Exhibit 10.25
STOCK OPTION AGREEMENT
UNDER THE ULTRAMAR DIAMOND SHAMROCK CORPORATION
1996 LONG TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT, dated as of FEBRUARY 6, 2001 by and between Ultramar
Diamond Shamrock Corporation, a Delaware corporation (the "Company"), and
XXXXXXX X. XXXXXX.
WHEREAS, the Company desires to permit the Employee to share directly
in the growth of the business of the Company and it's Subsidiaries and to
identify his interests with those of the Company's stockholders by awarding an
Option to the Employee under the terms of the Company's 1996 Long Term Incentive
Plan, as amended from time to time (the "Plan");
NOW, THEREFORE, in consideration of the Employee's employment with the
Company or a Subsidiary, the Company and the Employee agree as follows:
1. DEFINITIONS.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings assigned to such terms in the Plan.
"Cause" shall mean (a) the willful failure by the Employee to perform his duties
with the Company or the willful engaging in conduct which is injurious to the
Company, or a Subsidiary, monetarily or otherwise, as determined by the
Committee in its sole discretion, or (b) if the Employee has entered into a
written employment agreement with the Company, the definition of "cause" used in
such employment agreement.
"Change in Control" occurs when (a) the Company is merged, consolidated or
reorganized with another corporation or legal person, and as a result, 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 of the Company immediately prior to
such transaction; (b) the Company sells or transfers all or substantially all of
its assets to any other corporation or other legal person, and as a result, less
than 50% of the combined voting power of the then-outstanding 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; (c) 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 of 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
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to vote generally in the election of directors of the Company; or (d) 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 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).
"Closing Price" shall mean, with respect to reload rights under Section 3, the
closing price of the Shares as reported in the New York Stock Exchange Composite
Transactions Report (or any other consolidated transactions reporting system
which subsequently may replace such Composite Transactions Report) on the
trading day the receipt of the exercise notice and Shares by the Company's
Compensation Department or the Company's designated agent.
"Disability" shall mean the Employee'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 Employee will not have returned to the
full-time performance of his duties.
"Employer" shall mean the Company or the Subsidiary that employs the Employee on
the date hereof, provided that, if the Employee subsequently is transferred to
another corporation covered by the Plan, such employing corporation shall be the
Employer for purposes of this Agreement.
"Exercise Price" shall mean the price per share at which the Option may be
exercised, which is set forth in Schedule A.
"Group" with respect to Option Shares shall mean a group of Option Shares having
a common Grant Date and Exercise Price.
"Reload Shares" shall mean the Shares granted upon exercise of reload rights in
conjunction with the exercise of an Option by tendering payment of the Exercise
Price of the Option as evidenced by proof of ownership along with an affidavit
of stock ownership of Shares that have been owned by the Employee for at least
six months prior to the transaction as set forth in Section 3.
"Option Shares" shall mean Shares issuable upon exercise of the Option.
"Retirement" shall mean a Participant's (a) early retirement (retirement from
active employment with the Company or a Subsidiary in accordance with the early
retirement provisions of a pension plan maintained by the Company or such
Subsidiary); or (b) normal retirement (retirement from active employment with
the Company or a Subsidiary in accordance with the normal retirement provisions
of a pension plan maintained by the Company or such Subsidiary).
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"Schedule A" shall mean Schedule A attached hereto and any subsequent Schedules
which may be issued from time to time to reflect any subsequent grants of
additional Shares subject to the Option.
"Termination of Employment" shall mean the time when employee-employer
relationship between the Employee and the Employer is terminated for any reason
whatsoever, but excluding any termination where there is a simultaneous
reemployment by the Company, a Subsidiary, or, if applicable, a parent
corporation, and where the Employee continues to serve on the Board. If the
Employer is a Subsidiary and ceases to be a Subsidiary as a result of a sale of
stock, merger or other transaction, such sale, merger or other transaction shall
be deemed to be a Termination of Employment of the Employee if he ceases to be
employed by either the Company or another Subsidiary following such sale, merger
or other transaction.
2. GRANT OF OPTION.
2.1 Grant; Grant Date; Exercise Price. Pursuant to and subject to the terms and
conditions of the Plan, the Company hereby grants to the Employee the right and
option to purchase from the Company all or any part of the Option Shares related
to this Agreement (annual grant) and set forth on Schedule A hereto upon the
terms and conditions set forth in this Agreement. The Employee hereby accepts
the Option, acknowledges that he has received and read a copy of the Plan and
agrees to be bound by all the terms and provisions of the Plan and this
Agreement. Any subsequent grant of the right and option to purchase Option
Shares related to this Agreement (annual grant) shall also be subject to the
terms and conditions set forth in this Agreement. The Grant Date and Exercise
Price of any subsequent Group of Option Shares shall be set forth on a Schedule
A.
2.2 Adjustments in Option. In the event that the outstanding Shares are changed
into or exchanged for a different number or kind of shares or securities of the
Company or of another corporation, by reason of reorganization, merger or other
subdivision, consolidation, recapitalization, reclassification, stock split,
issuance of warrants, stock dividend or combination of shares or similar event,
the Committee shall make an appropriate and equitable adjustment in the Option
so that the Employee's proportionate interest shall be maintained as before the
occurrence of such event to the maximum extent possible. Any adjustment made by
the Committee shall be final and binding upon the Employee, the Company and all
other interested parties.
2.3 Option Terms. The Option granted under this Agreement shall be subject to
the following terms and conditions:
(a) Term. The Option with respect to a particular Group of Option
Shares shall expire on the tenth anniversary of the Grant Date
for such Group of Option Shares, unless terminated earlier in
accordance with Section 2.3(d);
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(b) Vesting. Except as provided in Section 4.1, the Option with
respect to a particular Group of Option Shares shall become
exercisable as follows:
Cumulative Percentage of Such
Group of Option Shares Which
Anniversary of Grant Date for Shall Become Exercisable
Such Group of Option Shares On and Following Such Date
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First Anniversary 30%
Second Anniversary 60%
Third Anniversary 100%
(c) Exercise. To the extent that the Option has become exercisable in
accordance with this Agreement, it may be exercised in whole or in part at any
time prior to its expiration or termination by providing notice of such exercise
to the Company's Compensation Department or the Company's designated agent of
the number and Group of Shares as to which the Option is being exercised and
enclosing payment for the Shares with respect to which the Option is being
exercised. Any such notice shall be irrevocable. The Exercise Price shall be
paid (i) in cash or by check, (ii) if approved by the Committee, by proof of
ownership along with an affidavit of stock ownership of Shares that have been
owned by the Employee for at least six months prior to such transaction with a
fair market value equal to the closing sale price per share of the Shares as
reported in the New York Stock Exchange Composite Transactions Report (or any
other consolidated transactions reporting system which subsequently may replace
such Composite Transactions Report) for the New York Stock Exchange trading day
on the day the exercise notice, proof of ownership and the affidavit of stock
ownership of Shares are received by the Company, or if there are no sales on
such date, on the next preceding day on which there were sales, and that are
equal to the aggregate purchase price of the Shares with respect to which the
Option is being exercised, (iii) pursuant to a cashless exercise program
maintained by the Company, or (iv) by any combination of the foregoing approved
by the Committee, in its sole discretion. Any partial exercise shall be for
whole Shares only and shall not be for less than one hundred (100) Shares unless
the number of Shares purchased constitutes the total number of Shares then
remaining subject to the Option or the Committee permits such smaller exercise
in its sole discretion.
(d) Status of Option Upon Termination of Employment. In the event of
the Employee's Termination of Employment for Cause, any outstanding portion of
the Option (whether or not exercisable) shall terminate on the date of such
Termination of Employment. If Termination is for any reason other than for
Cause, any outstanding portion of the Option that has not become exercisable
shall terminate on the date of such Termination of Employment, unless otherwise
provided by the Committee in its sole discretion, and any outstanding
exercisable portion (including any previously nonvested portion accelerated by
the Committee) shall be exercisable for the following periods:
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(i) for the shorter of five (5) years following Termination or
the remainder of its original term if Termination of Employment is due
to Employee's death, Permanent Disability or Retirement or if
Termination of Employment occurs on or before the second anniversary of
a Change in Control Date and is an involuntary termination;
(ii) for the shorter of five (5) years following the Change in
Control Date or the remainder of its original term if the Employee is
employed by a Subsidiary and a Termination of Employment as described
in the second sentence of the definition of such term is deemed to have
occurred; or
(iii) for the shorter of ninety (90) days following such
Termination of Employment or the remainder of it's original term in all
other cases.
2.4 Nontransferability. Except as otherwise determined by the Committee, the
Option shall not be assignable or transferable other than by will or the laws of
descent and distribution, and no transfer so affected shall be effective to bind
the Company unless the Company has been furnished with written notice thereof
and a copy of the will, if applicable, and such other evidence as the Committee
may deem necessary to establish the validity of the transfer and the acceptance
by the transferee or transferees of the terms and conditions of the Option.
2.5 Conditions to Issuance of Stock Certificates.
(a) The Shares delivered upon exercise of the Option or any portion
thereof may be either treasury shares or shares of original issue or a
combination of the foregoing. Upon payment of the applicable Exercise Price,
such Shares shall be fully paid and non-assessable. The stock certificates
evidencing the Shares shall bear such legends restricting transferability as the
Committee deems necessary or advisable.
(b) The Company shall not be required to issue or deliver any
certificate or certificates for Shares deliverable upon any exercise of the
Option prior to fulfillment of all of the following conditions:
(i) The completion of any registration or other
qualification of such Shares under any state or
federal law or under rulings or regulations of the
Securities and Exchange Commission or any other
governmental regulatory body or the obtaining of
approval or other clearance from any state or federal
governmental agency which the Committee shall, in its
sole discretion, deem necessary or advisable.
(ii) If the Committee shall, in its sole discretion, deem
it necessary or advisable, the execution by the
Employee of a written representation and agreement,
in a form satisfactory to the Committee, in which the
Employee represents that the Shares
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acquired by him upon exercise of the Option are being
acquired for investment and not with a view to
distribution thereof.
2.6 Rights as Stockholder. The Employee shall not be, nor have any of the rights
or privileges of, a stockholder of the Company in respect of any Shares issuable
upon exercise of the Option unless and until certificates representing such
Shares shall have been issued by the Company following exercise of the Option.
3. RELOAD RIGHTS.
3.1 Grant. Upon payment of the Exercise Price as evidenced by proof of ownership
along with an affidavit of stock ownership of Shares that have been owned by the
Employee for at least six months prior to the transaction for the full or
partial exercise of the Option, the Company will issue to the Employee (a) a
certificate representing a number of Reload Shares determined by (i) multiplying
the number of Shares with respect to which the Option is exercisable by the
difference between the Closing Price and the Exercise Price, and (ii) dividing
such product by the Closing Price and (b) a written agreement granting a Reload
Option to purchase at a price per share equal to the Closing Price a number of
Shares equal to the number of Shares tendered as payment for the exercise of the
Option.
3.2 Limitations. If the Employee transfers other than by will or the applicable
laws of descent and distribution any Reload Shares prior to the second
anniversary of the exercise date of the underlying Option, the Reload Option
will be forfeited. The Exercise Price of the Reload Options shall be not less
than 100% of the fair market value of the Share at closing on the trading day on
the date the Reload Options are granted as reported in the New York Stock
Exchange Composite Transactions Report (or any other consolidated transactions
reporting system which subsequently may replace such Composite Transactions
Report). The Reload Options shall not be exercisable after the expiration of the
term of the underlying Option. The Employee may not elect this reload feature in
the exercise of the Option if he ceases to be an employee of either the Company
or any of its majority-owned subsidiaries at any time during the duration of the
Option, notwithstanding the provisions of Paragraph 2.
4. CHANGE IN CONTROL PROVISIONS.
4.1 Impact of Event. In the event of a Change in Control prior to the Employee's
Termination of Employment, the following shall apply:
(a) Any portion of the Option that had not yet become exercisable
and vested shall become fully vested and exercisable
immediately.
(b) In the event of a Change in Control other than one defined in
Section 1, if (i) following the Change in Control Date, the
Shares cease to be listed on a national securities exchange or
traded on an over-the-counter market or (ii) within sixty (60)
days following the Change in Control Date, the Fair Market
Value of a Share on such exchange or market shall have
declined
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by twenty percent (20%) or more from the Fair Market Value of
a Share on the Change in Control Date or the Change in Control
Price, whichever is higher, then the Company shall offer in
writing the Employee the opportunity to be paid the value of
the outstanding option, determined on the basis of the Change
in Control Price for a period of sixty (60) days following the
event that gives rise to the obligation to pay under this
paragraph (b). Such amount shall be payable in a cash lump sum
within thirty (30) days after the Company receives
notification of the Employee's election to accept the offer
described in this paragraph (b).
4.2 Designation Beneficiary. If the Employee dies prior to receiving any payment
due under Section 4.1(b) such payment shall be made to his beneficiary (as
designated in the form and manner determined by the Committee) or, if no
designation is in effect, to the Employee's estate.
5. MISCELLANEOUS.
5.1 Administration. The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the
Employee, the Company and all other interested persons.
5.2 Tax Implication. In general, employees will be subject to tax upon exercise
of all or any part of the Option in an amount equal to the difference between
the Fair Market Value of the Shares being acquired upon such exercise as of the
exercise date and the Exercise Price, less any applicable commissions and fees.
The Employee is advised to consult tax counsel concerning the tax implications
of holding and exercising all or any part of the Option.
5.3 No Right to Continued Employment. Nothing in this Agreement or in the Plan
shall confer upon the Employee any right to continue in the employ of the
Employer or shall interfere with or restrict in any way the rights of the
Employer, which are hereby expressly reserved, to discharge the Employee at any
time for any reason whatsoever, with or without cause.
5.4 Entire Agreement; Amendment. This Agreement together with the Plan consists
of the entire agreement between the parties with respect to the subject matter
hereof. Any term or provision of this Agreement may be waived at any time by the
party which is entitled to the benefits thereof and any term or provision of
this Agreement may be amended or supplemented at any time by the mutual consent
of the parties hereto, provided that any such waiver, amendment or supplement is
in writing.
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5.5 Governing Law. The laws of the State of
Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflict of
laws.
5.6 Successors. This Agreement shall be binding upon and inure to the benefit of
the successors, assigns and heirs of the respective parties.
5.7 Notices. All notices or other communications made or given in connection
with this Agreement shall be in writing and shall be deemed to have been duly
given when sent by telecopy with oral confirmation or when delivered or mailed
by registered or certified mail, return receipt requested, to the parties at
their addresses listed below or at such other address as each may specify by
notice to the others:
To the Employee: To the Company:
XXXXXXX X. XXXXXX Ultramar Diamond Shamrock Corporation
X.X. Xxx 000000
Xxx Xxxxxxx, XX 00000-0000
Attention: Compensation Department
Human Resources
Telecopy: (000) 000-0000
5.8 Waiver. The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver thereof or
deprive that party of the light thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
5.9 Titles: Construction. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of the Agreement.
The masculine pronoun shall include the feminine and neuter and the singular
shall include the plural, when the context so indicates.
5.10 Dialoque. This Agreement, all grants of Options subject to this Agreement,
and all claims arising from this Agreement are subject to and governed by the
Ultramar Diamond Shamrock Dialogue Dispute Resolution Program.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
UTLRAMAR DIAMOND SHAMROCK EMPLOYEE
CORPORATION
By:
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Xxxx X. Xxxxxx Name: XXXXXXX X. XXXXXX
Chief Executive Officer
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Schedule A to
Stock Option Agreement
dated as of February 6, 2001 by and
between Ultramar Diamond Shamrock Corporation and XXXXXXX X. XXXXXX
Option Shares
Grant Date Granted Exercise Price
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02/06/01 108,700 $32.71
