EXHIBIT 10.2
MEMORANDUM OF AGREEMENT
made as of the ____th day of _________________, 1997
(hereinafter referred to as the "Agreement Date")
B E T W E E N:
XXXXX REFINING AND MARKETING, INC.,
a corporation incorporated
under the laws of Delaware
(hereinafter referred to as the "Corporation"),
OF THE FIRST PART
- and -
Xxxx X. Xxxxxx
of St. Louis, Missouri
(hereinafter referred to as the "Executive"),
OF THE SECOND PART.
WHEREAS the Corporation is a wholly-owned subsidiary of Xxxxx USA, Inc.
(hereinafter referred to as "Xxxxx USA");
AND WHEREAS the Corporation recognizes the valuable services that the
Executive has provided and is continuing to provide to the Corporation, Xxxxx
USA, and their affiliates, considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Corporation, Xxxxx USA, and its shareholders, and wishes to
continue the Executive's employment in accordance with the terms of this
Agreement;
AND WHEREAS the Board has determined that it would be in the best interests
of Xxxxx USA and the Corporation to induce the Executive to remain in the employ
of Xxxxx USA, the Corporation and the Subsidiaries, by entering into this
Agreement relating to the terms of the Executive's continuing employment, and by
indicating that in the event of a Change in Control, the Executive would have
certain automatic and guaranteed rights;
AND WHEREAS both the Corporation and the Executive wish formally to agree
as to the terms and conditions which will
1
govern the Executive's continuing employment, and the terms and conditions which
will govern the termination or modification of the employment of the Executive
following a Change in Control;
NOW THEREFORE, in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
ARTICLE II
RECITALS
--------
II.1 The parties agree, and represent and warrant to each other, that the
above recitals are true and accurate.
ARTICLE III
INTERPRETATION
--------------
III.1 Unless elsewhere herein otherwise expressly provided or unless the
context otherwise requires, words importing the singular include the plural and
vice versa and words importing the masculine gender include the feminine and
neuter genders.
III.2 The headings of the Articles, sections, subsections, paragraphs, and
clauses herein are inserted for convenience of reference only and shall not
affect the meaning or construction hereof.
III.3 This Agreement shall be construed in accordance with the laws of the
State of Missouri, without regard to the conflict of law provisions of any
state. All disputes shall be litigated in St. Louis, Missouri.
2
III.4 If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
III.5 In this Agreement, unless the context otherwise requires, the
following terms shall have the following meanings, respectively:
(a) "Affiliate" means (i) any corporation, partnership, joint venture or other
entity during any period in which it beneficially owns at least thirty
percent of the voting power of all classes of stock of the Corporation
entitled to vote; and (ii) any corporation, partnership, joint venture or
other entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Corporation or by any entity
that is an Affiliate by reason of clause (i) next above.
(b) "Basic Compensation" means the sum of:
(i) the annual salary of the Executive based upon the greater of (A) the
salary paid by or on behalf of Xxxxx USA and the Corporation for the
calendar year ended immediately preceding the Date of Termination
and (B) the salary which would have been payable by or on behalf of
Xxxxx USA and the Corporation to the Executive (based upon the
salary rate in effect immediately preceding the Date of Termination)
for the 12 months immediately following the Date of Termination; and
3
(ii) an amount equal to the greater of:
(A) the agreed yearly minimum bonus which is payable to the
Executive under the compensation terms in effect immediately
prior to the date of the Date of Termination; or
(B) the average of the yearly bonus amounts paid to the Executive
by Xxxxx USA and the Corporation over the last two fiscal years
of the Corporation ended immediately preceding the date of the
Date of Termination.
(c) "beneficial ownership" shall be determined in accordance with Rule 13d-3
issued under the U.S. Securities Exchange Act of 1934.
(d) "Board" means the board of directors of the Corporation.
(e) "Cause" means a determination by the Board, after permitting the Executive
a reasonable opportunity to be heard, that any of the following has
occurred:
(i) wilful and continued failure by the Executive to substantially
perform the Executive's duties with the Corporation (other than any
such failure resulting from his incapacity due to physical or mental
illness) after a demand for substantial performance improvement has
been delivered in writing to the Executive by the Chairman of the
Corporation or the person performing the function of the Chairman of
the Corporation, which identifies the manner in which such officer
or person believes that the Executive has not substantially
performed his duties;
(ii) wilful engaging by the Executive in misconduct which is materially
injurious to Xxxxx USA, the Corporation, or the Affiliates,
monetarily or otherwise; or
(iii) the conviction of the Executive of a criminal offense involving
dishonesty or other moral turpitude;
provided that no act, or failure to act, on the Executive's part shall be
considered "wilful" unless the Board determines that such act or failure to
act by the Executive was in bad faith and was without reasonable belief by
the Executive that such act or failure to act was in the best interests of
Xxxxx USA, the Corporation, or the Affiliates. For purposes of paragraph
(i) above, the phrase "wilful and
4
continued failure by the Executive to substantially perform the Executive's
duties with the Corporation" shall include, without limitation, any
violation of paragraph V.2(a).
(f) "Change in Control" means the first date upon which (I) a TrizecHahn
Corporation Change in Control shall have occurred, if on such date Tiger
shall beneficially own less than 20% of the number of shares of capital
stock of Xxxxx USA held by it as of the Agreement Date; or (II) a Xxxxx
Change in Control shall have occurred.
(g) "TrizecHahn Corporation Change in Control" means the occurrence of any of
the following events described in paragraph (i) through (vi) below:
(i) TrizecHahn Corporation - Voting/Board Control.
---------------------------------------------
The date upon which the following three conditions shall have been
satisfied:
(A) the MVS shall have been converted into SVS in accordance with
their terms (the "Conversion");
(B) a person or group (other than Mr. Xxxxx Xxxx) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 20% or more of the votes attached to the outstanding
Voting Shares; and
(C) a change in the composition of the TrizecHahn Corporation Board
within two years after the date of Conversion such that the
directors of TrizecHahn Corporation in office immediately
before the date of Conversion and the directors recommended for
election or elected to succeed such directors by a majority of
such directors cease to constitute a majority of the TrizecHahn
Corporation Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (i) only if, on
the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Xxxxx USA.
(ii) TrizecHahn Corporation - Voting.
-------------------------------
The date upon which the following two conditions shall have been
satisfied:
5
(A) the Conversion shall have occurred; and
(B) a person or group (other than Mr. Xxxxx Xxxx) holds shares
and/or other securities which, directly or after conversion,
exercise or exchange thereof, would entitle the holders thereof
to cast 35% or more of the votes attached to the outstanding
Voting Shares;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (ii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Xxxxx USA.
(iii) TrizecHahn Corporation - MVS/Board.
----------------------------------
The date upon which the following two conditions shall have been
satisfied:
(A) a majority of the MVS are beneficially owned, or control or
direction is exercised over a majority of the MVS, by any
person or group, other than Mr. Xxxxx Xxxx or a member of his
immediate family who is a Canadian within the meaning of the
Investment Canada Act ("Change in Ownership"); and
(B) there is a change in the composition of the TrizecHahn
Corporation Board within two years after the date of the Change
in Ownership and the directors recommended for election or
elected to succeed such directors by a majority of such
directors such that the directors in office immediately before
the date of the Change in Ownership cease to constitute a
majority of the TrizecHahn Corporation Board;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iii) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Xxxxx USA.
(iv) TrizecHahn Corporation - Merger/Board.
-------------------------------------
The date upon which the following two conditions shall have been
satisfied:
6
(A) the shareholders of TrizecHahn Corporation shall have approved
(I) an amalgamation, merger, or any other business combination
or consolidation of TrizecHahn Corporation with any other
corporation (other than a TrizecHahn Corporation Successor,
TrizecHahn Corporation Subsidiary, Xxxxx USA, the Corporation,
or one or more of the Subsidiaries), (II) a plan for the
liquidation of TrizecHahn Corporation, (III) an agreement for
the sale or disposition of all or substantially all of the
assets of TrizecHahn Corporation; and
(B) within two years following a transaction referred to in
paragraph (iv)(A) above, a majority of the Board of the
amalgamated or merged entity or successor entity into which
TrizecHahn Corporation was liquidated or which acquired
substantially all of the assets of TrizecHahn Corporation is
not comprised of individuals who were directors of TrizecHahn
Corporation immediately before the event referred to in
paragraph (iv)(A) above, or directors recommended for election
or elected to succeed such directors by a majority of such
directors;
provided, however, that a TrizecHahn Corporation Change in Control
will be deemed to have occurred under this paragraph (iv) only if,
on the date on which such TrizecHahn Corporation Change in Control
would otherwise have occurred, TrizecHahn Corporation is a
Substantial Owner of Xxxxx USA.
(v) Increase in Ownership/Board Change.
-----------------------------------
The date upon which the following two conditions have been
satisfied:
(A) any Person (excluding TrizecHahn Corporation, any TrizecHahn
Corporation Subsidiary, and any person who satisfies the
requirements set forth in Rule 13d-1(b)(i) and (ii) issued under the
U.S. Securities Exchange Act of 1934 (relating to certain persons
acquiring securities in the ordinary course of business and not with
the purpose or effect of changing or influencing the control of the
issuer)) has beneficial ownership of the Voting Power of Xxxxx USA
that is in excess of the greater of:
7
(I) 20% of the Voting Power of Xxxxx USA; or
(II) the Voting Power of Xxxxx USA then held by TrizecHahn
Corporation;
(B) of the Board of Directors of Xxxxx USA is comprised of persons
who are neither executive officers of TrizecHahn Corporation or any
TrizecHahn Corporation Subsidiary, nor members of the board of
directors of TrizecHahn Corporation.
(vi) Increase in Ownership.
----------------------
The date upon which any Person (excluding TrizecHahn Corporation and
any TrizecHahn Corporation Subsidiary) has beneficial ownership of
the Voting Power of Xxxxx USA that is in excess of the greater of:
(I) 35% of the Voting Power of Xxxxx USA; or
(II) the Voting Power of Xxxxx USA then held by TrizecHahn
Corporation.
(h) "Xxxxx Change in Control" means the occurrence of any of the events
described in paragraphs (i) through (iii) below:
(i) Merger of Xxxxx USA.
--------------------
The date of approval by the shareholders of Xxxxx USA of a
reorganization, merger or consolidation of Xxxxx USA, in each case,
with respect to which all or substantially all of the individuals
and entities who were the respective beneficial owners of the common
stock and voting securities of Xxxxx USA immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation (or following a series of
prearranged related transactions), beneficially own more than 50%
of, respectively, the then outstanding shares of common stock or the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such reorganization,
merger or consolidation.
(iii) Liquidation of Xxxxx USA.
-------------------------
The date of approval by the shareholders of Xxxxx USA of the sale or
other disposition of all or substantially all of the assets of Xxxxx
USA; in each case, with respect to which all or substantially all
8
of the individuals and entities who were the respective beneficial
owners of the common stock and voting securities of Xxxxx USA
immediately prior to such sale or disposition do not, following such
sale or disposition (or following a series of prearranged related
transactions), beneficially own more than 50% of, respectively, the
then outstanding shares of common stock or the combined voting power
of the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the entity or
entities acquiring all or substantially all of the assets of Xxxxx
USA.
(iii) Disposition of the Corporation.
-------------------------------
The first date on which Xxxxx USA does not beneficially own more
than 50% of the total voting power of the outstanding capital stock
of the Corporation.
(i) Xxxxx USA" means Xxxxx USA, Inc. and includes any corporation, partnership,
joint venture or other entity that succeeds to the interests of Xxxxx USA,
Inc.
(j) "Corporation" means Xxxxx Refining and Marketing, Inc. and includes any
corporation, partnership, joint venture or other entity that succeeds to
the interests of Xxxxx Refining and Marketing, Inc.
(k) "Date of Termination" means the first date on which the Executive is
employed by neither Xxxxx USA, the Corporation, nor any Subsidiary.
(l) "Disability" means the physical or mental illness of the Executive
resulting in the Executive's absence from his full time duties with the
Corporation for more than nine consecutive months and failure by the
Executive to return to full time performance of his duties within thirty
days after written demand by the Corporation to do so given at any time
after such nine-month period.
(m) "Good Reason" means the occurrence of any of the following events without
the Executive's written consent:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including substantial status,
offices, titles and reporting requirements), authority, duties or
responsibilities, or any other action by the Corporation, in each
case which results in a substantial diminution in such position,
authority,
9
duties or responsibilities, in the salary amount, or in the amount
of the potential bonus opportunity,
10
previously provided to the Executive;
(ii) the Corporation requiring the Executive to be based at any office or
location other than in the Greater St. Louis Area; or
(iii) any other action by the Executive's employer purporting to result in
a Date of Termination other than for Cause, Disability or death.
(h) "Greater St. Louis Area" means any location within 30 miles (traveling by
automobile) of 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx.
(i) "group" means any person or company acting jointly or in concert with any
other person or company and for such purposes "acting jointly or in
concert" shall be interpreted in accordance with subsection 91(a) of the
Securities Act (Ontario).
(j) "TrizecHahn Corporation" means TrizecHahn Corporation Corporation, a
corporation incorporated under the laws of the Province of Ontario, and any
TrizecHahn Corporation Successor.
(k) "TrizecHahn Corporation Board" means the board of directors of TrizecHahn
Corporation.
(l) "TrizecHahn Corporation Subsidiary" means any corporation, partnership,
joint venture or other entity during any period in which at least a fifty
percent voting or profits interest is beneficially owned by TrizecHahn
Corporation.
(m) "TrizecHahn Corporation Successor" means any corporation, partnership,
joint venture or other entity which satisfies either (or both of) clause
(i) and (ii):
(i) Mr. Xxxxx Xxxx has beneficial ownership that is in excess of the
greater of:
(A) 40% of the total voting power of the outstanding capital stock
of the entity; or
11
(B) the percentage of the total voting power of the outstanding
capital stock of the entity that is then held by any other
Person;
(ii) the entity succeeds to the interests of TrizecHahn Corporation
Corporation; but including only an entity which, immediately after
the succession: (A) is beneficially owned by all or substantially
all of the individuals and entities who were the respective
beneficial owners of TrizecHahn Corporation immediately prior to
such succession, in substantially the same proportions as the
proportions beneficially owned immediately prior to such succession;
or (B) for a period of two years following the succession, a
majority of the Board of the successor entity is comprised of
individuals who were directors of TrizecHahn Corporation immediately
before the succession.
(n) "MVS" means the outstanding Multiple Voting Shares in the capital of
TrizecHahn Corporation at any time.
(o) The term "Person", when capitalized, shall mean any person, and shall also
include two or more persons acting as a partnership, limited partnership,
syndicate, or other group for the purpose or with the effect of changing or
influencing the control of Xxxxx USA. The provisions of this paragraph (u)
shall be interpreted based on the interpretations of the comparable
provisions of Sections 13 and 14 of the U.S. Securities Exchange Act of
1934 and the rules thereunder.
(p) "Subsidiary" means any corporation, partnership, joint venture or other
entity during any period in which at least a fifty percent voting or
profits interest is beneficially owned by the Xxxxx USA.
(q) TrizecHahn Corporation shall be a "substantial owner" of Xxxxx USA for the
period in which it beneficially owns at least 25% of the Voting Power of
Xxxxx USA, and no other shareholder of Xxxxx USA beneficially owns more
Voting Power of Xxxxx USA than does TrizecHahn Corporation.
12
(r) "SVS" means the outstanding Subordinate Voting Shares in the capital of
TrizecHahn Corporation at any time.
(s) "Tiger" shall mean, collectively, The Jaguar Fund N.V., Tiger (a limited
partnership), Puma (a limited partnership) and any other Person managed by
Tiger Management Corporation which at any time holds any shares of capital
stock of Xxxxx USA.
(t) "Voting Power of Xxxxx USA" shall mean the total voting power of the
outstanding capital stock of Xxxxx USA.
(u) "Voting Shares" means any security of TrizecHahn Corporation carrying a
right to vote for the election of directors of TrizecHahn Corporation under
all circumstances or under circumstances that have occurred and are
continuing.
ARTICLE IV
AGREEMENT TERM
--------------
IV.1 Subject to the automatic extension discussed below in this Article
IV.1, the "Agreement Term" shall be the period beginning on the Agreement Date,
and ending on the fifth anniversary of the Agreement Date. On the fifth
anniversary of the Agreement Date and on each anniversary date thereafter
(including the period during which this Agreement is extended), the Agreement
Term shall automatically be extended by one additional year unless, not less
than 90 days prior to any such anniversary, either the Corporation or the
Executive shall have given written notice to the Executive or the Corporation,
as applicable, that the Agreement Term will not be extended.
IV.2 If a Change in Control occurs during the Agreement Term, and at the
time the Change in Control, less than two years remains in the Agreement Term,
the Agreement Term shall be automatically extended to the second anniversary of
the Agreement Term.
ARTICLE V
CONTINUATION OF EMPLOYMENT
--------------------------
V.1 During the Agreement Term, the Corporation agrees to continue the
Executive in its employ, in accordance with the terms and provisions of this
Agreement, in accordance with the following:
13
(a) The Executive shall be employed by the Corporation as its President
and Chief Executive Officer, and shall not be assigned tasks that would be
substantially inconsistent with that position.
(b) The Executive shall receive, while employed, for each 12-consecutive
month period beginning on the Effective Date and each anniversary thereof, in
substantially equal monthly or more frequent installments, an annual base salary
of not less than $325,000.00 (the "Salary").
(c) The Executive is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar items in promoting the
Corporation's business. Subject to the reimbursement applicable to the
Corporation's senior management employees as in effect from time to time, the
Corporation will reimburse the Executive for all reasonable expenses so
incurred.
(d) The Executive shall be provided with the welfare benefits and other
fringe benefits to the same extent and on the same terms as those benefits are
provided by the Corporation from time to time to the Corporation's other senior
management employees.
V.2 (a) During the Agreement Term, while the Executive is employed by the
Corporation, the Executive shall not solicit, initiate or encourage proposals or
offers from, or provide information relating to Xxxxx USA, the Corporation or
any of the Affiliates to, any person, entity or group in connection with or
relating to any acquisition or disposition of all or any material part of Xxxxx
USA's issued and outstanding shares, or any amalgamation, merger, sale of all or
any material part of the assets of Xxxxx USA, the Corporation or any Subsidiary,
take-over bid, re-organization, re-capitalization, liquidation, winding-up of,
or other business combination or any similar transaction involving Xxxxx USA,
the Corporation or any Subsidiary, without in each case the explicit approval of
the Board, the Chairman of the Board or the person performing the function of
the Chairman of the Board. The Executive shall report to the Chairman of the
Board any explicit approval that he gives to other executives of the Company
with respect to any such transaction.
(b) The provisions of paragraph V.2(a) shall not apply to the sale by the
Executive of any shares of Xxxxx USA owned by him.
ARTICLE VI
OBLIGATIONS UPON TERMINATION
----------------------------
VI.1 If, at any time during the Agreement Term, the
14
Executive's Date of Termination occurs as a result the Executive's employment
being terminated by the Executive's employer (other than for Cause, Disability,
or death), or as a result of the Executive's employment being terminated by the
Executive for Good Reason:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions):
(i) if not theretofore paid, the amount of the Executive's unpaid Basic
Compensation for the then current fiscal year of the Corporation for
the period to and including the Date of Termination, plus any other
compensation and benefit amounts that are accrued and unpaid as of
the Date of Termination; and
(ii) as partial compensation for the Executive's loss of employment, an
amount equal to three (3) times the Basic Compensation.
(b) If the Executive holds any options, rights, warrants or other entitlements
for the purchase or acquisition of securities in the capital of Xxxxx USA,
the Corporation or any Affiliate granted by Xxxxx USA or the Corporation
(collectively, "Rights"), regardless of whether such Rights are then
exercisable, notwithstanding the terms and conditions of such Rights or of
any plan or other document affecting such Rights, shall be deemed to be
immediately exercisable for a term that is the lesser of five years after
the Date of Termination or the remaining term to expiry for such Rights.
(c) The Corporation, at its expense, shall provide the Executive with the
reasonable job relocation counselling services of a firm chosen from time
to time by the Executive, for a period not to exceed 18 months after the
Date of Termination.
(d) The Corporation shall maintain in full force and effect, for the
Executive's continued benefit, until the earlier of:
(i) one year after the Date of Termination; and
(ii) the Executive's commencement of full time employment with a new
employer;
all life insurance, medical, dental, health and accident and disability
plans, programs or arrangements in which the Executive was entitled to
participate immediately prior to the Date of Termination at a cost to the
Executive no
15
greater than the Executive paid while employed, provided that the
Executive's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that the Executive's
participation is barred, the Corporation shall arrange to provide the
Executive, at the Corporation's expense, with benefits substantially
similar to those which the Executive is entitled to receive under such
plans, programs or arrangements or pay cash in an amount after tax
sufficient to enable the Executive to purchase substantially similar
coverage for a one year period on an individual basis at a cost to the
Executive no greater than the Executive paid while employed. In the case
of the Executive's commencement of full time employment with a new employer
within the one year period, the Corporation agrees to make up any
differential in benefits between what the Executive would have received
from the Corporation in the one year period and what the Executive receives
from his new employer, so that the Executive is ensured of receiving the
same benefits which he would have been entitled to receive from the
Corporation had his employment with the Corporation continued for the one
year period at a cost to the Executive no greater than the Executive paid
while employed.
(e) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Xxxxx USA, the Corporation, and the Affiliates,
shall be determined under the terms of the respective plans as in effect
from time to time, with such entitlement based on the fact that the
Executive's employment with Xxxxx USA, the Corporation and the Affiliates
ceased on the Executive's Date of Termination.
Except as may be otherwise specifically provided in an amendment of this
subsection VI.1 adopted in accordance with subsection VII.8, payments under this
subsection VI.1 shall be in lieu of all benefits that may be otherwise payable
to or on behalf of the Executive pursuant to the terms of any severance pay
arrangement of Xxxxx USA, the Corporation or any Affiliate or any other, similar
arrangement of Xxxxx USA, the Corporation or any Affiliate providing benefits
upon involuntary termination of employment.
VI.2 If, at any time during the Agreement Term, the Executive's Date of
Termination occurs as a result the Executive's employment being terminated by
the Executive's voluntary resignation (other than for Good Reason), or is
terminated by the employer for Cause, or if the Executive's Date of Termination
occurs as a result the Executive's employment being terminated by the
Executive's death or Disability:
16
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions), if not
theretofore paid, the amount of the Executive's unpaid Basic Compensation
for the then current fiscal year of the Corporation for the period to and
including the Date of Termination; and shall provide any other compensation
and benefit amounts that are accrued and unpaid as of the Date of
Termination; provided, however, that the Executive's entitlement to the
bonus amounts for the year shall be determined in accordance with the
provisions of the applicable bonus program.
(b) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit plans and benefit
arrangements maintained by Xxxxx USA and the Corporation, shall be
determined under the terms of the respective plans as in effect from time
to time, with such entitlement based on the fact that the Executive's
employment with Xxxxx USA and the Corporation ceased on the Executive's
Date of Termination.
VI.3 The Corporation shall pay to the Executive all reasonable legal and
professional fees and expenses incurred by the Executive in seeking to obtain or
enforce any right or benefit provided by this Agreement, if the Executive is
successful in obtaining such right or benefit.
VI.4 (a) In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Corporation, or by any other member
of the same affiliated group with the Corporation (as determined under Code
Section 280G(d)(5)) for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or
otherwise) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended from time to time (the
"Code"), or any interest or penalties are incurred by the Executive with respect
to such excise tax (other than interest or penalties incurred as a result of the
failure of the Executive to file any tax return, or pay any tax (except any such
failure to pay tax in accordance with the terms hereof), required by applicable
law or to be filed or paid by the Executive) (such excise tax together with any
such interest and penalties, hereinafter collectively referred to as the "Excise
Tax"), the Executive shall be entitled to receive an additional payment (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,
other
17
than interest or penalties imposed as a result of the failure of the Executive
to file any tax return or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law to be filed or
paid by the Executive), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto, other than interest or
penalties imposed as a result of the failure of the Executive to file any tax
return or pay any tax (except any such failure to pay tax in accordance with the
terms hereof), required by applicable law to be filed or paid by the Executive)
and the 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.
(b) Subject to the provisions of subsection VI.5(c), all
determinations required to be made under this subsection VI.5, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by such nationally recognized certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Corporation and the Executive within fifteen
(15) business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Corporation. All
fees and expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, as determined pursuant to this Ection VI.5,
shall be paid by the Corporation to the Executive within five (5) days after the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall so indicate
to the Executive in writing. Any dtermineation by the Accounting Firm shall be
binding upon the Corporation and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Corporation should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Corporation exhausts its remedies pursuant to
subsection VI.5(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Corporation to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten (10) business days after the
18
Executive is informed in writing of such claim and shall apprise the Corporation
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives such notice to the
Corporation (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Corporation notifies the Executive
in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(1) give the Corporation any information requested by the Corporation
relating to such claim;
(2) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Corporation;
(3) cooperate with the Corporation in good faith in order to effectively
contest such claim; and
(4) permit the Corporation to participate in any proceedings relating to
such claim;
provided, however, that the Corporation shall bear and pay directly all costs
-------- -------
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto, other than interest or penalties
imposed as a result of the failure of the Executive to file any tax return or
pay any tax (except any such failure to pay tax in accordance with the terms
hereof), required by applicable law to be filed or paid by the Executive)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this subsection 5.5(c), the
Corporation shall control all proceedings taken in connection with such contest
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 and may, at its sole 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 Corporation shall
determine; provided, however, that if the Corporation directs the Executive to
-------- -------
pay such claim and xxx for a refund, the Corporation shall advance the amount of
19
such payment to the Executive, on an interest-free basis, and shall 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, other than
interest or penalties imposed as a result of the failure of the Executive to
file any tax return or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law to be filed or
paid by the Executive) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and provided, further, that if
-------- -------
the Executive is required to extend the statute of limitations to enable the
Corporation to contest such claim, the Executive may limit this extension solely
to such contested amount. The Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall 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.
(d) If, after the receipt by the Executive of an amount advanced by
the Corporation pursuant to subsection VI.5(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Corporation's complying with the requirements of subsection VI.5(c))
promptly pay to the Corporation the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Corporation pursuant
to subsection VI.5(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Corporation does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
ARTICLE VII
GENERAL
-------
VII.1 If the Executive's Date of Termination occurs for any reason,
subject to subsection VII.3 the Executive shall not be prohibited or restricted
in any manner whatsoever from obtaining employment with or otherwise forming or
participating in a business competitive to the business of Xxxxx USA, the
Corporation or Subsidiary.
VII.2 If the Executive's Date of Termination occurs for any
20
reason, the Executive shall not be subject to any duty or obligation to seek
alternate employment or other sources of income or benefits, or to mitigate his
damages, or to any similar duty or obligation, and, except as specifically
provided with respect to benefits in paragraph VI.1(d), all payment and other
obligations of the Corporation under this Agreement shall not be subject to any
rights of set-off, duty to mitigate or other reduction, and shall be paid and
performed in full notwithstanding any alternate employment or other sources of
income or benefits obtained or received or receivable by the Executive.
VII.3 The Executive agrees that he shall maintain the confidentiality of
any confidential or proprietary information concerning Xxxxx USA, the
Corporation or any Subsidiary until the date, if any, upon which: (i) the
relevant information becomes available to the public or is made available to the
Executive from a source which is not bound by an obligation of confidentiality
to Xxxxx USA, the Corporation or the relevant Subsidiary; or (ii) the Executive
is required to disclose such information by any court or governmental or
regulatory authority of competent jurisdiction (in which case the Executive
shall notify the Corporation and, after such notification, shall be entitled to
disclose or make use of such information only to the extent he is so required).
VII.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand or mailed
by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
Xxxxx Refining and Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board of the Corporation
with a copy to:
Xxxxx Refining and Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Secretary of Xxxxx USA, Inc.
(b) in the case of the Executive, to:
XXXX X. XXXXXX
21
at the last address of the Executive in the records of the
Corporation
or to such other address as the parties may from time to time specify by notice
given in accordance herewith. Any notice so given shall be conclusively deemed
to have been given or made on the day of delivery, if delivered, or if mailed by
registered mail, upon the date shown on the postal return receipt as the date
upon which the envelope containing such notice was actually received by the
addressee.
VII.5 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors, administrators and other legal personal
representatives and upon the Corporation and its successors and assigns.
VII.6 As a condition of receipt of the benefits described in paragraphs
VI.1(a) through VI.1(e), the Executive will be required to enter into a full and
complete release of the Corporation from any and all claims which the Executive
may then have for whatever reason or cause in connection with the Executive's
employment and the termination of it (including, without limitation, any rights
under an employment agreement which may then be in effect), other than those
obligations specifically set out in this Agreement, and other than obligations
of Xxxxx USA, the Corporation and the Subsidiaries to the extent that the
documents providing for such obligations specifically provide that the
obligations are in addition to obligations under this Agreement. In agreeing to
the terms set out in this Agreement, the Executive specifically agrees to
execute a formal release document to that effect and will deliver upon request
appropriate resignations from all offices and positions with Xxxxx USA, the
Corporation and any Subsidiaries and Affiliates if, as, and when requested by
the Board upon the termination of employment within the circumstances
contemplated by this Agreement. To avoid future uncertainty as to the
interpretation of this Agreement, the parties hereto expressly agree that if
Xxxx Xxxxxx ceases to be President and Chief Executive Officer of the
Corporation, and no events constituting Good Reason have occurred, then nothing
in this Agreement shall adversely affect the rights of the Executive which may
arise by reason of such cessation under any other agreement or arrangement
between the Executive and the Corporation.
VII.7 Each of the Corporation and the Executive agrees to execute all such
documents and to do all such acts and things, in any case at the Corporation's
expense, as the other party may reasonably request and as may be lawful and
within its powers to
22
do or to cause to be done in order to carry out and/or implement the provisions
of intent of this Agreement, including, without limitation, seeking all such
governmental, regulatory and other third party approvals as may be necessary or
desirable. Without limiting the generality of the foregoing, the Corporation
agrees to execute all such documents and to do all such acts and things as the
Executive may reasonably request and as may be lawful and within the power of
the Corporation to do or cause to be done in order to minimize any tax
consequences to the Executive or his legal personal representatives in respect
of the payment or performance by the Corporation of the obligations of the
Corporation upon termination arising under Article V or in respect of other
payments or actions required to be made or taken by or on behalf of the
Corporation in the event of termination of the Executive's employment hereunder;
provided that the Corporation shall in no material way be prejudiced thereby.
VII.8 This Agreement may be amended only by an instrument in writing
signed by both parties.
VII.9 Neither party may waive or shall be deemed to have waived any right
it has under this Agreement (including under this subsection VII.9) except to
the extent that such waiver is in writing.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.
XXXXX REFINING AND MARKETING, INC.
By___________________________
___________________________
SIGNED, SEALED AND DELIVERED )
in the presence of )
)
)
______________________________)
) ___________________________
______________________________) EXECUTIVE
23
