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ITEM 14(a)3, EXHIBIT 10.6
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is
entered into as of December 12, 1996, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
("Employee") and Tesoro Petroleum Corporation, a Delaware corporation (the
"Company").
Recitals:
A. The Company and Employee are parties to an Employment Agreement
dated December 14, 1994, including all amendments thereto prior to the date
hereof (the "Prior Agreement").
B. The Company wishes to continue the employment of Employee as its
Executive Vice President, Operations; as such, Employee shall have certain
responsibilities and shall receive certain compensation and benefits.
C. Employee and the Company wish to formalize the continuation of
this employment relationship by amending and restating the Prior Agreement,
including extending its term, and by setting forth certain additional
agreements between Employee and the Company.
THE PARTIES AGREE AS FOLLOWS:
1. Employment and Duties.
During the term of this Agreement, the Company agrees to employ Employee
as Executive Vice President, Operations, and Employee agrees to serve the
Company in such capacity on the terms and subject to the conditions set forth
in this Agreement. Employee shall devote substantially all of his business
time, energy and skill to the affairs of the Company as the Company, acting
through its Board of Directors or its Chief Executive Officer, shall reasonably
deem necessary to discharge Employee's duties in such capacity. Employee may
participate in social, civic, charitable, religious, business, educational or
professional associations, so long as such participation would not materially
detract from Employee's ability to perform his duties under this Agreement.
Employee shall not engage in any other business activity during the term of
this Agreement without the prior written consent of the Company, other than the
passive management of Employee's personal investments or activities which would
not materially detract from Employee's ability to perform his duties under this
Agreement.
2. Compensation.
(a) Salary; Withholding. During the term of this Agreement, the
Company shall pay Employee a base salary of $285,000 per year ("base salary"),
payable in arrears in equal bi-weekly installments. The parties shall comply
with all applicable withholding requirements in connection with all
compensation payable to Employee. The Company's Board of Directors may, in its
sole discretion, review and adjust upward Employee's base salary from time to
time, but no downward adjustment in Employee's base salary may be made during
the term of this Agreement.
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(b) Annual Incentive Plan. The Company shall establish an Annual
Incentive Compensation Plan for executive officers in which the Employee shall
be entitled to participate in a manner consistent with his position with the
Company and the evaluations of his performance by the Board of Directors or any
appropriate committee thereof.
(c) Stock Options and Restricted Stock Grants. The Employee shall be
entitled to receive stock options and restricted stock grants under the
Company's plans in effect from time to time, if any, commensurate with his
position with the Company and the evaluations of his performance by the Board
of Directors or any appropriate committee thereof.
(d) Flexible Perquisites Arrangement. The Employee shall receive
annually a stipulated amount of $20,000 which will be expended by the Company
on behalf of the Employee or paid to the Employee, at the Employee's election,
to cover various business-related expenses such as monthly dues for country,
luncheon or social clubs, automobile expenses and financial and tax planning
expenses. The Employee may elect at any time by written notice to the Company
to receive any of such stipulated amount which has not been paid to or on
behalf of the Employee. In addition, the Company will pay initiation fees and
reimburse the Employee for related tax expenses to the extent the Board of
Directors or a duly authorized committee thereof determines such fees are
reasonable and in the best interest of the Company.
(e) Other Benefits. Employee shall be eligible to participate in and
have the benefits under the terms of all life, accident, disability and health
insurance plans, pension, profit sharing, incentive compensation and savings
plans and all other similar plans and benefits which the Company from time to
time makes available to its management executives, including, without
limitation, those listed on Exhibit A, in the same manner and at least at the
same participation level as other senior management executives.
3. Business Expenses.
The Company shall promptly reimburse Employee for all appropriately
documented, reasonable business expenses incurred by Employee in accordance
with Company policies.
4. Term.
This Agreement shall commence effective as of December 12, 1996, and if
not terminated earlier as herein provided, shall terminate on December 31,
1998. Notwithstanding the foregoing, if the Company shall not have offered to
the Employee the opportunity to enter into a new employment agreement prior to
December 31, 1998, with terms, in all respects, no less favorable to the
Employee than the terms of this Agreement and with a term lasting until at
least December 31, 2000, the Employee shall have the right to elect by written
notice delivered to the Company prior to January 31, 1999, to terminate his
employment and such termination shall be deemed to have been for Good Reason in
accordance with Section 5 and the Employee shall be entitled to all payments
and benefits as if he had terminated his employment for Good Reason in
accordance with Section 5 on December 30, 1998.
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5. Termination by the Company Without Cause, Termination by Employee
for "Good Reason" or Failure to Extend Employment Contract.
The Company may, by delivering 30 days prior written notice to Employee,
terminate Employee's employment at any time without cause, and the Employee
may, by delivering 30 days prior written notice to the Company, terminate
Employee's employment for "good reason," as defined below. If such termination
without cause or for good reason occurs or if the Company fails to offer to the
Employee a new employment contract prior to December 31, 1998, with terms, in
all respects, no less favorable to the employee than the terms of this
Agreement, Employee shall be entitled to receive a lump-sum payment equal to
the sum of (a) two times the sum of (i) his base salary at the then current
rate and (ii) the sum of the target bonuses under all of the Company's
incentive bonus plans applicable to Employee for the year in which the
termination occurs and (b) if termination occurs in the fourth quarter of a
calendar year, the sum of the target bonuses under all of the Company's
incentive bonus plans applicable to Employee for the year in which the
termination occurs prorated daily based on the number of days from the
beginning of the calendar year in which the termination occurs to and including
the date of termination. Employee shall also receive all unpaid bonuses for
the year prior to the year in which the termination occurs and shall receive
(i) for a period of two years following termination of employment continuing
coverage and benefits comparable to all life, health and disability insurance
plans which the Company from time to time makes available to its management
executives and their families, (ii) a lump-sum payment equal to two times the
stipulated flexible perquisites amount pursuant to Section 2(d), and (iii) two
years additional service credit under the current non-qualified supplemental
pension plans, or successors thereto, of the Company applicable to the Employee
on the date of termination. All unvested stock options held by Employee on the
date of the termination shall become immediately vested and all restrictions on
Restricted Stock then held by the Employee shall terminate.
For purposes of this Section 5, "good reason" shall mean the occurrence
of any of the following events:
(a) Removal, without the consent of Employee in writing, from one or
more of the offices Employee holds on the date of this Agreement or a material
reduction in Employee's authority or responsibility but not termination of
Employee for "cause," as defined below; or
(b) The Company otherwise commits a material breach of this
Agreement.
The Company shall pay any attorney fees incurred by Employee in
reasonably seeking to enforce the terms of this Section 5.
6. Termination upon Death or Disability.
If the Employee's employment is terminated because of death or on
account of his becoming permanently disabled (as defined below), the Employee,
or his estate, if applicable, shall be entitled to receive the Employee's base
salary earned pro rata to the date of his
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termination of employment, plus unpaid bonuses for the year prior to the year in
which the termination occurs. All unvested stock options held by the Employee on
the date of termination shall become immediately vested and all restrictions on
restricted stock held by the Employee shall terminate.
For purposes of this Agreement, Employee shall be deemed to be
"permanently disabled" if Employee shall be considered to be permanently and
totally disabled in accordance with the Company's Long-Term Disability Income
Plan. If there should be a dispute between the Company and Employee as to
Employee's physical or mental disability for purposes of this Agreement, the
question shall be settled by the opinion of an impartial reputable physician or
psychiatrist agreed upon by the parties or their representatives, or if the
parties cannot agree within ten calendar days after a request for designation
of such party, then a physician or psychiatrist shall be designated by the San
Antonio, Texas Medical Association. The parties agree to be bound by the final
decision of such physician or psychiatrist.
7. Termination by the Company for Cause.
The Company may terminate this Agreement at any time if such termination
is for "cause," as defined below, by delivering to Employee written notice
describing the cause of termination 30 days before the effective date of such
termination and by granting Employee at least 30 days to cure the cause. In
the event the employment of Employee is terminated for "cause," Employee shall
be entitled only to his base salary earned pro rata to his date of termination
with no entitlement to any base salary continuation payments or benefit
continuation (except as specifically provided by the terms of an employee
benefit plan of the Company). Except as otherwise provided in this Agreement,
the determination of whether Employee is terminated for "cause" shall be made
by the Board of Directors of the Company, in the reasonable exercise of its
business judgment, and shall be limited to the occurrence of the following
events:
(a) Conviction of or a plea of nolo contendere to the charge of a
felony (which, through lapse of time or otherwise, is not subject to appeal);
(b) Willful refusal without proper legal cause to perform, or gross
negligence in performing, Employee's duties and responsibilities;
(c) Material breach of fiduciary duty to the Company through the
misappropriation of Company funds or property; or
(d) The unauthorized absence of Employee from work (other than for
sick leave or disability) for a period of 30 working days or more during a
period of 45 working days.
8. Voluntary Termination by Employee.
Employee may terminate this Agreement at any time upon delivering 30
days written notice to the Company. In the event of such voluntary termination
other than for "good reason," as defined above, Employee shall be entitled to
his base salary earned pro rata to the date of his resignation, plus unpaid
bonuses for the year prior to the year in which the termination occurs, but no
base salary continuation payments or benefits continuation (except as
specifically provided by the terms of an employee benefit plan of the Company).
On or after the date the Company receives notice of Employee's resignation, the
Company may, at its option, pay Employee his
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base salary through the effective date of his resignation and terminate his
employment immediately.
9. Termination Following Change of Control.
Notwithstanding anything to the contrary contained herein, should
Employee at any time within two years of a change of control cease to be an
employee of the Company (or its successor), by reason of (i) involuntary
termination by the Company (or its successor) other than for "cause" (following
a change of control, "cause" shall be limited to the conviction of or a plea of
nolo contendere to the charge of a felony (which, through lapse of time or
otherwise, is not subject to appeal), or a material breach of fiduciary duty to
the Company through the misappropriation of Company funds or property), or (ii)
voluntary termination by Employee for "good reason upon change of control" (as
defined below), the Company (or its successor) shall pay to Employee within ten
days of such termination the following severance payments and benefits:
(a) A lump-sum payment equal to three times the base salary of the
Employee at the then current rate;
(b) A lump-sum payment equal to the sum of (i) three times the sum of
the target bonuses under all of the Company's incentive bonus plans applicable
to the Employee for the year in which the termination occurs or the year in
which the change of control occurred, whichever is greater, and (ii) if
termination occurs in the fourth quarter of a calendar year, the sum of the
target bonuses under all of the Company's incentive bonus plans applicable to
Employee for the year in which the termination occurs prorated daily based on
the number of days from the beginning of the calendar year in which the
termination occurs to and including the date of termination; and
(c) A lump-sum payment equal to the amount of any unpaid bonuses to
which the Employee is entitled under any incentive bonus plan.
The Company (or its successor) shall also provide to Employee (i) for a
period of three years following termination of employment continuing coverage
and benefits comparable to all life, health and disability plans of the Company
in effect at the time a change of control is deemed to have occurred; (ii) a
lump-sum payment equal to three times the stipulated flexible perquisites
amount pursuant to Section 2(d); and (iii) three years additional service
credit under the current non-qualified supplemental pension plans, or
successors thereto, of the Company applicable to the Employee on the date of
termination.
For purposes of this Agreement, a "change of control"
shall be deemed to have occurred if (i) there shall be
consummated (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Company's Common Stock would
be converted into cash, securities or other property, other than
a merger of the Company where a majority of the Board of
Directors
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of the surviving corporation are, and for a two year period after
the merger continue to be, persons who were directors of the
Company immediately prior to the merger or were elected as
directors, or nominated for election as director, by a vote of at
least two-thirds of the directors then still in office who were
directors of the Company immediately prior to the merger, or (B)
any sale, lease, exchange or transfer (in one transaction or a
series of related transactions) of all or substantially all of
the assets of the Company, or (ii) the shareholders of the
Company shall approve any plan or proposal for the liquidation or
dissolution of the Company, or (iii) (A) any "person" (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), other than
the Company or a subsidiary thereof or any employee benefit plan
sponsored by the Company or a subsidiary thereof, shall become
the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing 20
percent or more of the combined voting power of the Company's
then outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise, and (B) at any time during a period of two years
thereafter, individuals who immediately prior to the beginning of
such period constituted the Board of Directors of the Company
shall cease for any reason to constitute at least a majority
thereof, unless the election or the nomination by the Board of
Directors for election by the Company's shareholders of each new
director during such period was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of such period.
For purposes of this Section 9, "good reason upon change of
control" shall exist if any of the following occurs:
(i) without Employee's express written consent, the assignment
to Employee of any duties inconsistent with the employment of
Employee to the positions set forth in Section 1, or a
significant diminution of Employee's positions, duties,
responsibilities and status with the Company from those
immediately prior to a change of control or a diminution in
Employee's titles or offices as in effect immediately prior to a
change of control, or any removal of Employee from, or any
failure to reelect Employee to, any of such positions;
(ii) a reduction by the Company in Employee's base salary in
effect immediately prior to a change of control;
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(iii) the failure by the Company to continue in effect any
thrift, stock ownership, pension, life insurance, health, dental
and accident or disability plan in which Employee is
participating or is eligible to participate at the time of the
change of control (or plans providing Employee with substantially
similar benefits), except as otherwise required by the terms of
such plans as in effect at the time of any change of control or
the taking of any action by the Company which would adversely
affect Employee's participation in or materially reduce
Employee's benefits under any of such plans or deprive Employee
of any material fringe benefits enjoyed by Employee at the time
of the change of control or the failure by the Company to provide
the Employee with the number of paid vacation days to which
Employee is entitled in accordance with the vacation policies of
the Company in effect at the time of a change of control;
(iv) the failure by the Company to continue in effect any
incentive plan or arrangement (including without limitation, the
Company's Incentive Compensation Plan and similar incentive
compensation benefits) in which Employee is participating at the
time of a change of control (or to substitute and continue other
plans or arrangements providing the Employee with substantially
similar benefits), except as otherwise required by the terms of
such plans as in effect at the time of any change of control;
(v) the failure by the Company to continue in effect any plan
or arrangement with respect to securities of the Company
(including, without limitation, any plan or arrangement to
receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof or to acquire stock or other
securities of the Company) in which Employee is participating at
the time of a change of control (or to substitute and continue
plans or arrangements providing the Employee with substantially
similar benefits), except as otherwise required by the terms of
such plans as in effect at the time of any change of control or
the taking of any action by the Company which would adversely
affect Employee's participation in or materially reduce
Employee's benefits under any such plan;
(vi) the relocation of the Company's principal executive
offices to a location outside the San Antonio, Texas, area, or
the Company's requiring Employee to be based anywhere other than
at the location of the Company's principal executive offices,
except for required travel on the Company's business to an extent
substantially consistent with Employee's present business travel
obligations, or, in the event Employee consents to any such
relocation of the Company's principal executive or divisional
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offices, the failure by the Company to pay (or reimburse Employee
for) all reasonable moving expenses incurred by Employee relating
to a change of Employee's principal residence in connection with
such relocation and to indemnify Employee against any loss
(defined as the difference between the actual sale price of such
residence and the fair market value thereof as determined by the
highest of three appraisals from Membership Appraisal Institute-
approved real estate appraisers reasonably satisfactory to both
Employee and the Company at the time the Employee's principal
residence is offered for sale in connection with any such change
of residence);
(vii) any material breach by the Company of any provision of
this Agreement;
(viii) any failure by the Company to obtain the assumption of
this Agreement by any successor or assign of the Company; or
(ix) any purported termination of Employee's employment by the
Company other than termination for cause fully in compliance with
this Agreement and for purposes of this Agreement, no such
purported termination shall be effective.
In the event of a change of control as "change of control" is defined in
any stock option plan or stock option agreement pursuant to which the Employee
holds options to purchase common stock of the Company, Employee shall retain
the rights to all accelerated vesting and other benefits under the terms of
such plans and agreements.
The Company shall pay any attorney fees incurred by Employee in
reasonably seeking to enforce the terms of this Section 9.
10. Exclusivity of Termination Provisions.
The termination provisions of this Agreement regarding the parties'
respective obligations in the event Employee's employment is terminated are
intended to be exclusive and in lieu of any other rights or remedies to which
Employee or the Company may otherwise be entitled at law, in equity, or
otherwise. It is also agreed that, although the personnel policies and fringe
benefit programs of the Company may be unilaterally modified from time to time,
the termination provisions of this Agreement are not subject to modification,
whether orally, impliedly or in writing, unless any such modification is
mutually agreed upon and signed by the parties.
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11. Vacation.
Employee shall be entitled to four weeks vacation annually in accordance
with Company policy as in effect from time to time. In the event Employee does
not use his entire vacation time in any year, Employee shall be entitled to
carry over unused vacation into the following year until his accrued vacation
reaches six weeks or such greater period as may be permitted under the
Company's vacation policy for management executives.
12. Nondisclosure.
During the term of this Agreement and thereafter, Employee shall not,
without the prior written consent of the Board of Directors, disclose or use
for any purpose (except in the course of his employment under this Agreement
and in furtherance of the business of the Company) confidential information or
proprietary data of the Company (or any of its subsidiaries), except as
required by applicable law or legal process; provided, however, that
confidential information shall not include any information known generally to
the public or ascertainable from public or published information (other than as
a result of unauthorized disclosure by Employee) or any information of a type
not otherwise considered confidential by persons engaged in the same business
or a business similar to that conducted by the Company (or any of its
subsidiaries).
13. Noncompetition.
The Company and Employee agree that the services rendered by Employee
hereunder are unique. Employee hereby agrees that, during the term of this
Agreement and for a period of one year thereafter, he shall not (except in the
course of his employment under this Agreement and in furtherance of the
business of the Company (or any of its subsidiaries)) (i) engage in as
principal, consultant or employee in any segment of a business of a company,
partnership or firm ("Business Segment") that is directly competitive with any
significant business of the Company in one of its major commercial or
geographic markets or (ii) hold an interest (except as a holder of a less than
5 percent interest in a publicly traded firm or mutual fund, or as a minority
stockholder or unitholder in a firm not publicly traded) in a company,
partnership, or firm with a Business Segment that is directly competitive with
the Company, without prior written consent of the Company.
14. Remedies.
Employee acknowledges that irreparable damage would result to the
Company if the provisions of Sections 12 or 13 above are not specifically
enforced and agrees that the Company shall be entitled to any appropriate
legal, equitable or other remedy, including injunctive relief, in respect of
any failure to comply with such provisions.
15. Miscellaneous.
(a) Complete Agreement. This Agreement constitutes the entire
agreement between the parties and cancels and supersedes all other agreements
between the parties which may have related to the subject matter contained in
this Agreement, including without limitation the Prior Agreement.
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(b) Modification; Amendment; Waiver. No modification, amendment or
waiver of any provisions of this Agreement shall be effective unless approved
in writing by both parties. The failure at any time to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of either party thereafter to enforce
each and every provision hereof in accordance with its terms.
(c) Governing Law; Jurisdiction. This Agreement and performance
under it, and all proceedings that may ensue from its breach, shall be
construed in accordance with and under the laws of the State of Texas.
(d) Employee's Representations. Employee represents and warrants
that he is free to enter into this Agreement and to perform each of the terms
and covenants of it. Employee represents and warrants that he is not
restricted or prohibited, contractually or otherwise, from entering into and
performing this Agreement, and that his execution and performance of this
Agreement is not a violation or breach of any other agreement between Employee
and any other person or entity.
(e) Company's Representations. Company represents and warrants that
it is free to enter into this Agreement and to perform each of the terms and
covenants of it. Company represents and warrants that it is not restricted or
prohibited, contractually or otherwise, from entering into and performing this
Agreement, and that its execution and performance of this Agreement is not a
violation or breach of any other agreement between Company and any other person
or entity. The Company represents and warrants that this Agreement is a legal,
valid and binding agreement of the Company, enforceable in accordance with its
terms.
(f) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
(g) Assignment. The rights and obligations of the parties under this
Agreement shall be binding upon and inure to the benefit of their respective
successors, assigns, executors, administrators and heirs, provided, however,
that neither the Company nor Employee may assign any duties under this
Agreement without the prior written consent of the other.
(h) Limitation. This Agreement shall not confer any right or impose
any obligation on the Company to continue the employment of Employee in any
capacity, or limit the right of the Company or Employee to terminate Employee's
employment.
(i) Notices. All notices and other communications under this
Agreement shall be in writing and shall be given in person or by telegraph,
facsimile or first-class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given when delivered
personally or three days after mailing or one day after transmission of a
telegram or facsimile, as the case may be, to the respective persons named
below.
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If to the Company: Corporate Secretary
Tesoro Petroleum Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Employee: ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
4351 F.M. 2673
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: TESORO PETROLEUM CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman of the Board of
Directors, President and Chief
Executive Officer
EMPLOYEE: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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Exhibit A
BENEFITS LISTING
1. Group Health Plan
2. Group Life and Accidental Death & Dismemberment Plan
3. Short Term Disability Income Plan
4. Long Term Disability Income Plan
5. Business Travel Accident Insurance Plan
6. Tesoro Petroleum Corporation Thrift/401K Plan
7. Tesoro Petroleum Corporation Retirement Plan
8. Tesoro Petroleum Corporation Amended Executive Security Plan
9. Tesoro Petroleum Corporation Funded Executive Security Plan
10. Tax Preparation and Financial Planning