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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of November 25,
1996, but effective as provided herein, is made and entered into by and between
Ultramar Corporation, a Delaware corporation (the "Company"), and Xxxxxx
Xxxxxxxxx (the "Executive").
WHEREAS, the Executive has been serving as a senior executive officer
of Ultramar Corporation;
WHEREAS, the Executive is a party to an Employment Agreement with
Ultramar Corporation, dated as of June 1, 1992 (the "Prior Agreement");
WHEREAS, pursuant to the Agreement and Plan of Merger between Ultramar
Corporation, and Diamond Shamrock, Inc., a Delaware corporation ("Diamond
Shamrock, Inc."), dated as of September 22, 1996 (the "Merger Agreement"), as of
the effective time of the Merger (the "Effective Date"), Diamond Shamrock, Inc.
will be merged with and into Ultramar Corporation, with Ultramar Corporation as
the surviving entity (the "Merger");
WHEREAS, pursuant to the Merger Agreement, the Company is authorized to
enter into this Agreement with Executive;
WHEREAS, the Company considers it in the best interests of its
stockholders to xxxxxx the continuous employment of certain key management
personnel;
WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change in Control (as defined herein)
exists;
WHEREAS, the Company wishes to assure itself of both present and future
continuation of management in light of the Merger and in the event of a Change
in Control subsequent to the Merger;
WHEREAS, the Company wishes to continue to employ the Executive and the
Executive is willing to continue to render services, both on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
1. Employment.
1.1. The Company hereby agrees to continue to employ the
Executive and the Executive hereby agrees to undertake employment with the
Company upon the terms and conditions herein set forth.
1.2. Employment will be for a term commencing on the Effective
Date and, subject to earlier expiration upon the Executive's termination under
Section 5, expiring two years from the Effective Date (the "Term").
Notwithstanding the previous sentence, this Agreement
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and the employment of the Executive will be automatically renewed and the Term
extended, subject to Section 5, for the successive one-year periods upon the
terms and conditions set forth herein, commencing on the second anniversary of
the Effective Date, and on each anniversary date thereafter, unless either party
to this Agreement gives the other party written notice (in accordance with
Section 12.5) of such party's intention to terminate this Agreement at least
three months prior to the end of such initial or extended term. For purposes of
this Agreement, any reference to the "Term" of this Agreement will include the
original term and any extension thereof.
2. Position and Duties.
2.1. Position and Duties. During the Term, the Executive will
serve as Vice President and Deputy General Counsel of the Company, and will have
such duties, functions, responsibilities and authority as are (i) consistent
with the Executive's position as Vice President and Deputy General Counsel of
the Company; or (ii) assigned to his office in the Company's bylaws; or (iii)
reasonably assigned to him by the Company's Board of Directors (the "Board").
2.2. Commitment. During the Term, the Executive will be the
Company's full-time employee and, except as may otherwise be approved in advance
in writing by the Board, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability, the
Executive will devote substantially all of his business time and attention to
the performance of his duties to the Company.
3. Place of Performance. In connection with his employment during the
Term, unless otherwise agreed by the Executive, the Executive will be based at
such location as may be determined by the Board. The Executive will undertake
normal business travel on behalf of the Company.
4. Compensation and Related Matters.
4.1. Compensation and Benefits.
(i) Annual Base Salary. During the Term of this
Agreement, the Company will pay to the Executive an annual base salary of not
less than $200,000, which annual base salary may be modified from time to time
by the Board (or the Compensation Committee thereof) in its sole discretion,
payable at the times and in the manner consistent with the Company's general
policies regarding compensation of executive employees. The Board may from time
to time authorize such additional compensation to the Executive, in cash or in
property, as the Board may determine in its sole discretion to be appropriate.
(ii) Annual Incentive Compensation. If the Board (or the
Compensation Committee thereof) authorizes any cash incentive compensation or
approves any other management incentive program or arrangement, the Executive
will be eligible to participate in such plan, program or arrangement under the
general terms and conditions applicable to executive and management employees;
provided, however, that so long as the Executive remains employed by the Company
at the end of the applicable fiscal year, (a) the annual cash incentive
compensation paid by the Company to the Executive for the Company's fiscal year
that includes the Effective Date, aggregated with any other annual incentive
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compensation earned by the Executive for calendar year 1996, will be in an
amount not less than 100% of the Executive's 1996 target bonus, and (b) the cash
incentive compensation paid to the Executive for the Company's next succeeding
fiscal year will be in an amount not less than 100% of the Executive's target
bonus for that year. Except as set forth in the proviso to the preceding
sentence, nothing in this Section 4.1(ii) will guarantee to the Executive any
specific amount of incentive compensation, or prevent the Board (or the
Compensation Committee thereof) from establishing performance goals and
compensation targets applicable only to the Executive.
4.2. Executive Benefits. In addition to the compensation
described in Section 4.1, the Company will make available to the Executive and
his eligible dependents, subject to the terms and conditions of the applicable
plans, including without limitation the eligibility rules, participation in all
Company-sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company), expense
reimbursement or other employee benefit policies, plans, programs or
arrangements or any equivalent successor policies, plans, programs or
arrangements that may now exist or be adopted hereafter by the Company.
4.3. Expenses. The Company will promptly reimburse the Executive
for all travel and other business expenses the Executive incurs in order to
perform his duties to the Company under this Agreement in a manner commensurate
with the Executive's position and level of responsibility with the Company, and
in accordance with the Company's policy regarding substantiation of expenses.
5. Termination. Notwithstanding the Term specified in Section 1.2, the
termination of the Executive's employment hereunder will be governed by the
following provisions:
5.1. Death. In the event of the Executive's death during the
Term, the Company will pay to the Executive's beneficiaries or estate, as
appropriate, promptly after the Executive's death, (i) the unpaid annual base
salary to which the Executive is entitled, pursuant to Section 4.1, through the
date of the Executive's death, and (ii) for any accrued but unused vacation
days, to the extent and in the amounts, if any, provided under the Company's
usual policies and arrangements. This Section 5.1 will not limit the entitlement
of the Executive's estate or beneficiaries to any death or other benefits then
available to the Executive under any life insurance, stock ownership, stock
options, or other benefit plan or policy that is maintained by the Company for
the Executive's benefit.
5.2. Disability.
(i) If the Company determines in good faith that the
Executive has incurred a Disability (as defined below) during the Term, the
Company may give the Executive written notice of its intention to terminate the
Executive's employment. In such event, the
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Executive's employment with the Company will terminate effective on the 30th day
after receipt of such notice by the Executive, provided that within the 30 days
after such receipt, the Executive will not have returned to full-time
performance of his duties. The Executive will continue to receive his annual
base salary and benefits until the date of termination. In the event of the
Executive's Disability, the Company will pay the Executive, promptly after the
Executive's termination, (a) the unpaid annual base salary to which he is
entitled, pursuant to Section 4.1, through the date of the Executive's
termination, (b) for any accrued but unused vacation days, to the extent and in
the amounts, if any, provided under the Company's usual policies and
arrangements, and (c) a lump sum in cash in an amount equal to 50% of his annual
base salary at the time of termination. This Section 5.2 will not limit the
entitlement of the Executive, the Executive's estate or beneficiaries to any
disability or other benefits then available to the Executive under any
disability insurance or other benefit plan or policy that is maintained by the
Company for the Executive's benefit.
(ii) For purposes of this Agreement, "Disability" will mean
the Executive's incapacity due to physical or mental illness substantially to
perform his duties on a full-time basis for six consecutive months and within 30
days after a notice of termination is thereafter given by the Company the
Executive will not have returned to the full-time performance of the Executive's
duties; provided, however, if the Executive disagrees with a determination to
terminate him because of Disability, the question of the Executive's disability
will be subject to the certification of a qualified medical doctor agreed to by
the Company and the Executive or, in the event of the Executive's incapacity to
designate a doctor, the Executive's legal representative. In the absence of
agreement between the Company and the Executive, each party will nominate a
qualified medical doctor and the two doctors will select a third doctor, who
will make the determination as to Disability. In order to facilitate such
determination, the Executive will, as reasonably requested by the Company, (a)
make himself available for medical examinations by a doctor in accordance with
this Section 5.2(ii), and (b) grant the Company and any such doctor access to
all relevant medical information concerning him, arrange to furnish copies of
medical records to such doctor and use his best efforts to cause his own doctor
to be available to discuss his health with such doctor.
5.3. Cause.
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below). In the event of the Executive's
termination for Cause, the Company will promptly pay to the Executive (or his
representative) the unpaid annual base salary to which he is entitled, pursuant
to Section 4.1, through the date the Executive is terminated and the Executive
will be entitled to no other compensation, except as otherwise due to him under
applicable law.
(ii) For purposes of this Agreement, the Company will have
"Cause" to terminate the Executive's employment hereunder upon a finding by the
Board that (a) the Executive committed an illegal act or acts that were intended
to and did defraud the Company, (b) the Executive engaged in gross negligence or
gross misconduct against the Company or another employee, or in carrying out his
duties and responsibilities, or (c) the Executive materially breached any of the
express covenants set forth in Section 9.1, 9.2 or 9.3. The Company will not
have Cause unless and until the Company provides the Executive with written
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notice that the Company intends to terminate his employment for Cause. Such
written notice will specify the particular act or acts, or failure to act, that
is or are the basis for the decision to so terminate the Executive's employment
for Cause. The Employee will be given the opportunity within 30 calendar days of
the receipt of such notice to meet with the Board to defend such act or acts, or
failure to act. The Executive's employment by the Company automatically will be
terminated under this Section 5.3 for Cause as of the receipt of the written
notice from the Company or, if later, the date specified in such notice. A
notice given under this Section 5.3 must set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment for Cause, and if the termination date is other than the
date of receipt of such notice, specify the date on which the Executive's
employment is to be terminated (which date will not be earlier than the date on
which such notice is given in accordance with Section 13.5). Such notice must be
given no later than 180 business days after a director of the Company (excluding
the Executive, if applicable) first has actual knowledge of the events
justifying the purported termination.
5.4. Termination.
(i) Involuntary Termination. The Executive's employment
hereunder may be terminated by the Company for any reason by written notice as
provided in Section 12.5. The Executive will be treated for purposes of this
Agreement as having been involuntarily terminated by the Company other than for
Cause if the Executive terminates his employment with the Company for any of the
following reasons (each, a "Good Reason"): without the Executive's written
consent, (a) the Company has breached any material provision of this Agreement
and within 30 days after notice thereof from the Executive, the Company fails to
cure such breach; (b) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company fails to assume liability under the
Agreement; (c) at any time after the Company has notified the Executive pursuant
to Section 1.2 that the Company does not intend to renew the Agreement and the
Executive's employment at the end of the Term (including any previous renewals)
(rather than to allow the Agreement automatically to renew); (d) a material
reduction in the aggregate benefits described by Section 4.2 (other than
stock-based compensation) provided to the Executive, unless such decrease is
required by law or is applicable to all employees of the Company eligible to
participate in any employee benefit arrangement affected by such reduction; (e)
a significant reduction in the Executive's duties or the addition of duties,
which in either case are materially inconsistent with the Executive's title or
position; or (f) a reduction in the Executive's annual base salary.
(ii) Voluntary Termination. The Executive may voluntarily
terminate the Agreement at any time by notice to the Company as provided in
Section 12.5. The Executive's death or Disability (as defined in Section
5.2(ii)) during the term of the Agreement will constitute a voluntary
termination of employment for purposes of eligibility for termination payments
and benefits as provided in Section 5.5, but for no other purpose.
5.5. Termination Payments and Benefits.
(i) Form and Amount. Upon the Executive's involuntary
termination, other than for Cause, (a) subject to Section 5.5(iii), the Company
will pay or provide to the
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Executive (1) his annual base salary and benefits until the date of termination,
(2) within five business days after termination of his employment, a lump sum
cash payment equal in amount to two times the sum of (x) the Executive's highest
annual base salary in effect during the two years prior to his date of
termination, and (y) the highest annual incentive compensation earned by the
Executive during the same two-year period, (3) two additional years of age and
service credit under the qualified and nonqualified defined benefit retirement
plans of the Company in which the Executive participates at the time of
termination; provided, however, that in the case of a qualified defined benefit
pension plan, the present value of the additional benefit the Executive would
have accrued if he had been credited for all purposes with the additional years
of age and service under such plan as of the Executive's date of termination
with the Company will be paid in a lump sum in cash within five business days
after termination of the Executive's employment, and (4) for a period of one
year after termination of his employment, the continuation of the employee
welfare benefits set forth in Section 4.2 except as offset by benefits paid by
other sources as set forth in Section 8, or as prohibited by law or as a
condition of maintaining the tax-favored status of any such benefits to the
Company or its employees; (b) the Executive's benefit under the applicable
supplemental executive retirement plan will be not less than the benefit the
Executive would have received under the terms of the corresponding plan
(including any individual modifications thereof) applicable to the Executive as
in effect immediately prior to the Effective Date determined as if the Executive
had continued employment under the terms of such corresponding plan (and
modifications) until his actual termination of employment; and (c) if the
Executive had theretofore relocated to San Antonio and his employment has been
terminated within two years after the Effective Date, Executive will be
reimbursed the costs of relocation from San Antonio to any other location in the
continental United States under the same policies and procedures applicable to
Executive's reimbursement for relocation to San Antonio.
(ii) Maintenance of Benefits. During the period set forth in
Section 5.5(i)(a)(4), the Company will use its best efforts to maintain in full
force and effect for the continued benefit of the Executive all referenced
benefits or will arrange to make available to the Executive benefits
substantially similar to those that the Executive would otherwise have been
entitled to receive if his employment had not been terminated. Such benefits
will be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to his termination.
(iii) Release. No benefit will be paid or made available
under Section 5.5(i) (a) unless the Executive first executes a release in the
form attached as an exhibit to this Agreement, and (b) to the extent any portion
of such release is subject to the seven-day revocation period prescribed by the
Age Discrimination in Employment Act of 1967, as amended, or to any similar
revocation period in effect on the date of termination of Executive's
employment, such revocation period has expired.
6. Change in Control Provisions.
6.1. Impact of Change in Control. In the event of a "Change in
Control" of the Company, as defined in Section 6.2, (i) the Company will cause
all cash benefits due under this Agreement to be secured by an irrevocable trust
for the benefit of the Executive, the assets of
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which will be subject to the claims of the Company's creditors, and will
transfer to such trust cash and other property adequate to satisfy all of the
expenses of the trust for at least five years after the Change in Control and
any of the Company's actual and potential cash obligations under this Agreement,
(ii) if the Executive's employment is involuntarily terminated without Cause
after the Change in Control, (A) the covenants of Sections 9.1 and 10 will be
inapplicable to the Executive, and (B) the covenant of Section 9.2 will expire
on the third anniversary of the date of termination of the Executive's
employment, and (iii) the definition of Good Reason, as set forth in Section
5.4(i) above, will be expanded to include the following:
(a) A good faith determination by the Executive that, as a result
of the Change in Control and a change in circumstances thereafter significantly
affecting his positions, including a change in the scope of business or other
activities for which he was responsible, he has been rendered substantially
unable to carry out, has been substantially hindered in the performance of, or
has suffered a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties attached to any of the Executive's
positions; the Executive's determination will be presumed to have been made in
good faith unless otherwise shown by the Company by clear and convincing
evidence;
(b) The relocation of the Company's principal executive offices
(but only if, immediately prior to the Change in Control, the Executive's
principal place of employment was at the Company's principal executive offices),
or requirement that the Executive have as his principal location of work any
location that is, in excess of 50 miles from the location thereof immediately
preceding the Change in Control or to travel away from his home or office
significantly more often than that required immediately prior to the Change in
Control; or
(c) For any reason, or without reason, during the 30-day period
immediately following the first anniversary of the first occurrence of a Change
in Control.
6.2. Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" will be deemed to occur if at any time during
the term of the Agreement any of the following events will occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization, less than 50% of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock (as that term is hereafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal person,
and as a result of such sale or transfer, less than 50% of the combined voting
power of the then-outstanding voting securities of such corporation or person
are held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Securities Exchange
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Act of 1934 (the "Exchange Act"), disclosing that any person (as the term
"person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act)
has become the beneficial owner (as the term "beneficial owner" is defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 20% or more of the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the
election of Directors of the Company ("Voting Stock");
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during the period of two consecutive years
individuals who at the beginning of any such period constitute the Directors of
the Company cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each Director of the Company first elected during such period
was approved by a vote of at least two-thirds of the Directors of the Company
then still in office who were Directors of the Company at the beginning of any
such period (excluding for this purpose the election of any new Director in
connection with an actual or threatened election or proxy contest).
Notwithstanding the foregoing provisions of Section 6.2(iii) or
(iv) hereof, unless otherwise determined in a specific case by majority vote of
the Board (or the Compensation Committee thereof), a "Change in Control" will
not be deemed to have occurred for purposes of this Agreement solely because the
Company, an entity in which the Company directly or beneficially owns 50% or
more of the voting securities of such entity, any Company-sponsored employee
stock ownership plan or any other employee benefit plan of the Company either
files or becomes obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares of voting securities of the
Company, whether in excess of 20% or otherwise, or because the Company reports
that a change in control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership. Notwithstanding the
foregoing provisions of Section 6.2, the Merger will not constitute a Change in
Control.
7. Certain Additional Payments by the Company:
(i) Anything in this Agreement to the contrary notwithstanding,
if it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being "contingent on a
change in ownership or control" of the Company, within the meaning of Section
280G of
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the Code (or any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such excise tax
(such tax or taxes, together with any such interest and penalties, are hereafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment or payments (a "Gross-Up Payment") in
an amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. No Gross-Up
Payment will be made with respect to the Excise Tax, if any, attributable to (a)
any incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement (unless a comparable Gross-Up
Payment has theretofore been made available with respect to such option), or (b)
any stock appreciation or similar right, whether or not limited, granted in
tandem with any ISO described in clause (a).
(ii) Subject to the provisions of Section 7(vi) hereof, all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
will be made by a nationally recognized firm of certified public accountants
(the "Accounting Firm") selected by the Executive in his sole discretion. The
Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and the Executive within 15
calendar days after the Termination Date, if applicable, and any other such time
or times as may be requested by the Company or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the Company
will pay the required Gross-Up Payment to the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it will, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his federal,
state, local income or other tax return. Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section
4999 of the Code (or any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax law at the time of
any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to pursue its remedies pursuant
to Section 7(vi) hereof and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive will direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company and the
Executive as promptly as possible. Any such Underpayment will be promptly paid
by the Company to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations.
(iii) The Company and the Executive will each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 7(ii) hereof.
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(iv) The federal, state and local income or other tax
returns filed by the Executive will be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive will make proper payment of the amount
of any Excise Tax, and at the request of the Company, provide to the Company
true and correct copies (with any amendments) of his federal income tax return
as filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, as such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive will within five business days pay to the Company the amount of such
reduction.
(v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Sections 7(ii) and (iv) hereof will be borne by the Company. If such fees and
expenses are initially advanced by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(vi) The Executive will notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification will be given as
promptly as practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive will further apprise
the Company of the nature of such claim and the date on which claim is requested
to be paid (in each case, to the extent known by the Executive). The Executive
will not pay such claim prior to the earlier of (a) the expiration of the
30-calendar-day period following the date on which he gives such notice to the
Company and (b) the date that any payment of amount with respect to such claim
is due. If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive will:
(1) provide the Company with any written records or
documents in his possession relating to such claim reasonably
requested by the Company;
(2) take such action in connection with contesting such
claim as the Company will reasonably request in writing from time
to time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by the Company;
(3) cooperate with the Company in good faith in order
effectively to contest such claim; and
(4) permit the Company to participate in any proceedings
relating to such claim;
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provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 7(vi), the Company will control all proceedings taken in connection with
the contest of any claim contemplated by this Section 7(vi) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company will determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company will advance the amount of such payment to the Executive on an
interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
will be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(vii) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(vi) hereof, the Executive receives
any refund with respect to such claim, the Executive will (subject to the
Company's complying with the requirements of Section 7(vi) hereof) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 7(vi)
hereof, a determination is made that the Executive will not be entitled to any
refund with respect to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial or refund prior to the
expiration of 30 calendar days after such determination, then such advance will
be forgiven and will not be required to be repaid and the amount of such advance
will offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid pursuant to this Section 7.
8. Mitigation and Offset. The Executive is under no obligation to
mitigate damages or the amount of any payment or benefit provided for hereunder
by seeking other employment or otherwise; provided, however, that the
Executive's coverage under the Company's welfare benefit plans will be reduced
to the extent that the Executive becomes covered under any comparable employee
benefit plan made available by another employer and covering the same type of
benefits. The Executive will report to the Company any such benefits actually
received by him.
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9. Competition; Confidentiality; Nonsolicitation.
9.1. (i) Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that during the Term and for one year following the Term he will not,
without the prior written consent of the Company, engage in Competition (as
defined below) with the Company. For purposes of this Agreement, if the
Executive takes any of the following action he will be engaged in "Competition":
engaging in or carrying on, directly or indirectly, any enterprise, whether as
an advisor, principal, agent, partner, officer, director, employee, stockholder,
associate or consultant to any person, partnership, corporation or any other
business entity, that is principally engaged in the business of refining and/or
marketing oil or related products in States or Provinces in which the Company,
(or any division or segment thereof) has operation; provided, however, that
"Competition" will not include (a) the mere ownership of securities in any
enterprise and exercise of rights appurtenant thereto or (b) participation in
management of any enterprise or business operation thereof other than in
connection with the competitive operation of such enterprise.
(ii) Subject to Section 6.1(ii), the Executive hereby
covenants and agrees that during the Term and for three years following the Term
he will not assist a third party in preparing or making an unsolicited bid for
the Company, engaging in a proxy contents with the Company, or engaging in
another other similar activity.
9.2. During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 9.2) to the extent necessary for Executive to carry out his obligations
under this Agreement. Subject to Section 6.1(ii), the Executive hereby covenants
and agrees that he will not, without the prior written consent of the Company,
during the Term or thereafter disclose to any person not employed by the
Company, or use in connection with engaging in Competition with the Company, any
confidential or proprietary information of the Company. For purposes of this
Agreement, the term "confidential or proprietary information" will include all
information of any nature and in any form that is owned by the Company and that
is not publicly available or generally known to persons engaged in businesses
similar or related to those of the Company. Confidential information will
include, without limitation, the Company's financial matters, customers,
employees, industry contracts, and all other secrets and all other information
of a confidential or proprietary nature. The foregoing obligations imposed by
this Section 9.2 will cease if such confidential or proprietary information will
have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure (after giving the Company
notice and an opportunity to contest such requirement).
9.3. The Executive hereby covenants and agrees that during the
Term and for one year thereafter he will not attempt to influence, persuade or
induce, or assist any other person in so persuading or inducing, any employee of
the Company to give up, or to not commence, employment or a business
relationship with the Company.
9.4. Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his post-termination obligations
under Sections 9.1, 9.2 and 9.3 would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, Executive acknowledges,
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consents and agrees that, in addition to any other rights or remedies which the
Company may have at law, in equity or under this Agreement, upon adequate proof
of his violation of any such provision of this Agreement, the Company will be
entitled to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach, without the necessity of proof of
actual damage.
10. Post-termination Assistance. Subject to Section 6.1(ii), the
Executive agrees that after his employment with the Company has terminated he
will provide, upon reasonable notice, such information and assistance to the
Company as may reasonably be requested by the Company in connection with any
audit, governmental investigation or litigation in which it or any of its
affiliates is or may become a party; provided, however, that (i) the Company
agrees to reimburse the Executive for any related out-of-pocket expenses,
including travel expenses, and to pay the Executive reasonable compensation for
his time based on his rate of annual salary at the time of termination and (ii)
any such assistance may not unreasonably interfere with the then-current
employment of the Executive.
11. Survival. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Executive's covenants contained in Sections
9.1, 9.2, 9.3 and 10 and the Company's obligations under Sections 5, 7 and 12.1
will survive the expiration or termination of Executive's employment.
12. Miscellaneous Provisions.
12.1. Legal Fees and Expenses. Without regard to whether the
Executive prevails, in whole or in part, in connection therewith, the Company
will pay and be financially responsible for 100% of any and all attorneys' and
related fees and expenses incurred by the Executive in connection with any
dispute associated with the interpretation, enforcement or defense of the
Executive's rights under this Agreement by litigation or otherwise; provided
that, in regard to such dispute, the Executive has not acted in bad faith or
with no colorable claim of success. All such fees and expenses will be paid by
the Company as incurred by the Executive on a monthly basis upon an undertaking
by the Executive to repay such advanced amounts if a court determines, in a
decision against which no appeal may be taken or with respect to which the time
period to appeal has expired, that he acted in bad faith or with no colorable
claim of success.
12.2. Binding on Successors. This Agreement will be binding upon
and inure to the benefit of the Company, the Executive and each of their
respective successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable.
12.3. Governing Law. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Delaware, without regard to conflicts of law principles.
12.4. Severability. Any provision of this Agreement that is
deemed invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent
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of such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant will be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
12.5. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof confirmed), or five
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business days after
having been sent by a nationally recognized overnight courier service such as
Federal Express, UPS, or Purolator, addressed to the Company (to the attention
of the Secretary of the Company) at its principal executive offices and to the
Executive at his principal residence, or to such other address as any party may
have furnished to the other in writing and in accordance herewith, except that
notices or changes of address will be effective only upon receipt.
(i) To the Company. If to the Company, addressed to the
attention of General Counsel at 0000 Xxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxx
00000.
(ii) To the Executive. If to the Executive, to him in care
of the Company at the above address.
12.6. Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.7. Entire Agreement. The terms of this Agreement are intended
by the parties to be the final expression of their agreement with respect to the
Executive's employment by the Company and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.
12.8. Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, approved by the
Company and signed by the Executive and the Company. Failure on the part of
either party to complain of any action or omission, breach or default on the
part of the other party, no matter how long the same may continue, will never be
deemed to be a waiver of any rights or remedies hereunder, at law or in equity.
The Executive or the Company may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such
waiver will not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.
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12.9. No Inconsistent Actions. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential intent of this Agreement.
Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.
12.10. Headings and Section References. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
12.11. Indemnification. The Company will indemnify, defend and
hold the Executive harmless, to the maximum extent permitted by law, from any
and all claims, litigations or suits arising out of the activities of the
Executive reasonably taken in the performance of his duties hereunder, including
all reasonable expenses and professional fees that may relate thereto. The
Company agrees to use its best efforts to obtain a directors and officers
liability insurance policy covering the Executive in a sufficient amount to
provide such indemnification, and to maintain such policy during the Term (and
for so long thereafter as is practicable in the circumstances taking into
account the availability of such insurance).
13. Effectiveness and Prior Agreement. This Agreement will become
effective upon, and the Prior Agreement will terminate immediately prior to, the
Effective Date. Notwithstanding any other provision of this Agreement, if the
Merger Agreement is terminated prior to the Effective Date, this Agreement will
have no further force or effect, and the Prior Agreement will continue in effect
as though this Agreement had not been entered into.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written but effective as provided in Section 13.
/s/ Xxxxxx Xxxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxxx
ULTRAMAR CORPORATION
a Delaware corporation
By: /s/ Xxxx Xxxxxx
--------------------------
Xxxx Xxxxxx
Chief Executive Officer
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Exhibit
GENERAL RELEASE OF ALL CLAIMS
This General Release of all Claims (this "Agreement") is entered into
by and between __________ ("Executive") and Ultramar Diamond Shamrock
Corporation (including its subsidiaries) (collectively the "Company") effective
as of _______.
In consideration of the promises set forth in the employment agreement
between Executive and the Company, dated ________, 1996, as amended as of the
effective date hereof (the "Employment Agreement"), as well as any promises set
forth in this Agreement, Executive and the Company agree as follows:
(1) Employment Agreement Entitlements
The Company will provide Executive the post-termination payments and
benefits to which he is entitled under the Employment Agreement.
(2) Return of Property
All Company files, access keys, desk keys, ID badges and credit cards,
and such other property of the Company as the Company may reasonable
request, in Executive's possession must be returned no later than the
date of Executive's termination from the Company (the "Termination
Date").
(3) General Release and Waiver of Claims
Except as provided in the last sentence of this paragraph (3),
Executive hereby unconditionally and forever releases, discharges and
waives any and all claims of any nature whatsoever, whether legal,
equitable or otherwise, which Executive may have against the Company
arising at any time on or before the Termination Date, other than with
respect to the obligations of the Company to the Executive under the
Employment Agreement. This release of claims extends to any and all
claims of any nature whatsoever, other than with respect to the
obligations of the Company to the Executive under the Employment
Agreement, whether known, unknown or capable or incapable of being
known as of the Termination Date of thereafter. This Agreement is a
release of all claims of any nature whatsoever by Executive against the
Company, other than with respect to the obligations of the Company to
the Executive under the Employment Agreement, and includes, other than
as herein provided, any and all claims, demands, causes of action,
liabilities whether known or unknown including those caused by, arising
from or related to Executive's employment relationship with the Company
including, but without limitation, any and all alleged discrimination
or acts of discrimination which occurred or may have occurred on or
before the Termination Date based upon race, color, sex, creed,
national origin, age, disability or any other violation of any Equal
Employment Opportunity Law, ordinance, rule, regulation or order,
including, but not limited to, Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1991; the Age Discrimination
in Employment Act, as amended (as further described in
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Section 7 below); the Americans with Disabilities Act; claims under
the Employee Retirement Income Security Act ("ERISA"); or any other
federal, state or local laws or regulations regarding employment
discrimination or termination of employment. This also includes claims
for wrongful discharge, fraud, or misrepresentation under any statute,
rule, regulation or under the common law.
The Executive agrees and understands and knowingly agrees to this
release because it is his intent in executing this Agreement to forever
discharge the Company from any and all present, future, foreseen or
unforeseen causes of action except for the obligations of the Company
set forth in the Employment Agreement.
Notwithstanding the foregoing, Executive does not release, discharge or
waive any rights to indemnification that he may have under the By-Laws
of the Company, the laws of the State of Delaware, any indemnification
agreement between the Executive and the Company or any insurance
coverage maintained by or on behalf of the Company.
(4) Release and Waiver of Claims Under the Age Discrimination in Employment
Act
Executive acknowledges that the Company encouraged him to consult with
an attorney of his choosing, and through this Agreement encourages him
to consult with his attorney with respect to possible claims under the
Age Discrimination in Employment Act of 1967, as amended ("ADEA") and
that Executive acknowledges that he understands that the ADEA is a
federal statute that prohibits discrimination, on the basis of age, in
employment, benefits and benefit plans. Executive whishes to waive any
and all claims under the ADEA that he may have, as of the Termination
Date, against the Company, its shareholders, employees, or successors
and hereby waives such claims. Executive further understands that by
signing this Agreement he is in fact waiving, releasing and forever
giving up any claim under the ADEA that may have existed on or prior to
the Termination Date. Executive acknowledges that the Company has
informed him that he has at his option, twenty-one (21) days in which
to sign the waiver of this claim under ADEA, and he does hereby
knowingly and voluntarily waive said twenty-one (21) day period.
Executive also understands that he has seven (7) days following the
Termination Date within which to revoke the release contained in this
paragraph by providing a written notice of his revocation of the
release and waiver contained in this paragraph to the Company.
Executive further understands that this right to revoke the release
contained in this paragraph relates only to this paragraph and does not
act as a revocation of any other term of this Agreement.
(5) Proceedings
Executive has not filed, and agrees not to initiate or cause to be
initiated on his behalf, any complaint, charge, claim or proceeding
against the Company before any local, state or federal agency, court or
other body relating to his employment or the termination of his
employment, other than with respect to the obligations of the Company
to the Executive under the Employment Agreement (each individually, a
"Proceeding"), and agrees not to voluntarily participate in any
Proceeding. Executive waives any right he
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may have to benefit in any manner from any relief (whether monetary or
otherwise) arising out of any Proceeding.
(6) Remedies
In the event Executive initiates or voluntarily participates in any
Proceeding, or if he fails to abide by any of the terms of this
Agreement or his post-termination obligations contained in the
Employment Agreement, or if he revokes the ADEA release contained in
Paragraph 4 of this Agreement within the seven-day period provided
under Paragraph 4, the Company may, in addition to any other remedies
it may have, reclaim any amounts paid to him under the termination
provisions of the Employment Agreement or terminate any benefits or
payments that are subsequently due under the Employment Agreement,
without waiving the release granted herein. Executive acknowledges and
agrees that the remedy at law available to the Company for breach of
any of his post-termination obligations under the Employment Agreement
or his obligations under Paragraphs 3, 4, and 5 of this Agreement would
be inadequate and that damages flowing from such a breach may not
readily be susceptible to being measured in monetary terms.
Accordingly, Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies which the Company may have at
law, in equity or under this Agreement, upon adequate proof of his
violation of any such provision of this Agreement, the Company shall be
entitled to immediate injunctive relief and may obtain a temporary
order restraining any threatened or further breach, without the
necessity of proof of actual damage.
Executive understands that by entering into this Agreement he will be
limiting the availability of certain remedies that he may have against
the Company and limiting also his ability to pursue certain claims
against the Company.
(7) Severability Clause
In the event any provision or part of this Agreement is found to be
invalid or unenforceable, only that particular provision or part so
found, and not the entire agreement, will be inoperative.
(8) Non-Admission
Nothing contained in this Agreement will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company.
(9) Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, applicable to agreements made and to
be performed in that State; and the parties agree to the jurisdiction
of the U.S. District Court for the District of Delaware, and agree to
appear in any action in such courts by service of process by certified
mail, return receipt requested, at the following addresses:
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To Company: ULTRAMAR DIAMOND SHAMROCK CORPORATION
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
and
To Executive:
-------------------------------------
-------------------------------------
-------------------------------------
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND THAT HE FULLY
KNOWS, UNDERSTANDS, AND APPRECIATES ITS CONTENTS, AND THAT HE HERBY EXECUTES THE
SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN
VOLUNTARILY AND OF HIS OWN FREE WILL.
IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the
date first set forth above.
-----------------------------------
Xxxxxx Xxxxxxxxx
ULTRAMAR DIAMOND SHAMROCK
CORPORATION, a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
Xxxxxx Xxxxxxxxx ("Executive") and Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the "Company"), hereby enter into this First Amendment to
the Employment Agreement between Executive and the Company, dated as of November
25, 1996 and effective as of December 3, 1996 (the "Agreement").
WHEREAS, the Executive serves as Vice President of the Company; and
WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and
WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and
WHEREAS, the Company considers it in the best interests of its stockholders to
xxxxxx the continued employment of certain key management personnel; and
WHEREAS, the Company wishes to amend the Agreement to add certain provisions
approved by the Compensation Committee of the Board of Directors of the Company
at a meeting held on May 1, 2000.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of May 1, 2000, the
Agreement shall be amended as follows:
I.
The first sentence of Section 1.2 shall be amended by striking the reference to
"two years" and inserting "three years" in lieu thereof.
II.
Section 5.2(i) of the Agreement is hereby deleted and substituted with the
following:
(i) If the Company determines in good faith that the Executive
has incurred a Disability (as defined below) during the Term, the
Company may give the Executive written notice of its intention to
terminate its obligations under this Agreement, which notice may, but
not need not, include a statement of the Company's intent to terminate
the Executive's employment. In such event, the Company's obligations
under this Agreement, and the Executive's employment (if applicable),
will terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Termination Date"), provided that
within the 30 days after such receipt, the Executive will not have
returned to full-time
21
performance of his duties. The Executive will continue to receive his
annual base salary until the Disability Termination Date. The
Executive will continue to receive benefits until the Disability
Termination Date, provided that if the Company has not elected to
terminate the Executive's employment under this provision (but rather
to terminate only its obligations under this Agreement), the
Executive's right to continue to receive benefits following the
Disability Termination Date will be governed by the policies and
procedures of the Company generally applicable to disabled employees.
In that event, the Executive will be considered an "employee at will"
following the Disability Termination Date, and either the Executive or
the Company may thereafter terminate the Executive's employment for
any reason or for no reason, and the rights and obligations of the
Executive and the Company upon such termination will be governed by
the policies and procedures of the Company applicable to employees at
will, and by applicable law.
In the event of the Executive's disability, the Company will pay the
Executive, promptly after the Disability Termination Date, (a) the
unpaid annual base salary to which he is entitled, pursuant to Section
4.1, through the Disability Termination Date, (b) for any accrued but
unused vacation days, to the extent and in the amounts, if any,
provided under the Company's usual policies and arrangements, and (c) a
lump sum in cash in an amount equal to 50% of his annual base salary at
the Disability Termination Date. This Section 5.2 will not limit the
entitlement of the Executive, the Executive's estate or beneficiaries
to any disability or other benefits then available to the Executive
under any disability insurance or other benefit plan or policy that is
maintained by the Company for the Executive's benefit; provided that
(i) any amounts paid as base salary shall offset, on a
dollar-for-dollar basis (but not below zero), the Company's obligation
to pay the Executive short-term disability benefits under any
short-term disability plan, program or arrangement of the Company, in
respect of the same period for which such base salary is paid, and (ii)
any benefits paid pursuant to the Company's long-term disability plan
shall reduce, on a dollar-for-dollar basis (but not below zero), the
Company's obligation to pay the Executive base salary in respect of the
same period for which such benefits are paid; provided, however, that
any such offset or reduction shall not affect, or be affected by, the
payments provided to be made in accordance with clauses (a), (b), or
(c) of this Section 5.2(i).
III.
Section 5.5(i)(a) of the Agreement shall be revised to read as follows:
(i) Form and Amount. Upon Executive's involuntary termination, other
than for Cause, the Company shall:
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(a) subject to Section 5.5(iii), pay or provide Executive
(1) his annual salary and benefits until the date of
termination,
(2) within five business days after any revocation
period in the release described in Section 5.5(iii) has
expired, a lump sum cash payment equal to three multiplied by
the sum of (x) and (y), where (x) is Executive's highest
annual base salary in effect during the three years prior to
his date of termination, and (y) is the highest annual
incentive compensation earned by Executive during the three
years prior to his termination; provided, however, that all
amounts received by Executive pursuant to the Ultramar Diamond
Shamrock Corporation Intermediate Incentive and
Performance-Based Restricted Stock Plan shall not be
considered "annual incentive compensation" for purposes of
this Section 5.5(i)(a)(2),
(3) three additional years of age and service credit
under all Company-sponsored employee benefit plans, including
all retirement income plans and welfare benefit plans,
policies or programs or arrangements in which Executive
participates, including any savings, pension, supplemental
executive retirement or other retirement income or welfare
benefit, short or long-term disability, and any other deferred
compensation, group and/or executive life, health, retiree
health, medical/hospital, or other insurance (whether funded
by actual insurance or self-insured by the Company), expense
reimbursement or other employee benefit plans, policies,
programs or arrangements or any equivalent successor plans,
policies, programs or arrangements that may not now exist or
may be adopted hereafter by the Company (but only to the
extent that eligibility, vesting, or the timing or amount of
the benefit are dependent upon age and service); provided,
however, that in the case of a qualified defined benefit
pension plan, the present value of the additional benefit
Executive would have accrued if he had been credited for all
purposes with the three additional years of age and service
under such plan as of his date of termination with the Company
will be paid in a lump sum in cash within five business after
any revocation period in the release described in Section
5.5(iii) has expired, with (i) in the event that Executive's
aforementioned involuntary termination occurs on or after a
"Change in Control" of the Company, as defined in Section 6.2
(or prior to, but in anticipation of, such a "Change in
Control," such present value being determined using the
interest rate and mortality table set forth in Section
4.1(m)(i) and 4.1(n)(i), respectively, of the Ultramar
Corporation Supplemental Executive
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Retirement Plan (or any equivalent successor plan, policy,
program or arrangement) (collectively, the "Ultramar SERP")
and (ii) in the event that Executive's aforementioned
involuntary termination occurs prior to such a "Change in
Control" of the Company (other than such a termination in
anticipation of such a "Change in Control"), such present
value being determined using the interest rate and mortality
table set forth in Section 4.1(m)(ii) and 4.1(n)(ii),
respectively, of the Ultramar SERP, and further, provided,
in crediting the three additional years of age and service
for purposes of calculating current and unused vacation such
additional years shall be applied in determining the amount
of annual vacation to which Executive is entitled, but shall
not be deemed to cause Executive to have earned three
additional years worth of unused vacation,
(4) within five business days after any revocation
period in the release described in Section 5.5(iii) has
expired, a lump sum cash payment equal to three times the
maximum amount the Company could have contributed on behalf of
Executive to all of the Company-sponsored qualified and
nonqualified defined contribution retirement plans in which
Executive participated for any of the three years ending on
the date of Executive's termination of employment, assuming
that Executive made the maximum voluntary contributions
thereto,
(5) for a period of three years after the date of
Executive's termination of employment, the continuation of the
employee welfare benefits set forth in Section 4.2 (other than
short-term or long-term disability benefits), except as offset
by benefits paid by other sources as set forth in Section 8.2,
or as provided in Section 5.5(ii) (provided, however, that in
the event that any such continued coverage is not permitted
under the terms of any applicable welfare plan or policy, the
Company shall provide Executive with the after-tax economic
equivalent of any coverage foregone, such economic equivalent
to be deemed to be no less than the total cost to Executive of
obtaining such coverage on an individual basis and to be paid
quarterly in advance without discount);
IV.
Section 5.5(i)(b) of the Agreement shall be revised to read as follows:
(b) the Company shall provide Executive with outplacement
services for a period of one year commencing on the date his employment
is terminated in accordance with the Company's executive outplacement
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policy in effect at the time his employment is terminated or
immediately prior to a Change in Control (if prior to his termination
of employment), whichever is more generous.
V.
Section 5.5(i)(c) of the Agreement shall be deleted from the Agreement.
VI.
Section 5.5(ii) of the Agreement shall be amended by striking the reference to
"Section 5.5(i)(a)(4)" and inserting "Section 5.5(i)(a)(5)" in lieu thereof and
adding a new sentence to the end thereof which shall read as follows:
Notwithstanding the above, if Executive's continued participation in
any of the benefits referenced in Section 5.5(i)(a)(5) would violate
any applicable law or cause any benefits plan, policy, or arrangement
of the Company to fail to qualify for tax-favored status, the Company
shall not be required to provide such benefits to Executive through the
Company's plans, policies, or arrangements, but instead shall either
(A) arrange to make a substantially similar benefit available to
Executive at no cost to the Executive or (B) pay Executive a sufficient
amount of cash to allow Executive to purchase, on an after-tax basis, a
substantially similar benefit on the open market at no incremental cost
to Executive.
VII.
Section 5.5 of the Agreement shall be amended by adding a new subsection (iv) to
the end thereof which shall read as follows:
(iv) Other Severance Benefits. Notwithstanding any provision
of this Agreement to the contrary, Executive shall be entitled to
receive the greater of (a) the termination payments and benefits
provided under Section 5.5 of this Agreement, or (b) the termination
payments and benefits provided by any other Company-sponsored plan,
program or policy which has as its primary purpose the provision of
severance benefits, but in no event shall Executive be eligible to
receive termination payments and benefits provided under both this
Agreement and any such plan, program or policy.
VIII.
Section 8 of the Agreement shall be revised to read as follows:
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8. Mitigation and Offset.
8.1 Executive's right to receive when due the payments and
other benefits provided for under and in accordance with the terms of
this Agreement is absolute, unconditional and subject to no set-off,
counterclaim or legal equitable defense. Any claim which the Company
may have against Executive, whether for breach of this Agreement or
otherwise, shall be brought in a separate action or proceeding and not
part of any action or proceeding brought by Executive to enforce the
rights against the Company under this Agreement.
8.2 Executive shall not have any duty to mitigate the amounts
payable by the Company under this Agreement upon any termination of
employment by seeking new employment following termination. All amounts
payable pursuant to this Agreement shall be paid without reduction
regardless of any amount of salary, compensation or other amounts which
may be paid or payable to Executive as the result of Executive's
employment by another employer; provided, however, that Executive's
coverage under the Company's welfare benefit plans will be reduced to
the extent that Executive becomes covered under any comparable employee
benefit plan made available by another employer and covering the same
type of benefits. Executive shall report to the Company any such
benefits actually received by him.
IX.
Section 12.5(i) of the Agreement shall be amended to read as follows:
(i) To The Company. If to the Company, addressed to the
attention of the Chief Executive Officer at X.X. Xxx 000000, Xxx
Xxxxxxx, Xxxxx, 00000-0000, with a copy sent to the attention of the
General Counsel at such address.
X.
Section 12 of the Agreement shall be amended to add a new Subsection 12.12 which
shall read as follows:
12.12 Dialogue. Unless Executive otherwise consents by the
execution of an instrument in writing that specifically refers to
Section 12.12 of this Agreement, no claim or dispute arising out of or
related to this Agreement or any other agreement, policy, plan, program
or arrangement, including, without limitation, any qualified or
nonqualified retirement plan, stock option plan or agreement, or any
other equity incentive plan in which Executive participated prior to
his termination, shall be subject to the Company's Dialogue Dispute
Resolution Program.
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XI.
The model release attached to this First Amendment as "Exhibit A" shall be
substituted for the exhibit referred to in Section 5.5(iii) of the Agreement.
XII.
Except as otherwise provided herein, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of May, 2000.
/s/ XXXXXX XXXXXXXXX
--------------------------------------
Xxxxxx Xxxxxxxxx
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ XXXX XXXXXX
-----------------------------------
Title: Chairman, President & CEO
--------------------------------
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SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
Xxxxxx Xxxxxxxxx ("Executive") and Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the "Company"), hereby enter into this Second Amendment to
the Employment Agreement between Executive and the Company, dated as of November
25, 1996 and effective as of December 3, 1996 (the "Agreement") as amended by
the First Amendment to the Agreement.
WHEREAS, the Executive serves as Vice President of the Company; and
WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and
WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and
WHEREAS, the Company considers it in the best interests of its stockholders to
xxxxxx the continued employment of certain key management personnel; and
WHEREAS, the Company wishes to amend the Agreement to conform the Agreement to a
change in Executive's position approved by the Compensation Committee of the
Board of Directors of the Company.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of August 1, 2000,
the Agreement shall be amended as follows:
I.
Section 2.1 of the Agreement is hereby deleted and substituted with the
following:
2.1 Position and Duties. During the Term, the Executive will serve as
Vice President of the Company and President and Chief Executive Officer
of Shamrock Logistics GP, LLC, a wholly owned indirect subsidiary of
the Company. Executive will devote substantially all of his attention
to the duties and functions, and shall have such responsibilities and
authority, as are consistent with the Executive's position as President
and Chief Executive Officer of Shamrock Logistics GP, LLC, and shall
have such additional duties, functions, responsibilities, and authority
as are (i) assigned to his office in the Company's bylaws or (ii)
reasonably assigned to him by the Company's Board of Directors (the
"Board").
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II.
The first sentence of Section 4.1(i) of the Agreement shall be revised to read
as follows:
(i) Annual Base Salary. During the term of this Agreement, the
Company will pay to the Executive an annual base salary of not less
than $255,400, which annual base salary may be modified from time to
time by the Board (or the Compensation Committee thereof) in its sole
discretion, payable at the times and in the manner consistent with the
Company's general policies regarding compensation of executive
employees. The Board may from time to time authorize such additional
compensation to the Executive, in cash or in property, as the Board may
determine in its sole discretion to be appropriate.
III.
Except as otherwise provided herein, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of August, 2000.
/s/ XXXXXX XXXXXXXXX
-------------------------------------
Xxxxxx Xxxxxxxxx
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ XXXX XXXXXX
----------------------------------
Xxxx Xxxxxx
Chairman, President & CEO
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