfy his obligations with respect to payment of the cash
purchase price and tax withholding on shares of restricted stock that become
fully vested hereunder and, as soon as practicable but not later than 15 days
following the satisfaction of such obligations, the Company will deliver to the
Executive certificates representing all such shares of restricted stock. The
numbers of shares of common stock subject to stock options and restricted stock
held by the Executive on the Termination Date are set forth in Exhibit A
hereto. With respect to the Executive's stock options, the Company agrees to
use its best efforts to (i) maintain in full force and effect a Form S-8
registration statement covering the shares of the Company's common stock
issuable under such options and (ii) to assist the Executive in arranging for
the "cashless exercise" of such stock options at the request of the Executive.
The Company hereby represents that all shares of restricted stock previously
issued to the Executive were covered by a valid Form S-8 registration
statement.
Section 5. Indemnification. The Company shall continue to
indemnify the Executive and hold him harmless for any acts or decisions made by
him as and to the extent provided under the Company's By-laws and the
Indemnification Agreement dated December 2, 1992 by and between Executive and
the Company, which Indemnification Agreement shall remain in full force and
effect as and to the extent provided therein. The Executive shall continue to
be covered for such acts and decisions under directors and officers liability
insurance policies as and to the extent that the Company maintains such
policies in effect from time to time on behalf of its directors and officers
generally.
Section 6. Other Rights and Benefits. Except as specifically
provided herein, this Termination Agreement shall have no effect on the rights
of the Executive to payments or other benefits due to the Executive pursuant to
the terms of any employee benefit plan, fringe benefit policy or payroll
practice of the Company, including, without limitation, rights in respect of
coverage under welfare benefit plans for periods through the Termination Date
and reimbursement for any reasonable business expenses incurred through the
Termination Date in accordance with Company policy. The Executive shall submit
appropriate expense reports and vouchers for business expenses to be reimbursed
by the Company within 30 days after the Termination Date.
Section 7. Conditions of Benefits. The Company shall provide
to the Executive the rights, payments and benefits set forth in Sections 1
through 5 hereof and shall
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execute and honor a release of claims and covenant not to xxx in favor of the
Executive (in the form attached hereto as Exhibit C) as consideration for and
contingent upon (i) the Executive's execution, non-revocation and honoring of a
release of claims and covenant not to xxx in favor of the Company in the form
attached hereto as Exhibit B and (ii) the Executive's continued compliance with
the restrictive covenants set forth in Section 8 hereof.
Section 8. Restrictive Covenants.
A. Nondisclosure. The Executive hereby agrees that
he shall not, at any time following the Termination Date, disclose or use for
any purpose confidential information or proprietary data of the Company (or any
of its subsidiaries), except as required by applicable law or legal process;
provided, however, that confidential information shall not include any
information known generally to the public or ascertainable from public or
published information (other than as a result of unauthorized disclosure by the
Executive) or any information of a type not otherwise considered confidential
by persons engaged in the same business or a business similar to that conducted
by the Company (or any of its subsidiaries).
B. Noncompetition. The Executive hereby agrees that, for a
period of one year following the Termination Date, he shall not (i) become a
principal, consultant or employee in any segment of a business of a company,
partnership or firm ("Business Segment") that is directly competitive with any
significant business of the Company in one of its major commercial or
geographic markets or (ii) hold an interest (except as a holder of less than a
5% interest in (a) a publicly traded firm or mutual fund, or (b) as a minority
stockholder or unitholder in a firm not publicly traded) in a company,
partnership, or firm with a Business Segment that is directly competitive with
the Company, without the prior written consent of the Company. The Executive
hereby also agrees that, for a period of two years following the Termination
Date, he will not (x) acquire or hold direct or indirect beneficial ownership
of more than 1,000,000 shares of Common Stock of the Company, or (y) seek to
influence or control the management or the policies of the Company or obtain
representation on the Board of Directors of the Company (other than in his
individual capacity as a member of the Board of Directors) or solicit,
participate in the solicitation of, or counsel or assist others in the
solicitation of, any proxies or consents with respect to any securities of the
Company.
C. Remedies. The Executive acknowledges and agrees that the
Company will suffer irreparable injury in the event of any material breach of
this Section 8, that damages
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resulting from such injury will be incapable of being precisely measured, and
that the Company will not have an adequate remedy at law to redress the harm
which such violation shall cause. Therefore, the Executive agrees that the
Company shall have the rights and remedies of specific performance and
injunctive relief, in addition to any other rights or remedies that may be
available at law or in equity or under this Agreement, in respect of any
failure, or threatened failure, on the part of the Executive to comply with the
provisions of this Section 8, including, but not limited to, temporary
restraining orders and temporary injunctions to restrain any violation or
threatened violation of this Section 8 by the Executive. The parties agree
that if the Company brings an action in any court to enforce the provisions of
this Section 8, the attorney's fees and costs incurred by the prevailing party
shall be borne by the losing party.
Section 9. Return of Company Property. The Executive
acknowledges that all records, files, documents and equipment, all information
relating to employees, customers and suppliers, and any other materials that in
any way relate to the business of the Company which the Executive has
accumulated during his employment by the Company are the property of the
Company and that all such property shall be returned to the sole possession of
the Company on or before the Termination Date. On the Termination Date, the
Executive shall provide the Company with a written list of all such documents
or information that he has retained duplicates or copies of (the contents of
such list being subject to the approval of the Company) or, in the absence
thereof, a written representation that no such duplicates or copies have been
retained.
Section 10. Business Goodwill. At all times following the
date hereof, the Executive will make only positive comments about the Company,
its affiliates, directors, officers, employees and agents, and shall make no
comments or take any other actions, direct or indirect, that will reflect
adversely on any of the foregoing or adversely affect their business reputation
or goodwill. At all times following the date hereof, the Board of Directors of
the Company will make only positive comments about the Executive, and shall
make no comments or take any other actions, direct or indirect, that will
reflect adversely on any of the foregoing or adversely affect his business
reputation or goodwill. The Executive hereby agrees that, for a period of two
years following the Termination Date, he shall reasonably cooperate with the
Company in providing information that the Company reasonably requests and in
taking such other action as the Company may reasonably request. The Executive
further agrees to reasonably assist the Company at any time in the future, with
respect to all reasonable requests to testify in
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connection with any legal proceeding or matter relating to the Company,
including but not limited to any federal, state or local audit, proceeding or
investigation, other than proceedings relating to the enforcement of this
Termination Agreement or other proceedings in which the Executive is a named
party whose interests are adverse to those of the Company.
Section 11. Miscellaneous.
A. Complete Agreement. This Termination Agreement
constitutes the entire agreement between the parties and cancels and supersedes
all other agreements and understandings, whether written or oral, between the
parties which may have related to the subject matter contained in this
Termination Agreement. Except to the extent specifically provided under this
Termination Agreement, effective as of the Termination Date, the Employment
Agreement shall be terminated and be of no further force or effect and, upon
the Termination Date, the parties release one another from all obligations
under the Employment Agreement.
B. Modification; Amendment; Waiver. No modification,
amendment or waiver of any provisions of this Termination Agreement shall be
effective unless approved in writing by both parties. The failure at any time
to enforce any of the provisions of this Termination 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.
C. Governing Law; Jurisdiction. This Termination
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, and the parties submit to the jurisdiction of the courts of the State
of Texas for purposes of any actions or proceedings that may be required to
enforce this Termination Agreement.
D. Severability. Whenever possible, each provision
of this Termination Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Termination 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 Termination Agreement.
E. Assignment. The rights and obligations of the
parties under this Termination Agreement shall be binding upon and inure to the
benefit of their respective successors, assigns, executors, administrators and
heirs; provided,
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however, that neither the Company nor the Executive may assign any duties under
this Termination Agreement without the prior written consent of the other.
F. Notices. All notices and other communications
under this Termination Agreement shall be in writing and shall be given in
person or by telegraph, telefax 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 telefax, as the case may be, to the respective persons named
below:
If to the Company: Corporate Secretary
Tesoro Petroleum Corporation
0000 Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
If to the Executive: Xxxxxxx X. Xxxxx
000 Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
IN WITNESS WHEREOF, the parties have executed this Termination
Agreement as of the day and year first above written.
COMPANY: Tesoro Petroleum Corporation
By /S/ Xxxxx X. Xxxxx
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Chief Operating
Officer and Executive
Its Vice President
EXECUTIVE: /S/ Xxxxxxx X. Xxxxx
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EXHIBIT A
Section 1. Termination Payment
Severance Payment $1,120,000
1995 Pro-Rata Bonus 184,438
1995 Base Salary and Accrued Vacation 74,289
Tax Withholding (407,761)
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Total $ 970,966
Consulting Payments $ 325,000
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Section 2. Supplemental Retirement Benefit
Executive Security Plan $ 986,480
Tax Withholding (404,950)
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Total $ 581,530
Section 4. Stock Awards
A. Stock Options
500,000 shares; Granted 07/27/92; $4.84 option price
209,000 shares; Granted 12/14/94; $9.50 option price
B. Restricted Stock
20,000 shares - Cost $.16-2/3 per share
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EXHIBIT B
RELEASE OF CLAIMS AND COVENANT NOT TO XXX
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX (the "Release")
is executed and delivered by XXXXXXX X. XXXXX (the "Executive") to TESORO
PETROLEUM CORPORATION (the "Company").
In consideration of the agreement by the Company to provide
the Executive with the rights, payments and benefits under the Termination
Agreement between the Executive and the Company dated September 26, 1995 (the
"Termination Agreement"), the Executive hereby agrees as follows:
Section 1. Release and Covenant. The Executive, of his own
free will, voluntarily releases and forever discharges the Company, its
subsidiaries, affiliates, their directors, officers, employees, agents,
stockholders, successors and assigns (both individually and in their official
capacities with the Company) from, and covenants not to xxx or proceed against
any of the foregoing on the basis of, any and all past or present causes of
action, suits, agreements or other claims which the Executive, his dependents,
relatives, heirs, executors, administrators, successors and assigns has or have
against the Company upon or by reason of any matter, cause or thing whatsoever,
including, but not limited to, any matters arising out of his employment by the
Company and the cessation of said employment, and including, but not limited
to, any alleged violation of the Civil Rights Acts of 1964 and 1991, the Equal
Pay Act of 1963, the Age Discrimination in Employment Act of 1967, the
Rehabilitation Act of 1973, the Older Workers Benefit Protection Act of 1990,
the Americans with Disabilities Act of 1990, the Family and Medical Leave Act
of 1993, the Texas Commission on Human Rights Act and any other federal or
state law, regulation or ordinance, or public policy, contract or tort law
having any bearing whatsoever on the terms and conditions of employment or
termination of employment. This Release shall not, however, constitute a
waiver of any of the Executive's rights under the Termination Agreement.
Section 2. Due Care. The Executive acknowledges that he has
received a copy of this Release prior to its execution and has been advised
hereby of his opportunity to review and consider this Release for 21 days prior
to its execution. The Executive further acknowledges that he has been advised
hereby to consult with an attorney prior to executing this Release. The
Executive enters into this Release having freely and knowingly elected, after
due consideration, to execute this Release and to fulfill the
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promises set forth herein. This Release shall be revocable by the Executive
during the 7-day period following its execution, and shall not become effective
or enforceable until the expiration of such 7-day period. In the event of such
a revocation, the Executive shall not be entitled to the consideration for this
Release set forth above.
Section 3. Reliance by Executive. The Executive acknowledges
that, in his decision to enter into this Release, he has not relied on any
representations, promises or agreements of any kind, including oral statements
by representatives of the Company, except as set forth in this Release.
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX is executed by
the Executive and delivered to the Company on September 26, 1995.
EXECUTIVE:
/S/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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EXHIBIT C
RELEASE OF CLAIMS AND COVENANT NOT TO XXX
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX is executed and
delivered by TESORO PETROLEUM CORPORATION (the "Company") to XXXXXXX X. XXXXX
(the "Executive").
In consideration of the agreement by the Executive to enter
into the Termination Agreement between the Executive and the Company, dated
September __, 1995 (the "Termination Agreement"), the Company hereby agrees as
follows:
The Company releases and forever discharges the Executive
from, and covenants not to xxx or proceed against the Executive on the basis
of, any and all past or present causes of action, suits, agreements or other
claims which the Company has against the Executive upon or by reason of any
matter, cause or thing whatsoever, including, but not limited to, any matters
arising out of his employment by the Company and the cessation of said
employment. This release shall not, however, constitute a waiver of any of the
Company's rights under the Termination Agreement. The Company hereby covenants
that it has not transferred or assigned to any person or entity any of the
claims that are subject to this release and covenant.
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX is executed by
the Company and delivered to the Executive on September 26, 1995.
TESORO PETROLEUM CORPORATION
By: /S/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Chief Operating
Officer and Executive
Vice President
