EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of the 4th
day of December, 2001, by and between ChevronTexaco (the "Company"), and Xxxxx
Xxxxxx (the "Employee"). The Company desires to retain Employee to perform
services for the Company and Employee is willing to perform such services on
terms set forth more fully below. In consideration of the mutual promises
contained herein, the parties agree as follows:
SECTION 1. SERVICES AND COMPENSATION
(A) The Parties agree that Employee shall be initially employed with Company
in Salary Grade 47 as its Vice Chairman. The Employee agrees to perform
such services customary to such office as shall from time to time be
assigned to him by the Company's Chairperson or its Board of Directors.
Employee agrees to devote such time and effort as shall be required by
the Company for him to timely and properly discharge the duties of Vice
Chairman. The Employee may perform such services from New York until
such time as he relocates to California on or after February 15, 2002.
(B) As consideration for Employee's services, Company agrees to compensate
Employee as follows:
(i) Base compensation in the annual amount of $889,600 (as increased
from time-to-time pursuant to Company's normally applicable
compensation policies);
(ii) Participation in benefit and compensation programs generally
applicable to Company employees in Salary Grade 47 with the
Company;
(iii) Supplemental Retirement Benefits; and
(iv) Retiree Benefits
(C) If the Employee dies while he is an employee of the Company, he will be
treated for purposes of this Agreement as if he resigned his employment
with the Company effective on the day immediately preceding his death
and his estate or beneficiaries will be entitled to any earned but
unpaid compensation including but not limited to salary, bonus, and
vacation plus the Supplemental Retirement Benefit and Retiree Benefits
as set forth herein.
(D) "Supplemental Retirement Benefits" shall be payable at the earlier of:
1) when Employee leaves the Company for any reason, or 2) the expiration
of the term of this Agreement :
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The Company may require that the Employee sign a release of claims
against the Company as a condition for qualifying for Supplemental
Retirement Benefits.
(E) The Supplemental Retirement Benefit shall consist of a cash payment
equal to the sum of (i) and (ii) below:
(i) 3.30 times the sum of Employee's highest annual base pay with the
Company and the highest cash bonus earned by the Employee in any
of the five years preceding the Employee's termination date; and
(ii) 0.18 times the Employee's highest annual base pay with the
Company.
The Supplemental Retirement Benefit will be deferred pursuant to the
terms of the Texaco Director and Employee Deferral Plan, or its
successor, with payments commencing January following Employee's
separation date and paid out over 10 years. The Supplemental Retirement
Benefit will be credited into the Texaco Director and Employee Deferral
Plan, or its successor, as soon after termination of employment as
reasonably practical under all the circumstances.
(F) Retiree Benefits shall mean, solely for purposes of this Agreement, the
Texaco retiree medical, Texaco retiree life insurance and Tax Assistance
Plan benefits the Employee is currently eligible for if he had retired
from Texaco as of the date of this Agreement. This Agreement is not
intended to change or alter his rights to these benefits nor is it
intended to limit his rights to retiree benefits provided to Company
employees in Salary Grade 47 with the Company.
The Retiree Benefits, which will be provided under the terms and
conditions of the respective plans, are summarized as follows:
(i) Retiree medical coverage for the Employee and his spouse pursuant
to the terms and conditions of the Texaco Comprehensive Medical
Plan, or its successor, as they exist on the date this Agreement
is executed with the full Company portion of the premium paid by
the Company;
(ii) Full retiree life insurance coverage pursuant to the terms and
conditions of the Texaco Life Insurance Plans as they exist on
the date this Agreement is executed with the full amount of
insurance paid by the Company;
(iii) Continued participation under the terms and practices of the
Company's Tax Assistance Plan for the year of termination or
resignation and three calendar years immediately following.
"Beneficiary" shall be the Employee's spouse, is she survives him. If she does
not survive him, Employee's estate will be the Beneficiary.
SECTION 2. WAIVER OF PRIOR AGREEMENTS OR PLANS.
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Employee agrees to waive participation in and any benefits that he may have
presently accrued or might have accrued in the future under:
(A) the Separation Pay Plan of Texaco Inc.;
(B) the Severance Agreement between Employee and Texaco Inc. dated December
17, 1998; and
(C) except as provided otherwise herein, any other plan, policy, or
agreement for the payment of severance or termination pay of
ChevronTexaco, or any of its subsidiaries, affiliates or joint ventures
and all of their respective predecessors.
Notwithstanding the foregoing, the Employee does not waive his rights granted by
Resolution dated December 11, 1998 approved by the Texaco Board of Directors
which provides the Employee with Gross Up payments for any excise tax imposed on
any excess parachute payments arising from any payment, plan or program etc. and
reasonable fees incurred in seeking to enforce this Resolution including but not
limited to legal and accounting fees.
SECTION 3. GROSS-UP OF EXCESS PARACHUTE PAYMENT
The Parties agree that any payments made under this Agreement constitute
compensation to Employee for services rendered after the October 9, 2001 merger
between Chevron Corporation and Texaco Inc. However, in the unlikely event that
any or all such payments are determined to be subject to the excise tax under
Internal Revenue Code (IRC) Section 4999 ("excess parachute payments"), the
Company shall pay to the Employee an additional amount (the "Gross-up Payment")
necessary to reimburse the Employee on an after-tax basis (including income,
FICA, and excise taxes) for the excise tax that may be imposed on him by the
Internal Revenue Service or by a court. In calculating the amount of the
Gross-up Payment, it shall be assumed that the Employee pays state and local
income taxes at the highest marginal rate of taxation imposed by the state and
locality in which the Employee resides and in which he is employed (or both) in
the calendar year in which the Gross-up Payment is to be made and pays FICA
taxes on wages earned. It also shall be assumed that the Employee's income tax
rate will be computed based upon the maximum effective marginal federal, state,
and local income tax rates (including FICA taxes) on earned income, with such
maximum effective federal rate to be computed with regard to IRC section 68, and
applying any available deduction of state and local income taxes for federal
income tax purposes.
SECTION 4. TERM AND TERMINATION
(A) Term. This Agreement will commence on the date first written above and
will continue for three years thereafter.
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(B) Termination.
(i) Either the Company or the Employee may terminate this Agreement
for any reason and in its or his sole discretion upon giving
thirty (30) days prior written notice thereof to the other. Any
such notice shall be addressed to Employee or the Company as
described below.
(ii) This Agreement shall terminate immediately upon the Employee's
Death except that the rights under this Agreement are payable to
the Employee's estate or beneficiary under the terms of this
Agreement or under the terms and conditions of the plan under
which they are due.
(iii) This Agreement shall terminate automatically upon the expiration
of its term.
(C) Consulting Services. The Employee and the Company acknowledge that the
Employee has extensive knowledge and expertise concerning the on-going
business of the former Texaco Inc. and its subsidiaries, affiliates and
joint ventures. Accordingly, if this agreement is terminated pursuant to
Section 4(B)(i), the Employee and the Company shall enter into a written
consulting agreement commencing on the date the Employee's employment
terminates and extending for a term equal to the remaining term of this
Agreement. During the term of the consulting agreement, the Employee
will be reasonably available to accept special projects and to provide
advice concerning the Company's on-going business operations as
requested by the Chairperson of the Company's Board of Directors in his
or her discretion. In exchange for such services, the Company will pay
the Employee a consulting fee in the amount of $7,300 per day (or $3,650
per half-day) plus expenses. As a consultant, the Employee will not be
entitled to participate in any benefit or compensation programs
applicable to the Company's employees.
(D) Survival. Upon termination of the Agreement, all rights and duties of
the Parties toward each other shall cease except the Company shall be
obligated to pay or provide to the Employee or his Beneficiary:
(i) within thirty (30) days of the effective date of termination, all
amounts owing to Employee for Services completed and accepted by
the Company prior to the termination date. Payment or deferral
will be made within 30 days. Such deferred amounts will be paid
pursuant to the terms and conditions of the Texaco Director and
Employee Deferral Plan, or its successor;
(ii) any Supplemental Retirement Benefit that may be payable under the
terms of this Agreement; and
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(iii) the retiree medical, retiree life and tax assistance plan
benefits, as described herein, shall each continue pursuant to
the terms of the respective plan.
SECTION 5. ASSIGNMENT
To the extent permitted by law, neither this Agreement, nor any rights hereunder
or interest herein may be assigned, alienated, or transferred by Employee
without the express written consent of the Company.
SECTION 6. ARBITRATION AND EQUITABLE RELIEF
(A) Disputes. Except as provided in Section 5(D) below, the Company and
Employee agree that any dispute or controversy arising out of, relating
to or in connection with the interpretation, validity, construction,
performance, breach or termination of Agreement shall be settled by
binding arbitration to be held in Contra Costa County, California, in
accordance with the Commercial Arbitration Rules, supplemented by the
Supplemental Procedures for Large Complex Dispute, of the American
Arbitration Association as then in effect (the "Rules"). The arbitrator
may grant in junctions or other relief in such dispute or controversy.
The decision of the arbitrator shall be final, conclusive and binding on
the parties to the arbitration. Judgment may be entered on the
arbitrator's decision in any court of competent jurisdiction.
(B) Consent to Personal Jurisdiction. The arbitrator(s) shall apply
California law to the merits of any dispute or claim, without reference
to conflicts of law rules. Employee hereby consents to the personal
jurisdiction of the state and federal courts located in California for
any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.
(C) Costs. The Company shall pay the full cost and expenses of such
arbitration. In addition, the Company will pay all reasonable fees and
expenses incurred by the Employee in seeking to obtain or enforce any
rights or benefits provided by this Agreement, including, all reasonable
attorney's fees and expenses, accountant's fees and expenses, and court
costs that may be incurred by the Employee in pursuing a claim for
payment of benefits under this Agreement, unless a Court of competent
jurisdiction determines that the participant's cause of action is
frivolous.
(D) Equitable Relief. The parties may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction,
or other interim or conservatory relief, as necessary, without breach of
this arbitration agreement and without abridgment of the powers of the
arbitrator.
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(E) Acknowledgment. EMPLOYEE HAS READ AND UNDERSTANDS SECTION 5, WHICH
DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS
AGREEMENT, EMPLOYEE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF, TO
BINDING ARBITRATION, EXCEPT AS PROVIDED IN SECTION 5(D), AND THAT THIS
ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY
TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE RELATIONSHIP BETWEEN THE PARTIES.
SECTION 7. NOTICES
Any notice provided for or permitted to be given under this Agreement by any
party or to any party must be in writing, and may be served by depositing same
in the United States mail, addressed as provided below, postage prepaid,
registered or certified return receipt requested or by delivering the same in
person to such party,. Notice deposited in the mail in the manner described
above shall be deemed to have been given and received forty-eight (48) hours
after deposit in the mail. For purposes of notice, the address of each of the
parties shall be as set forth below, or such other address as such parties shall
provide to the other party pursuant to written notice.
EMPLOYEE:
Xxxxx X. Xxxxxx
00 Xxxxx Xxxx
Xxx, Xxx Xxxx 00000
COMPANY:
ChevronTexaco
Office of the Secretary
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
SECTION 8. GOVERNING LAW.
This Agreement shall be governed by the law of the State of California.
SECTION 9. SEVERABILITY
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The invalidity or unenforceability of any provision of this Agreement, or any
terms thereof, shall not affect the validity of this Agreement as a whole, which
shall at all times remain in full force and effect.
SECTION 10. ENTIRE AGREEMENT.
This Agreement is the entire agreement of the parties and supersedes any prior
agreements between them, whether written or oral, with respect to the subject
matter hereof. No waiver, alternation, or modification of any of the provision
of this Agreement shall be binding unless in writing and signed by duly
authorized representatives of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
XXXXX XXXXXX
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CHEVRONTEXACO
By:
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Title:
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