UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[x] FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from . . . . to . . . .
Commission file number 1-7627
FRONTIER OIL CORPORATION
(Exact name of registrant as specified in its charter)
WYOMING 74-1895085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10000 MEMORIAL DRIVE, SUITE 600 77024-3411
HOUSTON, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 688-9600
------------------------------------------------------
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No . . .
Registrant's number of common shares outstanding as of April 23, 1999:
27,281,124
<PAGE>
FRONTIER OIL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
INDEX
Page
----
Part I - Financial Information
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information 10
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), including, without limitation,
statements that include the words "anticipates," "believes," "could,"
"estimates," "expects," "intends," "may," "plan," "predict," "project,"
"should," and similar expressions, and statements relating to the Company's
strategic plans, capital expenditures, industry trends and prospects and the
Company's financial position. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause actual results,
performance or achievements of the Company to differ materially from those
expressed or implied by such forward-looking statements. Although the Company
believes that its plans, intentions and expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
plans, intentions or expectations will be achieved. Important factors that could
cause actual results to differ materially from the Company's expectations
("Cautionary Statements") are set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
elsewhere in this document. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the Cautionary Statements.
Definitions of Terms
bbl(s) = barrel(s)
bpd = barrel(s) per day
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FRONTIER OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
For the three months ended March 31, 1999 1998
--------- ---------
<S> <C> <C>
Revenues:
Refined products $ 55,945 $ 69,023
Other 272 668
--------- ---------
56,217 69,691
--------- ---------
Costs and Expenses:
Refining operating costs 54,441 64,190
Selling and general expenses 2,077 1,994
Depreciation 2,841 2,376
--------- ---------
59,359 68,560
--------- ---------
Operating Income (Loss) (3,142) 1,131
Interest Expense, net 1,627 1,970
--------- ---------
Income (Loss) Before Income Taxes (4,769) (839)
Provision For Income Taxes 77 -
--------- ---------
Income (Loss) Before Extraordinary Item (4,846) (839)
Extraordinary Loss on Retirement of Debt, net of taxes - 3,013
--------- ---------
Net Income (Loss) $ (4,846) $ (3,852)
========= =========
Basic and Diluted Earnings (Loss) Per Share of Common Stock:
Continuing Operations $ (.18) $ (.03)
Extraordinary Loss - (.11)
--------- ---------
Net Income (Loss) $ (.18) $ (.14)
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 1 -
<PAGE>
FRONTIER OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except shares)
<TABLE>
<CAPTION>
March 31, 1999 and December 31, 1998 1999 1998
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash, including cash equivalents of
$21,593 in 1999 and $31,781 in 1998 $ 23,461 $ 33,589
Trade and other receivables, less allowance for
doubtful accounts of $500 in 1999 and 1998 16,231 11,021
Inventory of crude oil, products and other 26,447 20,269
Other current assets 462 560
--------- ---------
Total current assets 66,601 65,439
--------- ---------
Property, Plant and Equipment, at cost:
Refinery and pipeline 166,557 164,664
Furniture, fixtures and other equipment 3,430 3,426
--------- ---------
169,987 168,090
Less - Accumulated depreciation 59,055 56,217
--------- ---------
110,932 111,873
Other Assets 5,406 4,714
--------- ---------
$ 182,939 $ 182,026
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 27,012 $ 23,492
Revolving credit facility 11,200 3,800
Accrued turnaround cost 1,658 1,339
Accrued liabilities and other 2,405 4,280
Accrued interest 810 2,403
--------- ---------
Total current liabilities 43,085 35,314
--------- ---------
Long-Term Debt, net of current maturities:
9-1/8% Senior Notes 70,000 70,000
Deferred Credits and Other 5,882 5,238
Deferred Income Taxes 1,121 1,121
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $100 par value, 500,000 shares
authorized, no shares issued
Common stock, no par, 50,000,000 shares authorized,
28,487,024 and 28,385,584 shares issued in 1999 and 1998 57,289 57,278
Paid-in capital 86,770 86,305
Retained earnings (deficit) (74,907) (70,061)
Treasury stock, 1,196,700 shares and 605,700 shares
in 1999 and 1998 (6,301) (3,169)
--------- ---------
Total Shareholders' Equity 62,851 70,353
--------- ---------
$ 182,939 $ 182,026
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE>
FRONTIER OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
For the three months ended March 31, 1999 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (4,846) $ (3,852)
Depreciation 2,841 2,376
Deferred credits and other (62) 207
Extraordinary loss on retirement of debt - 3,013
Change in working capital from operations (10,574) (7,706)
--------- ---------
Net cash used in operating activities (12,641) (5,962)
--------- ---------
INVESTING ACTIVITIES
Additions to property and equipment (1,914) (3,097)
Other (250) -
--------- ---------
Net cash used in investing activities (2,164) (3,097)
--------- ---------
FINANCING ACTIVITIES
Borrowings:
Refining credit facility 7,400 5,700
9-1/8% Senior Notes - 70,000
Repayments of debt:
12% Senior Notes, including redemption premium - (25,423)
7-3/4% Convertible Subordinated Debentures, including
redemption premium - (45,971)
Debt issuance costs - (2,700)
Issuance of common stock 476 195
Purchase of treasury stock (3,143) (284)
Other (56) (61)
--------- ---------
Net cash provided by financing activities 4,677 1,456
--------- ---------
Increase (decrease) in cash and cash equivalents (10,128) (7,603)
Cash and cash equivalents, beginning of period 33,589 21,735
--------- ---------
Cash and cash equivalents, end of period $ 23,461 $ 14,132
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
FRONTIER OIL CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
1. FINANCIAL STATEMENT PRESENTATION
FINANCIAL STATEMENT PRESENTATION
The condensed consolidated financial statements include the accounts of
Frontier Oil Corporation, a Wyoming Corporation, and its wholly owned
subsidiaries, including Frontier Holdings Inc. (the "Refinery"), collectively
referred to as Frontier or the Company. These financial statements have been
prepared by the registrant without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC) and include all adjustments
(comprised of only normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It
is suggested that the financial statements included herein be read in
conjunction with the financial statements and the notes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1998.
Frontier conducts its refining operations in the Rocky Mountain region of
the United States. The Company's Cheyenne, Wyoming Refinery purchases the crude
oil to be refined and markets the refined petroleum products produced, including
various grades of gasoline, diesel fuel, asphalt and petroleum coke.
EARNINGS PER SHARE
Basic and diluted earnings per share have been computed based on the
weighted average number of common shares outstanding and did not assume the
exercise of stock option shares for the diluted computation as a loss from
continuing operations was incurred. The basic and diluted average shares
outstanding for the three months ended March 31, 1999 and 1998 were 27,589,539
and 28,104,335 respectively.
NEW ACCOUNTING STATEMENT
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities". The Statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. The Statement
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting.
Statement 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement the Statement as of the beginning of any fiscal
quarter after issuance (that is, fiscal quarters beginning June 16, 1998 and
thereafter). Statement 133 cannot be applied retroactively. Statement 133 must
be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts that were issued, acquired, or
substantively modified after December 31, 1997 (and, at the company's election,
before January 1, 1998).
The Company plans to adopt Statement 133 as of January 1, 2000 and presently
does not expect the impact of adopting Statement 133 to be material.
- 4 -
<PAGE>
2. SCHEDULE OF MAJOR COMPONENTS OF INVENTORY
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Crude oil $ 4,821 $ 1,407
Unfinished products 5,170 2,644
Finished products 8,887 8,602
Chemicals 1,457 1,333
Repairs and maintenance supplies and other 6,112 6,283
--------- ---------
$ 26,447 $ 20,269
========= =========
</TABLE>
- 5 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THE SAME PERIOD IN 1998
The Company had a loss for the three months ended March 31, 1999 of $4.8
million, or $.18 per share, compared to a loss of $3.9 million, or $.14 per
share, for the same period in 1998. The 1998 results included a $3.0 million
extraordinary loss on early retirement of debt.
Operating income decreased $4.3 million in 1999 versus 1998 due to a decrease
in the refined product spread (revenues less material costs) of $3.1 million, a
decrease in other income of $396,000, and increases in refining operating
expenses of $206,000, selling and general costs of $83,000 and depreciation of
$465,000.
Refined product revenues and refining operating costs are impacted by changes
in the price of crude oil. The average price of crude oil was lower in 1999
than in 1998. The refined product spread was $4.05 per bbl compared to $4.74
per bbl in 1998. The 1999 refined product spread decreased due to lower margins
and a reduction in the light/heavy crude spread offset by inventory gains.
High nationwide levels of gasoline and diesel inventories in 1999 have kept
margins for gasoline and diesel low. Frontier's market place was accordingly
impacted with decreases from the first quarter of 1998 in average gasoline and
diesel margins of 35% and 13%, respectively. Commencing in late March, product
margins began their seasonal improvement, but margins are lagging expectations
due to high nationwide and local inventory levels.
The price of crude oil reached its low point in December 1998 when crude
closed at below $10.75 per bbl on the New York Mercantile Exchange and stayed at
or below $13.00 per bbl during January and February 1999. Commencing in March,
with the announcement of OPEC production cuts, the price of crude oil increased
and ended March at $16.76 per bbl. In 1999, the Company realized a benefit to
the refined product spread of approximately $2.8 million because of inventory
gains. In 1998, the Company realized inventory losses of approximately $3.7
million because of declines in crude oil prices. Inventories are recorded at
the lower of cost on a first in, first out (FIFO) basis or market.
The light/heavy spread was $1.94 per bbl for the three months ended March 31,
1999, the lowest ever experienced by Frontier. The tightening spread has been
caused by low crude oil prices and the resulting reduced supply of heavy crude
oil as certain heavy crude oil has been uneconomic to produce. With the recent
increase in crude oil prices, more heavy crude oil has become available for
purchase, although the price remains high relative to lighter crude. Because of
the higher cost of heavy crude oil, more lighter crude has been purchased and
fewer heavy bbls have been contracted for at a fixed price above postings than
in prior years and the length of the 1999 contracts shortened to mainly average
three to six months. Consequently, any sustained improvement in crude oil
prices may enable the Company to purchase a higher percentage of heavy crude oil
and benefit from an improvement in the light/heavy spread.
Refined product revenues decreased $13.1 million or 19%. The decrease in
refined product revenues resulted from a $3.71 per bbl decrease in average
gasoline sales prices, a $3.79 per bbl decrease in average diesel sales prices
and a refined product sales volumes decrease of 4% in 1999 from 1998 levels.
Yields of gasoline decreased 11% while yields of diesel decreased 23% in 1999
compared to the same period in 1998. The decline in yields and sales volumes
during 1999 were caused by the 14 day crude unit turnaround which commenced
March 14, 1999 and was completed March 27, 1999.
Other income decreased $396,000 to $272,000 in 1999 versus 1998 due to sulfur
credit sales in 1998 of $360,000.
Refining operating costs decreased $9.7 million or 15% from 1998 levels due
to a decrease in material costs offset by an increase in refining operating
expenses. Material costs per bbl decreased 16% or $2.23 per bbl in 1999
primarily due to lower oil prices which more than offset an increases in
material costs from the use of a lower percentage of less expensive heavy crude
oil and a lower light/heavy spread. During 1999, the Refinery decreased its use
of heavy crude oil by 27% and the heavy crude oil utilization rate expressed as
a percentage of total crude oil decreased to 79% in 1999 from 93% in 1998. The
light/heavy spread decreased 59% to average $1.94 per bbl in the three months of
1999. Refining operating expense per bbl increased $.20 per bbl to $ 3.61 per
bbl in 1999 due to slightly higher expenses related to turnaround accruals and
fewer sales bbls.
Selling and general expenses increased $83,000 or 4% for the three months
ended March 31, 1999.
Depreciation increased $465,000 or 20% in the 1999 three-month period as
compared to the same period in 1998, attributable to increases in capital
investment.
- 6 -
<PAGE>
The interest expense decrease of $343,000 or 17% in 1999 was attributable to
utilizing proceeds of the 9-1/8% Senior Notes to retire the remaining 12% Senior
Notes in March 1998. Average debt for the three months decreased from $94
million in 1998 to $77 million in 1999.
Income tax expense for 1999 is for state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $12.6 million and $6.0 million for
the three months ended March 31, 1999 and 1998, respectively. Working capital
changes required $10.6 million and $7.7 million of cash flows for the first
three months of 1999 and 1998, respectively. During 1999, increases in
receivables, inventory and payables occurred due to rising crude oil prices.
Consistent with the seasonality of its business, the Company invests in working
capital during the first half of the year and recovers working capital
investment in the second half of the year. In addition to normal seasonality,
working capital cash flows were used as inventory quantities of crude oil and
intermediate products increased because of the March turnaround. During 1998,
working capital cash flows were used to increase gasoline and diesel inventories
in preparation for the April 1998 turnaround.
At March 31, 1999, the Company had $23.5 million of cash and $7.9 million
available under the its line of credit. The Company had working capital of
$23.5 million at March 31, 1999.
Additions to property and equipment in the first three months of 1999 of $1.9
million decreased $1.2 million from the first three months in 1998. Capital
expenditures of approximately $9.0 million are planned in 1999.
On September 1, 1998, the Company announced that the Board of Directors had
approved a stock repurchase program of up to three million shares of common
stock. In 1998, 469,700 shares of common stock were purchased by the Company
for $2.3 million. Through March 1999, an additional 593,500 shares of common
stock have been purchased by the Company for $3.1 million.
YEAR 2000
Many of the computer systems used by the Company today were designed and
developed using two digits, rather than four, to specify the year. As a result,
such systems will recognize the year 2000 as "00". This could cause many
computer applications to fail completely or to create erroneous results unless
corrective measures are taken. The Company utilizes software and related
information technology ("IT") essential to its operations that may be affected
by the Year 2000 issue. The company also relies on non-IT systems in its daily
operations, such as fax machines, radios, voice mail systems, alarms, monitors
and other miscellaneous systems. Additionally the company is dependent upon
third party relationships with both suppliers and customers.
The Company initiated a company wide task force to assess and resolve the
business risks associated with the Year 2000 issues. The process implemented by
the task force included identification of possibly effected systems, assessment
of probability of and implications of noncompliance, alternative modifications
to or replacements of existing systems or technology and cost and timetables for
completion. The analysis is being substantially completed by internal resources
with third party vendor verification when available.
The Company has completed a preliminary review of its IT, accounting and
operational, systems for Year 2000 compliance. The review of the Company's
primary financial computer systems, including its accounting system, indicated
only minor modifications will be required to make them Year 2000 compliant. The
process control system has been documented as Year 2000 compliant by the vendor
literature but further testing is being pursued to verify this. The Company
believes it will be able to implement the necessary corrections to all of its
critical information technology and non-IT systems by mid 1999 with one
exception. The weigh scale software will be upgraded in October 1999 to avoid
disrupting high volume seasonal operations. Systems identified as non-critical
noncompliant will be addressed at later dates.
The Company does significant business with and is dependent upon various
third party entities. These relationships include customers, critical suppliers
of products and utilities, financial institutions, transportation companies and
others. The Company is also reviewing the possible impact of Year 2000
noncompliance by its outside providers. Communications with critical third
parties regarding their plans and progress addressing the Year 2000 has been
initiated and continues. The Company is dependent upon the reliability and
completeness of the third parties representations in assessing their Year 2000
readiness.
The estimated costs of the software and hardware modifications and
some consultant support identified to date will be between $65,000 to $150,000
to implement and will be financed from operating cash flows.
- 7 -
<PAGE>
Expenditures through March 31, 1999 totaled approximately $32,500. The Company
does not separately track the internal costs for the Year 2000 project, and such
costs are principally the related payroll costs for its information systems
group.
The Company's refinery operations are very dependent upon outside providers
and in certain areas an alternative to the Company is not available. Failure to
correct a material year 2000 issue could result in an interruption in, or a
failure of, certain normal business activities or operations. Although the
Company is taking steps to reduce the likelihood of interruption or failure of
normal operations, there can be no guarantee that other companies' systems, on
which our systems rely, will be timely Year 2000 compliant. To date, the Company
is not aware of any significant Year 2000 problems with these outside providers
that would have a material adverse effect on the Company's business or results
of operations, liquidity and financial operations.
The Company is in the process of developing contingency plans to address
issues associated with the reasonably likely worst case scenarios. The Company
expects to have such contingency plans formulated by the end of August 1999.
- 8 -
<PAGE>
REFINING OPERATING STATISTICAL INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Raw material input (bpd)
Light crude 6,400 2,293
Heavy crude 24,032 32,729
Other feed and blend stocks 5,946 6,333
--------- ---------
Total 36,378 41,355
Manufactured product yields (bpd)
Gasoline 15,366 17,268
Diesel 10,886 14,228
Asphalt and other 8,652 9,047
--------- ---------
Total 34,904 40,543
Total product sales (bpd)
Gasoline 21,390 21,176
Diesel 11,484 12,492
Asphalt and other 5,691 6,625
--------- ---------
Total 38,565 40,293
Operating margin information (per sales bbl)
Average sales price $ 16.12 $ 19.04
Material costs (under FIFO inventory accounting) 12.07 14.30
--------- ---------
Product spread 4.05 4.74
Operating expenses excluding depreciation 3.61 3.41
Depreciation .81 .65
--------- ---------
Operating margin (loss) $ (.37) $ .68
Manufactured product margin before depreciation (per bbl) $ .50 $ 1.33
Purchased product margin (per purchased product bbl) $ (.47) $ 1.48
Light/heavy crude spread (per bbl) $ 1.94 $ 4.72
Average sales price (per sales bbl)
Gasoline $ 18.11 $ 21.82
Diesel 16.99 20.78
Asphalt and other 9.34 6.84
</TABLE>
- 9 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings -
None, which in the opinion of management would have a material
impact on the registrant.
ITEM 2. Changes in Securities -
There have been no changes in the constituent instruments defining the
rights of the holders of any class of registered securities during the
current quarter.
ITEM 3. Defaults Upon Senior Securities -
None.
ITEM 4. Submission of Matters to a Vote of Security Holders -
None.
ITEM 5. Other Information -
None.
ITEM 6. Exhibits and Reports on Form 8-K -
(a) Exhibits
10.01 - Executive Employment Agreement dated February 25, 1999 between
the Company and James R. Gibbs.
10.02 - Executive Employment Agreement dated February 25, 1999 between
the Company and Julie H. Edwards.
10.03 - Executive Employment Agreement dated February 25, 1999 between
the Company and S. Clark Johnson.
10.04 - Executive Employment Agreement dated February 25, 1999 between
the Company and J. Currie Bechtol.
10.05 - Executive Employment Agreement dated February 25, 1999 between
the Company and Gerald B. Faudel.
10.06 - Executive Employment Agreement dated February 25, 1999 between
the Company and Jon D. Galvin.
27 - Financial Data Schedule
(b) Reports on Form 8-K
None.
- 10 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FRONTIER OIL CORPORATION
By: /s/Jon D. Galvin
---------------------------
Jon D. Galvin
Vice President - Controller
Date: April 28, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 23,461
<SECURITIES> 0
<RECEIVABLES> 16,231
<ALLOWANCES> 0
<INVENTORY> 26,447
<CURRENT-ASSETS> 66,601
<PP&E> 169,987
<DEPRECIATION> 59,055
<TOTAL-ASSETS> 182,939
<CURRENT-LIABILITIES> 43,085
<BONDS> 70,000
0
0
<COMMON> 57,289
<OTHER-SE> 5,562
<TOTAL-LIABILITY-AND-EQUITY> 182,939
<SALES> 55,945
<TOTAL-REVENUES> 56,217
<CGS> 57,282
<TOTAL-COSTS> 57,282
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,627
<INCOME-PRETAX> (4,769)
<INCOME-TAX> 77
<INCOME-CONTINUING> (4,846)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,846)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT executed as of the 25th day of February, 1999, by and
between Frontier Oil Corporation, a Wyoming corporation (the "Company"), and
James R. Gibbs (the "Executive").
W I T N E S S E T H:
WHEREAS the Executive is a principal officer of the Company and an integral
part of its management;
WHEREAS, the Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened change in
control of the Company;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive could reasonably expect in the
absence of a change in control of the Company and, accordingly, this Agreement
will be operative only upon a change in control of the Company, or if the
Executive's employment is terminated in anticipation of a change in control as
that term is hereafter defined.
NOW THEREFORE, in consideration of the premises and covenants herein
contained and other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties as follows:
1. OPERATION OF AGREEMENT.
1.01 This Agreement shall be binding immediately upon its execution by
the parties hereto, but, anything in this Agreement to the contrary
notwithstanding, neither the Agreement nor any provision thereof shall be
operative unless and until there has been a Change in Control of the Company, or
if the Executive's employment is terminated in anticipation of a change in
control as defined in paragraph 1.02 below. Upon the date of such a Change in
Control of the Company (the "Effective Date"), this Agreement and all provisions
thereof shall become operative immediately, without the necessity of any further
action on the part of either party hereto.
1.02 For the purpose of this Agreement, the term "Change in Control of
the Company" shall mean a change in control of a nature that would be required
to be disclosed in a proxy statement, governed by the rules of the Securities
and Exchange Commission as in effect on the date of this Agreement; provided
that without limitation, such a change in control shall be deemed to have
occurred upon the occurrence of any one of the following:
(a) the consummation of any transaction (including without
limitation, any merger, consolidation, tender offer, or exchange offer) the
result of which is that any individual or "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934 - the
"Exchange Act") is or becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities,
(b) the first day during any period of 24 consecutive months,
commencing before or after the date of this Agreement that the individuals, who
at the beginning of such 24 month period were directors of the Company for whom
the Executive shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company,
(c) the sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole,
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company, or
(e) the date the Company files a report or proxy statement with
the SEC stating that a change in control has or may occur pursuant to any then
existing contract or termination.
1.03 This Agreement shall terminate forthwith, and without more, in
the event that Executive ceases to be an executive officer of the Company at any
time prior to the Effective Date whether by reason of his death, Disability,
discharge, resignation or otherwise; except that either party wishing to
terminate the employment relationship, other than by reason of death, Disability
or discharge for Cause, hereby agrees to give the other party at least 60 days
prior written notice. Notwithstanding the foregoing, following the commencement
of any discussions of any third party that ultimately result in the occurrence
of a Change of Control, the Company shall not at the instance or upon the
suggestion of such third party terminate the employment or reduce the
compensation of Executive.
1.04 This Agreement shall terminate three years from the date hereof;
provided, however, that this Agreement shall be continued in full force and
effect for an additional period of three years following such term, unless the
Company elects to terminate this Agreement at the end of such term and provides
at least 30 days' prior written notice to Executive; and provided, further, that
following the commencement of any discussions with any third party that
ultimately result in the occurrence of a Change of Control, the Company shall
not make such election to terminate this Agreement at the instance or upon the
suggestion of such third party.
1.05 Except as provided in paragraphs 1.03 and 1.04 above, nothing
expressed or implied herein shall create any right or duty (on the part of the
Company or Executive) to have Executive remain in the employment of the Company
at any time prior to the Effective Date, each reserving all rights to terminate
the employment relationship at any time (subject to the notice requirement
contained in paragraphs 1.03 and 1.04 above) prior to the Effective Date, with
or without Cause.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
2.01 The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company,
or subject to the terms of this Agreement, such other corporate profit center as
shall then be the principal successor to the business, assets and the properties
of the Company, for the period set forth in paragraph 2.02 below (the "Period of
Employment") in the position and with the duties and responsibilities set forth
in Section 3 below, and upon the other terms and conditions hereinafter stated.
2.02 The Period of Employment, subject only to the provisions of
Section 6 below relating to death or Disability, shall continue for a period of
three years from the Effective Date.
3. POSITION, DUTIES, RESPONSIBILITIES.
3.01 It is contemplated that at all times during the Period of
Employment the Executive shall continue to serve as a principal officer of the
Company with the office and title of President, Chief Executive Officer of the
Company and continue to have duties and responsibilities commensurate with those
duties and responsibilities imposed on the Executive immediately prior to the
Effective Date.
3.02 During the Period of Employment the Executive shall also serve
and continue to serve, if and when elected and reelected, as an officer or
director, or both, of any subsidiary, division or affiliate of the Company.
3.03 Throughout the Period of Employment the Executive shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations and except
for illness or incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods required for serving as a director or
member of a committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.04 The office of the Executive shall be located at the principal
executive offices of the Company at 10000 Memorial Drive, Suite 600, Houston,
Texas 77024. The Executive shall not be required to change the current situs of
his employment or residence. The Executive also shall not be required to be
absent therefrom on travel status or otherwise more than a total of 60 working
days in any calendar year nor more than 20 consecutive days at any one time.
4. COMPENSATION, COMPENSATION PLANS, PERQUISITES.
4.01 (a) For all services rendered by the Executive in any capacity
during the Period of Employment, including, without limitation, services as an
executive, officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, the Executive shall be paid as
compensation:
(i) A base salary at no less than the rate in effect immediately
prior to the Effective Date, with increases (if any) as shall be made from time
to time in accordance with the Employer's regular salary administration
practices;
(ii) An annual performance bonus in an amount no less than the
amount of 65% of the base salary determined pursuant to subparagraph 4.01
(a)(i).
(b) Any increase in salary pursuant to clause (i) of
subparagraph 4.01 (a) or in bonus or other compensation shall in no way diminish
any other obligation of the Company under this Agreement.
4.02 During the Period of Employment the Executive shall be and
continue to be a full participant in the Company's applicable stock option plans
and any other compensation plans in which the Executive participates immediately
prior to the Effective Date, or equivalent successor plans that may be adopted
by the Company, with at least the same reward opportunities to Executive that
have heretofore been provided. Nothing in this Agreement shall preclude
improvement of reward opportunities in such plans or other plans in accordance
with the present practice of the Company.
4.03 During the Period of Employment, the Executive shall be entitled
to perquisites, including, without limitation, an office, secretarial and
clerical staff, and to fringe benefits, including, without limitation, the
payment or reimbursement of club dues, in each case at least equal to those
attached to his office immediately prior to the Effective Date, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5. EMPLOYEE BENEFIT PLANS.
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02 The Executive, his dependents and beneficiaries shall be entitled
to all payments and benefits and service credit, for benefits during the Period
of Employment to which officers of the Company, their dependents and
beneficiaries are entitled as a result of the employment of such officers under
the terms of employee plans and practices of the Company in effect immediately
prior to the Effective Date, including, without limitation, the Company's
retirement program (consisting of the Frontier Retirement Savings Plan, and the
Frontier Deferred Compensation Plan), the Company's stock purchase and savings,
thrift and investment plans, if any, the Frontier Oil Corporation Executive Life
Insurance Plan, its group life insurance plans, its accidental death and
dismemberment insurance, its business travel insurance, its long term
disability, medical, dental and health and welfare plans and other present or
successor plans and practices of the Company, its subsidiaries and divisions,
for which officers, their dependents and beneficiaries are eligible, and to all
payments or other benefits under any such plan or practice after the Period of
Employment as a result of participation in such plan or practice durinq the
Period of Employment.
5.03 Nothing in this Agreement shall preclude the Company from
amending or terminating any employee benefit plan or practice but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Period of Employment to perquisites as set forth in paragraph 4.03 above and
to benefits and service credit for benefits under paragraph 5.02 above at least
equal to those attached to his position immediately prior to the Effective Date,
and nothing in this Agreement shall operate as, or be construed to reduce or
authorize reduction without the Executive's written consent in the level of such
perquisites, benefits or service credit for benefits. In the event of any such
reduction by amendment or termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries shall continue to be entitled to
perquisites, benefits and service credit for benefits under such plans or
practices that he or his dependents and beneficiaries would have received if
such reduction had not taken place.
6. EFFECT OF DEATH OR DISABILITY.
6.01 In the event of the death of the Executive during the Period of
Employment, the legal representative of the Executive shall be entitled to the
compensation provided for in paragraph 4.01 during the balance of the Period of
Employment. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of the twelfth month following the month in
which death shall have occurred but without prejudice to any other payments due
in respect of the Executive's death hereunder or pursuant to any other
agreements or arrangements with the Company.
6.02 The term "Disability," as used in this Agreement, shall mean an
illness or accident which prevents the Executive from performing his duties
under this Agreement for a period of six consecutive months. In the event of the
Disability of the Executive during the Period of Employment, the Executive shall
be entitled to the full compensation provided for in this Agreement for the
period of such Disability (i.e., commencing on the date on which the Disability
occurred) but not in excess of six months. The Period of Employment shall be
deemed to have ended as of the close of business on the last day of such six
months' period but without prejudice to any payments due to the Executive in
respect of disability or any short term illness or accident which prevents the
Executive from performing his duties for a period of less than six months.
7. TERMINATION.
7.01 In the event of a Termination, as defined in paragraph 7.03
below, during the Period of Employment, the provisions of this Section 7 shall
apply.
7.02 In the event of a Termination the Company shall, as liquidated
damages or severance pay, or both, pay to the Executive and provide him, his
dependents, beneficiaries and estate, with the following:
(a) The Company shall continue to pay the Executive the base
salary compensation provided in paragraph 4.01 (a)(i) above at the rate in
effect at the time of Termination (which in accordance with the terms of this
Agreement shall be no less than the rate of base salary in effect immediately
prior to the Effective Date). Such base salary shall be paid no less than
monthly beginning at the end of the month in which Termination occurred and
continuing during the remainder of the Period of Employment.
(b) The Company shall also continue to pay the Executive the
annual performance bonus provided in paragraph 4.01(a)(ii) above. Such annual
performance bonus compensation shall be paid on an annual basis, so that a
payment will be made in each of the three years of the Employment Period.
(c) With regard to the employee benefits and perquisites
described in paragraphs 5.02 and 4.03, the Company shall pay the Executive an
amount no less than 30% of the total amount for the balance of the Period of
Employment of the unpaid base salary payable pursuant to subparagraph (a) above.
(d) In the event that the Executive shall at the time of
Termination hold an outstanding and unexercised (whether or not exercisable at
the time) option or options theretofore granted by the Company, the Company
shall, in addition to the amounts provided for above, pay to the Executive in a
lump sum an amount equal to the excess above the option price under each such
option of the Fair Market Value at the time of Termination of the shares subject
to each such option. Solely for the purpose of this subparagraph (d), Fair
Market Value at the time of Termination shall be deemed to mean the higher of
(i) the average of the reported closing prices of the Common Shares of the
Company, as reported on the New York Stock Exchange - Composite Transactions, on
the last trading day prior to the Termination and on the last trading day of
each of the two preceding thirty-day periods, and (ii) in the event that a
Change in Control, as defined in paragraph 1.02 above, prior to Termination
shall have taken place as the result of a tender offer and such Change in
Control was consummated within twelve months of Termination, the price paid for
a majority of the Common Shares of the Company in the course of such tender
offer.
(e) At the Company's option, the Company may pay Executive the
total of all amounts payable to Executive for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment. Executive may also elect, at any time during the remaining Term of
Employment, to receive all amounts payable to him for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment by providing written notice of such election to the Company. The
Company agrees to make a lump sum payment of the total of such amounts within 30
days of Executive's notice of election to receive lump sum payment. It is
acknowledged and agreed that no lump sum payment will shorten the Term of
Employment of Executive, or modify or obviate any obligations of the Company
other than the payments otherwise due during the Term of Employment pursuant to
subparagraphs (a) and (b) above.
7.03 The word "Termination," for the purpose of this Section 7 and any
other provisions of this Agreement, shall mean:
(a) Termination by the Company of the employment of the Executive by
the Company and its subsidiaries for any reason other than for Cause as defined
in paragraph 7.04 below or for Disability as defined in subparagraph 6.02 above;
or
(b) Termination by the Executive of his employment by the Company and
its subsidiaries upon the occurrence of any of the following events:
(i) Failure to elect or reelect the Executive to, or removal of
the Executive from, the office set forth in paragraph 3.01 above.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties of Executive as contemplated by
paragraph 3.01 above, or a reduction in compensation, and such change and/or
reduction is not remedied within 30 days after receipt by the Company of written
notice from the Executive.
(iii) A determination by the Executive made in good faith that
as a result of a Change in Control of the Company, as defined in paragraph 1.02
above, and a change in circumstances thereafter that significantly affects his
position, he is unable to carry out the authorities, powers, functions or duties
attached to his position as contemplated by Section 3 of this Agreement, and
such determination is not remedied within 30 days after receipt by the Company
of written notice from the Executive.
(iv) A breach by the Company of any provision of this Agreement
not embraced within the foregoing clauses (i), (ii) and (iii) of this
subparagraph 7.03(b) that is not remedied within 30 days after receipt by the
Company of written notice from the Executive .
(v) The liquidation, dissolution, consolidation or merger of the
Company or transfer of all or substantially all of the assets of the Company and
its Subsidiaries unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of the assets have been
transferred shall have assumed all duties and obligations of the Company under
this Agreement.
An election by the Executive to terminate his employment given under the
provisions of this paragraph 7.03 shall not be deemed a voluntary termination of
employment by the Executive for the purpose of this Agreement or any plan or
practice of the Company.
7.04 For the purpose of any provision of this Agreement, the
termination of the Executive's employment shall be deemed to have been for
"Cause" only if:
(a) termination of his employment shall have been the result of
an act or acts of dishonesty on the part of the Executive constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company; or
(b) there has been a breach by the Executive during the Period
of Employment of the provisions of paragraph 3.03 above, relating to the time to
be devoted to the affairs of the Company, or of Section 8.01, relating to
confidential information, and such breach results in demonstrably material
injury to the Company and with respect to any alleged breach of paragraph 3.03
or of section 8.01 hereof, the Executive after notice and an opportunity to be
heard either shall have failed to remedy such alleged breach or shall have
failed to take all reasonable steps to that end within thirty days from his
receipt of written notice by the Company pursuant to resolution duly adopted by
the Board of Directors of the Company; and provided that thereafter
(c) there shall have been delivered to the Executive a certified
copy of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraphs (a) or (b) above, specifying the particulars
thereof in detail.
Anything in this paragraph 7.04 or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (a) as the result of bad judgment or negligence on the
part of the Executive, or (b) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (c) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (d) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under the
Policies of the Company or the laws of the State of Wyoming or the directors'
and officers' liability insurance of the Company, in each case as in effect at
the time of such act or omission, or (e) as the result of an act or omission
which occurred more than twelve calendar months prior to the Executive's having
been given notice of the termination of his employment for such act or omission
unless the commission of such act or such omission could not at the time of such
commission or omission have been known to a member of the Board of Directors of
the Company (other than the executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar months from the date that
the commission of such act or such omission was or could reasonably have been so
known, or (f) as the result of a continuing course of action which commenced and
was or could reasonably have been known to a member of the Board of Directors of
the Company (other than the Executive) more than twelve calendar months prior to
notice having been given to the Executive of the termination of his employment.
7.05 In the event that the Executive's employment shall be terminated
by the Company during the Period of Employment and such termination is alleged
to be for Cause, or the Executive's right to terminate his employment under
paragraph 7.03(b) above shall be questioned by the Company or for any other
reason, the Executive shall have the right, in addition to all other rights and
remedies provided by law, at his election either to seek arbitration in Harris
County, Texas under the rules of the American Arbitration Association by serving
a notice to arbitrate upon the Company or to institute a judicial proceeding, in
either case within ninety days after having received notice of termination of
his employment under paragraph 7.03(b) is subject to question or that the
Company is withholding or proposes to withhold payments or provision of benefits
or within such longer period as may reasonably be necessary for the Executive to
take action in the event that his illness or incapacity should preclude his
taking such action within such ninety-day period.
8. CONFIDENTIAL INFORMATION
8.01 The Executive agrees not to disclose, either while in the
Company's employ or at any time thereafter, to any person not employed by the
Company, or not engaged to render services to the Company, any confidential
information obtained by him while in the employ of the Company, including,
without limitation, any of the Company's inventions, processes, methods of
distribution or customers or trade secrets; provided, however, that this
provision shall not preclude the Executive from use or disclosure of information
known generally to the public or of information not considered confidential by
persons engaged in the business conducted by the Company or from disclosure
required by law or Court order.
8.02 The Executive also agrees that upon leaving the Company's employ
he will not take with him, without the prior written consent of an officer
authorized to act in the matter by the Board of Directors of the Company, any
drawing, blueprint, specification or other document of the Company, its
subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or without
limitation, relating to its or their methods of distribution, or any description
of any formulae or secret processes.
9. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be deemed to have been duly given if and when mailed in
the continental United States by registered or certified mail, return receipt
requested, postage prepaid, or personally delivered or sent by telex or other
telegraphic means to the party entitled thereto at the address stated below or
to such changed address as the addressee may have given by a similar notice:
To the Company: Frontier Oil Corporation
10000 Memorial Drive
Suite 600
Houston, Texas 77024
To the Executive: James R. Gibbs
11100 Kingsworthy
Houston, Texas 77024
10. GENERAL PROVISIONS
10.01 There shall be no right of set-off or counterclaim in respect
of any claim, debt or obligation, against any payments to the Executive, his
dependents, beneficiaries or estate provided for in this Agreement.
10.02 The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of such agreements.
10.03 No right or interest or in any payments shall be assignable by
the Executive; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive's estate.
10.04 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
10.05 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to his beneficiary or beneficiaries.
10.06 The titles to sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
10.07 No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Company or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized.
10.08 Except as otherwise specifically provided in this Agreement, no
waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a subsequent breach of such condition or provision
or a waiver of a similar or dissimilar provision or condition at the same or at
any prior or subsequent time.
10.09 In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
10.10 Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purpose of this Agreement), but
shall not otherwise be assignable by the Company.
10.11 This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas (other than the choice of law principles
thereof).
10.12 To the extent that any payment made to Executive pursuant to
the terms of this Agreement is subject to federal income, excise, or other tax
at a rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G (b)(1 ) and 4999 (a) of the Internal Revenue Code of
1954, as amended (the "Code"), any similar or analogous provisions of any
statute adopted subsequent to the date hereof, or otherwise, then the amount due
hereunder shall be increased by an amount ("the "Additional Amount") such that
the net amount received by Executive, after paying any applicable Penalty Tax
and any federal or state income tax on such Additional Amount, shall be equal to
the amount that Employee would have received if such Penalty Tax were not
applicable.
10.13 The Company shall pay all legal fees and expenses which the
Executive may incur as a result of the Company's (and its successors and
assigns) contesting the validity or enforceability of this Agreement. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and amounts
received from other employment or otherwise by the Executive shall not be
recoupable by the Company against the amounts paid to the Executive pursuant to
the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FRONTIER OIL CORPORATION
By: /s/ Julie H. Edwards
-----------------------
Julie H. Edwards
ATTEST:
/s/ J. Currie Bechtol
--------------------------
J. Currie Bechtol
/s/ James R. Gibbs
-----------------------
James R. Gibbs
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT executed as of the 25th day of February, 1999, by and
between Frontier Oil Corporation, a Wyoming corporation (the "Company"), and
Julie H. Edwards (the "Executive").
W I T N E S S E T H:
WHEREAS the Executive is a principal officer of the Company and an integral
part of its management;
WHEREAS, the Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened change in
control of the Company;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive could reasonably expect in the
absence of a change in control of the Company and, accordingly, this Agreement
will be operative only upon a change in control of the Company, or if the
Executive's employment is terminated in anticipation of a change in control as
that term is hereafter defined.
NOW THEREFORE, in consideration of the premises and covenants herein
contained and other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties as follows:
1. OPERATION OF AGREEMENT.
1.01 This Agreement shall be binding immediately upon its execution by
the parties hereto, but, anything in this Agreement to the contrary
notwithstanding, neither the Agreement nor any provision thereof shall be
operative unless and until there has been a Change in Control of the Company, or
if the Executive's employment is terminated in anticipation of a change in
control as defined in paragraph 1.02 below. Upon the date of such a Change in
Control of the Company (the "Effective Date"), this Agreement and all provisions
thereof shall become operative immediately, without the necessity of any further
action on the part of either party hereto.
1.02 For the purpose of this Agreement, the term "Change in Control of
the Company" shall mean a change in control of a nature that would be required
to be disclosed in a proxy statement, governed by the rules of the Securities
and Exchange Commission as in effect on the date of this Agreement; provided
that without limitation, such a change in control shall be deemed to have
occurred upon the occurrence of any one of the following:
(a) the consummation of any transaction (including without
limitation, any merger, consolidation, tender offer, or exchange offer) the
result of which is that any individual or "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934 - the
"Exchange Act") is or becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities,
(b) the first day during any period of 24 consecutive months,
commencing before or after the date of this Agreement that the individuals, who
at the beginning of such 24 month period were directors of the Company for whom
the Executive shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company,
(c) the sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole,
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company, or
(e) the date the Company files a report or proxy statement with
the SEC stating that a change in control has or may occur pursuant to any then
existing contract or termination.
1.03 This Agreement shall terminate forthwith, and without more, in
the event that Executive ceases to be an executive officer of the Company at any
time prior to the Effective Date whether by reason of his death, Disability,
discharge, resignation or otherwise; except that either party wishing to
terminate the employment relationship, other than by reason of death, Disability
or discharge for Cause, hereby agrees to give the other party at least 60 days
prior written notice. Notwithstanding the foregoing, following the commencement
of any discussions of any third party that ultimately result in the occurrence
of a Change of Control, the Company shall not at the instance or upon the
suggestion of such third party terminate the employment or reduce the
compensation of Executive.
1.04 This Agreement shall terminate three years from the date hereof;
provided, however, that this Agreement shall be continued in full force and
effect for an additional period of three years following such term, unless the
Company elects to terminate this Agreement at the end of such term and provides
at least 30 days' prior written notice to Executive; and provided, further, that
following the commencement of any discussions with any third party that
ultimately result in the occurrence of a Change of Control, the Company shall
not make such election to terminate this Agreement at the instance or upon the
suggestion of such third party.
1.05 Except as provided in paragraphs 1.03 and 1.04 above, nothing
expressed or implied herein shall create any right or duty (on the part of the
Company or Executive) to have Executive remain in the employment of the Company
at any time prior to the Effective Date, each reserving all rights to terminate
the employment relationship at any time (subject to the notice requirement
contained in paragraphs 1.03 and 1.04 above) prior to the Effective Date, with
or without Cause.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
2.01 The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company,
or subject to the terms of this Agreement, such other corporate profit center as
shall then be the principal successor to the business, assets and the properties
of the Company, for the period set forth in paragraph 2.02 below (the "Period of
Employment") in the position and with the duties and responsibilities set forth
in Section 3 below, and upon the other terms and conditions hereinafter stated.
2.02 The Period of Employment, subject only to the provisions of
Section 6 below relating to death or Disability, shall continue for a period of
three years from the Effective Date.
3. POSITION, DUTIES, RESPONSIBILITIES.
3.01 It is contemplated that at all times during the Period of
Employment the Executive shall continue to serve as a principal officer of the
Company with the office and title of Senior Vice President- Finance & CFO of the
Company and continue to have duties and responsibilities commensurate with those
duties and responsibilities imposed on the Executive immediately prior to the
Effective Date.
3.02 During the Period of Employment the Executive shall also serve
and continue to serve, if and when elected and reelected, as an officer or
director, or both, of any subsidiary, division or affiliate of the Company.
3.03 Throughout the Period of Employment the Executive shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations and except
for illness or incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods required for serving as a director or
member of a committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.04 The office of the Executive shall be located at the principal
executive offices of the Company at 10000 Memorial Drive, Suite 600, Houston,
Texas 77024. The Executive shall not be required to change the current situs of
his employment or residence. The Executive also shall not be required to be
absent therefrom on travel status or otherwise more than a total of 60 working
days in any calendar year nor more than 20 consecutive days at any one time.
4. COMPENSATION, COMPENSATION PLANS, PERQUISITES.
4.01 (a) For all services rendered by the Executive in any capacity
during the Period of Employment, including, without limitation, services as an
executive, officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, the Executive shall be paid as
compensation:
(i) A base salary at no less than the rate in effect immediately
prior to the Effective Date, with increases (if any) as shall be made from time
to time in accordance with the Employer's regular salary administration
practices;
(ii) An annual performance bonus in an amount no less than the
amount of 50% of the base salary determined pursuant to subparagraph 4.01
(a)(i).
(b) Any increase in salary pursuant to clause (i) of
subparagraph 4.01 (a) or in bonus or other compensation shall in no way diminish
any other obligation of the Company under this Agreement.
4.02 During the Period of Employment the Executive shall be and
continue to be a full participant in the Company's applicable stock option plans
and any other compensation plans in which the Executive participates immediately
prior to the Effective Date, or equivalent successor plans that may be adopted
by the Company, with at least the same reward opportunities to Executive that
have heretofore been provided. Nothing in this Agreement shall preclude
improvement of reward opportunities in such plans or other plans in accordance
with the present practice of the Company.
4.03 During the Period of Employment, the Executive shall be entitled
to perquisites, including, without limitation, an office, secretarial and
clerical staff, and to fringe benefits, including, without limitation, the
payment or reimbursement of club dues, in each case at least equal to those
attached to his office immediately prior to the Effective Date, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5. EMPLOYEE BENEFIT PLANS.
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02 The Executive, his dependents and beneficiaries shall be entitled
to all payments and benefits and service credit, for benefits during the Period
of Employment to which officers of the Company, their dependents and
beneficiaries are entitled as a result of the employment of such officers under
the terms of employee plans and practices of the Company in effect immediately
prior to the Effective Date, including, without limitation, the Company's
retirement program (consisting of the Frontier Retirement Savings Plan, and the
Frontier Deferred Compensation Plan), the Company's stock purchase and savings,
thrift and investment plans, if any, the Frontier Oil Corporation Executive Life
Insurance Plan, its group life insurance plans, its accidental death and
dismemberment insurance, its business travel insurance, its long term
disability, medical, dental and health and welfare plans and other present or
successor plans and practices of the Company, its subsidiaries and divisions,
for which officers, their dependents and beneficiaries are eligible, and to all
payments or other benefits under any such plan or practice after the Period of
Employment as a result of participation in such plan or practice durinq the
Period of Employment.
5.03 Nothing in this Agreement shall preclude the Company from
amending or terminating any employee benefit plan or practice but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Period of Employment to perquisites as set forth in paragraph 4.03 above and
to benefits and service credit for benefits under paragraph 5.02 above at least
equal to those attached to his position immediately prior to the Effective Date,
and nothing in this Agreement shall operate as, or be construed to reduce or
authorize reduction without the Executive's written consent in the level of such
perquisites, benefits or service credit for benefits. In the event of any such
reduction by amendment or termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries shall continue to be entitled to
perquisites, benefits and service credit for benefits under such plans or
practices that he or his dependents and beneficiaries would have received if
such reduction had not taken place.
6. EFFECT OF DEATH OR DISABILITY.
6.01 In the event of the death of the Executive during the Period of
Employment, the legal representative of the Executive shall be entitled to the
compensation provided for in paragraph 4.01 during the balance of the Period of
Employment. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of the twelfth month following the month in
which death shall have occurred but without prejudice to any other payments due
in respect of the Executive's death hereunder or pursuant to any other
agreements or arrangements with the Company.
6.02 The term "Disability," as used in this Agreement, shall mean an
illness or accident which prevents the Executive from performing his duties
under this Agreement for a period of six consecutive months. In the event of the
Disability of the Executive during the Period of Employment, the Executive shall
be entitled to the full compensation provided for in this Agreement for the
period of such Disability (i.e., commencing on the date on which the Disability
occurred) but not in excess of six months. The Period of Employment shall be
deemed to have ended as of the close of business on the last day of such six
months' period but without prejudice to any payments due to the Executive in
respect of disability or any short term illness or accident which prevents the
Executive from performing his duties for a period of less than six months.
7. TERMINATION.
7.01 In the event of a Termination, as defined in paragraph 7.03
below, during the Period of Employment, the provisions of this Section 7 shall
apply.
7.02 In the event of a Termination the Company shall, as liquidated
damages or severance pay, or both, pay to the Executive and provide him, his
dependents, beneficiaries and estate, with the following:
(a) The Company shall continue to pay the Executive the base
salary compensation provided in paragraph 4.01 (a)(i) above at the rate in
effect at the time of Termination (which in accordance with the terms of this
Agreement shall be no less than the rate of base salary in effect immediately
prior to the Effective Date). Such base salary shall be paid no less than
monthly beginning at the end of the month in which Termination occurred and
continuing during the remainder of the Period of Employment.
(b) The Company shall also continue to pay the Executive the
annual performance bonus provided in paragraph 4.01(a)(ii) above. Such annual
performance bonus compensation shall be paid on an annual basis, so that a
payment will be made in each of the three years of the Employment Period.
(c) With regard to the employee benefits and perquisites
described in paragraphs 5.02 and 4.03, the Company shall pay the Executive an
amount no less than 30% of the total amount for the balance of the Period of
Employment of the unpaid base salary payable pursuant to subparagraph (a) above.
(d) In the event that the Executive shall at the time of
Termination hold an outstanding and unexercised (whether or not exercisable at
the time) option or options theretofore granted by the Company, the Company
shall, in addition to the amounts provided for above, pay to the Executive in a
lump sum an amount equal to the excess above the option price under each such
option of the Fair Market Value at the time of Termination of the shares subject
to each such option. Solely for the purpose of this subparagraph (d), Fair
Market Value at the time of Termination shall be deemed to mean the higher of
(i) the average of the reported closing prices of the Common Shares of the
Company, as reported on the New York Stock Exchange - Composite Transactions, on
the last trading day prior to the Termination and on the last trading day of
each of the two preceding thirty-day periods, and (ii) in the event that a
Change in Control, as defined in paragraph 1.02 above, prior to Termination
shall have taken place as the result of a tender offer and such Change in
Control was consummated within twelve months of Termination, the price paid for
a majority of the Common Shares of the Company in the course of such tender
offer.
(e) At the Company's option, the Company may pay Executive the
total of all amounts payable to Executive for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment. Executive may also elect, at any time during the remaining Term of
Employment, to receive all amounts payable to him for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment by providing written notice of such election to the Company. The
Company agrees to make a lump sum payment of the total of such amounts within 30
days of Executive's notice of election to receive lump sum payment. It is
acknowledged and agreed that no lump sum payment will shorten the Term of
Employment of Executive, or modify or obviate any obligations of the Company
other than the payments otherwise due during the Term of Employment pursuant to
subparagraphs (a) and (b) above.
7.03 The word "Termination," for the purpose of this Section 7 and any
other provisions of this Agreement, shall mean:
(a) Termination by the Company of the employment of the Executive by
the Company and its subsidiaries for any reason other than for Cause as defined
in paragraph 7.04 below or for Disability as defined in subparagraph 6.02 above;
or
(b) Termination by the Executive of her employment by the Company and
its subsidiaries upon the occurrence of any of the following events:
(i) Failure to elect or reelect the Executive to, or removal of
the Executive from, the office set forth in paragraph 3.01 above.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties of Executive as contemplated by
paragraph 3.01 above, or a reduction in compensation, and such change and/or
reduction is not remedied within 30 days after receipt by the Company of written
notice from the Executive.
(iii) A determination by the Executive made in good faith
that as a result of a Change in Control of the Company, as defined in paragraph
1.02 above, and a change in circumstances thereafter that significantly affects
her position, she is unable to carry out the authorities, powers, functions or
duties attached to her position as contemplated by Section 3 of this Agreement,
and such determination is not remedied within 30 days after receipt by the
Company of written notice from the Executive.
(iv) A breach by the Company of any provision of this Agreement
not embraced within the foregoing clauses (i), (ii) and (iii) of this
subparagraph 7.03(b) that is not remedied within 30 days after receipt by the
Company of written notice from the Executive .
(v) The liquidation, dissolution, consolidation or merger of the
Company or transfer of all or substantially all of the assets of the Company and
its Subsidiaries unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of the assets have been
transferred shall have assumed all duties and obligations of the Company under
this Agreement.
An election by the Executive to terminate her employment given under the
provisions of this paragraph 7.03 shall not be deemed a voluntary termination of
employment by the Executive for the purpose of this Agreement or any plan or
practice of the Company.
7.04 For the purpose of any provision of this Agreement, the
termination of the Executive's employment shall be deemed to have been for
"Cause" only if:
(a) termination of his employment shall have been the result of
an act or acts of dishonesty on the part of the Executive constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company; or
(b) there has been a breach by the Executive during the Period
of Employment of the provisions of paragraph 3.03 above, relating to the time to
be devoted to the affairs of the Company, or of Section 8.01, relating to
confidential information, and such breach results in demonstrably material
injury to the Company and with respect to any alleged breach of paragraph 3.03
or of section 8.01 hereof, the Executive after notice and an opportunity to be
heard either shall have failed to remedy such alleged breach or shall have
failed to take all reasonable steps to that end within thirty days from his
receipt of written notice by the Company pursuant to resolution duly adopted by
the Board of Directors of the Company; and provided that thereafter
(c) there shall have been delivered to the Executive a certified
copy of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraphs (a) or (b) above, specifying the particulars
thereof in detail.
Anything in this paragraph 7.04 or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (a) as the result of bad judgment or negligence on the
part of the Executive, or (b) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (c) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (d) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under the
Policies of the Company or the laws of the State of Wyoming or the directors'
and officers' liability insurance of the Company, in each case as in effect at
the time of such act or omission, or (e) as the result of an act or omission
which occurred more than twelve calendar months prior to the Executive's having
been given notice of the termination of his employment for such act or omission
unless the commission of such act or such omission could not at the time of such
commission or omission have been known to a member of the Board of Directors of
the Company (other than the executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar months from the date that
the commission of such act or such omission was or could reasonably have been so
known, or (f) as the result of a continuing course of action which commenced and
was or could reasonably have been known to a member of the Board of Directors of
the Company (other than the Executive) more than twelve calendar months prior to
notice having been given to the Executive of the termination of his employment.
7.05 In the event that the Executive's employment shall be terminated
by the Company during the Period of Employment and such termination is alleged
to be for Cause, or the Executive's right to terminate his employment under
paragraph 7.03(b) above shall be questioned by the Company or for any other
reason, the Executive shall have the right, in addition to all other rights and
remedies provided by law, at his election either to seek arbitration in Harris
County, Texas under the rules of the American Arbitration Association by serving
a notice to arbitrate upon the Company or to institute a judicial proceeding, in
either case within ninety days after having received notice of termination of
his employment under paragraph 7.03(b) is subject to question or that the
Company is withholding or proposes to withhold payments or provision of benefits
or within such longer period as may reasonably be necessary for the Executive to
take action in the event that his illness or incapacity should preclude his
taking such action within such ninety-day period.
8. CONFIDENTIAL INFORMATION
8.01 The Executive agrees not to disclose, either while in the
Company's employ or at any time thereafter, to any person not employed by the
Company, or not engaged to render services to the Company, any confidential
information obtained by him while in the employ of the Company, including,
without limitation, any of the Company's inventions, processes, methods of
distribution or customers or trade secrets; provided, however, that this
provision shall not preclude the Executive from use or disclosure of information
known generally to the public or of information not considered confidential by
persons engaged in the business conducted by the Company or from disclosure
required by law or Court order.
8.02 The Executive also agrees that upon leaving the Company's
employ he will not take with him, without the prior written consent of an
officer authorized to act in the matter by the Board of Directors of the
Company, any drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or without
limitation, relating to its or their methods of distribution, or any description
of any formulae or secret processes.
9. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be deemed to have been duly given if and when mailed in
the continental United States by registered or certified mail, return receipt
requested, postage prepaid, or personally delivered or sent by telex or other
telegraphic means to the party entitled thereto at the address stated below or
to such changed address as the addressee may have given by a similar notice:
To the Company: Frontier Oil Corporation
10000 Memorial Drive
Suite 600
Houston, Texas 77024
To the Executive: Julie H. Edwards
3826 Coleridge
Houston, Texas 77005
10. GENERAL PROVISIONS
10.01 There shall be no right of set-off or counterclaim in
respect of any claim, debt or obligation, against any payments to the Executive,
his dependents, beneficiaries or estate provided for in this Agreement.
10.02 The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of such agreements.
10.03 No right or interest or in any payments shall be assignable
by the Executive; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive's estate.
10.04 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
10.05 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to his beneficiary or beneficiaries.
10.06 The titles to sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
10.07 No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Company or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized.
10.08 Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a subsequent breach of such condition or provision
or a waiver of a similar or dissimilar provision or condition at the same or at
any prior or subsequent time.
10.09 In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
10.10 Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purpose of this Agreement), but
shall not otherwise be assignable by the Company.
10.11 This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the choice of law
principles thereof).
10.12 To the extent that any payment made to Executive pursuant to
the terms of this Agreement is subject to federal income, excise, or other tax
at a rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G (b)(1 ) and 4999 (a) of the Internal Revenue Code of
1954, as amended (the "Code"), any similar or analogous provisions of any
statute adopted subsequent to the date hereof, or otherwise, then the amount due
hereunder shall be increased by an amount ("the "Additional Amount") such that
the net amount received by Executive, after paying any applicable Penalty Tax
and any federal or state income tax on such Additional Amount, shall be equal to
the amount that Employee would have received if such Penalty Tax were not
applicable.
10.13 The Company shall pay all legal fees and expenses which the
Executive may incur as a result of the Company's (and its successors and
assigns) contesting the validity or enforceability of this Agreement. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and amounts
received from other employment or otherwise by the Executive shall not be
recoupable by the Company against the amounts paid to the Executive pursuant to
the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FRONTIER OIL CORPORATION
By: /s/ James R. Gibbs
-------------------
James R. Gibbs
ATTEST:
/s/ J. Currie Bechtol
----------------------
J. Currie Bechtol
/s/ Julie H. Edwards
-----------------------
Julie H. Edwards
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT executed as of the 25th day of February, 1999, by and
between Frontier Oil Corporation, a Wyoming corporation (the "Company"), and S.
Clark Johnson (the "Executive").
W I T N E S S E T H:
WHEREAS the Executive is a principal officer of the Company and an integral
part of its management;
WHEREAS, the Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened change in
control of the Company;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive could reasonably expect in the
absence of a change in control of the Company and, accordingly, this Agreement
will be operative only upon a change in control of the Company, or if the
Executive's employment is terminated in anticipation of a change in control as
that term is hereafter defined.
NOW THEREFORE, in consideration of the premises and covenants herein
contained and other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties as follows:
1. OPERATION OF AGREEMENT.
1.01 This Agreement shall be binding immediately upon its execution by
the parties hereto, but, anything in this Agreement to the contrary
notwithstanding, neither the Agreement nor any provision thereof shall be
operative unless and until there has been a Change in Control of the Company, or
if the Executive's employment is terminated in anticipation of a change in
control as defined in paragraph 1.02 below. Upon the date of such a Change in
Control of the Company (the "Effective Date"), this Agreement and all provisions
thereof shall become operative immediately, without the necessity of any further
action on the part of either party hereto.
1.02 For the purpose of this Agreement, the term "Change in Control
of the Company" shall mean a change in control of a nature that would be
required to be disclosed in a proxy statement, governed by the rules of the
Securities and Exchange Commission as in effect on the date of this Agreement;
provided that without limitation, such a change in control shall be deemed to
have occurred upon the occurrence of any one of the following:
(a) the consummation of any transaction (including without
limitation, any merger, consolidation, tender offer, or exchange offer) the
result of which is that any individual or "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934 - the
"Exchange Act") is or becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities,
(b) the first day during any period of 24 consecutive months,
commencing before or after the date of this Agreement that the individuals, who
at the beginning of such 24 month period were directors of the Company for whom
the Executive shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company,
(c) the sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole,
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company, or
(e) the date the Company files a report or proxy statement with
the SEC stating that a change in control has or may occur pursuant to any then
existing contract or termination.
1.03 This Agreement shall terminate forthwith, and without more, in
the event that Executive ceases to be an executive officer of the Company at any
time prior to the Effective Date whether by reason of his death, Disability,
discharge, resignation or otherwise; except that either party wishing to
terminate the employment relationship, other than by reason of death, Disability
or discharge for Cause, hereby agrees to give the other party at least 60 days
prior written notice. Notwithstanding the foregoing, following the commencement
of any discussions of any third party that ultimately result in the occurrence
of a Change of Control, the Company shall not at the instance or upon the
suggestion of such third party terminate the employment or reduce the
compensation of Executive.
1.04 This Agreement shall terminate three years from the date hereof;
provided, however, that this Agreement shall be continued in full force and
effect for an additional period of three years following such term, unless the
Company elects to terminate this Agreement at the end of such term and provides
at least 30 days' prior written notice to Executive; and provided, further, that
following the commencement of any discussions with any third party that
ultimately result in the occurrence of a Change of Control, the Company shall
not make such election to terminate this Agreement at the instance or upon the
suggestion of such third party.
1.05 Except as provided in paragraphs 1.03 and 1.04 above, nothing
expressed or implied herein shall create any right or duty (on the part of the
Company or Executive) to have Executive remain in the employment of the Company
at any time prior to the Effective Date, each reserving all rights to terminate
the employment relationship at any time (subject to the notice requirement
contained in paragraphs 1.03 and 1.04 above) prior to the Effective Date, with
or without Cause.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
2.01 The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company,
or subject to the terms of this Agreement, such other corporate profit center as
shall then be the principal successor to the business, assets and the properties
of the Company, for the period set forth in paragraph 2.02 below (the "Period of
Employment") in the position and with the duties and responsibilities set forth
in Section 3 below, and upon the other terms and conditions hereinafter stated.
2.02 The Period of Employment, subject only to the provisions of
Section 6 below relating to death or Disability, shall continue for a period of
three years from the Effective Date.
3. POSITION, DUTIES, RESPONSIBILITIES.
3.01 It is contemplated that at all times during the Period of
Employment the Executive shall continue to serve as a principal officer of the
Company with the office and title of Senior Vice President- Refining Operations
of the Company and continue to have duties and responsibilities commensurate
with those duties and responsibilities imposed on the Executive immediately
prior to the Effective Date.
3.02 During the Period of Employment the Executive shall also serve
and continue to serve, if and when elected and reelected, as an officer or
director, or both, of any subsidiary, division or affiliate of the Company.
3.03 Throughout the Period of Employment the Executive shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations and except
for illness or incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods required for serving as a director or
member of a committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.04 The office of the Executive shall be located at the executive
offices of the Company at 5340 S. Quebec, Suite 200N, Englewood, Colorado
80111-1911. The Executive shall not be required to change the current situs of
his employment or residence. The Executive also shall not be required to be
absent therefrom on travel status or otherwise more than a total of 60 working
days in any calendar year nor more than 20 consecutive days at any one time.
4. COMPENSATION, COMPENSATION PLANS, PERQUISITES.
4.01 (a) For all services rendered by the Executive in any capacity
during the Period of Employment, including, without limitation, services as an
executive, officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, the Executive shall be paid as
compensation:
(i) A base salary at no less than the rate in effect immediately
prior to the Effective Date, with increases (if any) as shall be made from time
to time in accordance with the Employer's regular salary administration
practices;
(ii) An annual performance bonus in an amount no less than the
amount of 50% of the base salary determined pursuant to subparagraph 4.01
(a)(i).
(b) Any increase in salary pursuant to clause (i) of
subparagraph 4.01 (a) or in bonus or other compensation shall in no way diminish
any other obligation of the Company under this Agreement.
4.02 During the Period of Employment the Executive shall be and
continue to be a full participant in the Company's applicable stock option plans
and any other compensation plans in which the Executive participates immediately
prior to the Effective Date, or equivalent successor plans that may be adopted
by the Company, with at least the same reward opportunities to Executive that
have heretofore been provided. Nothing in this Agreement shall preclude
improvement of reward opportunities in such plans or other plans in accordance
with the present practice of the Company.
4.03 During the Period of Employment, the Executive shall be entitled
to perquisites, including, without limitation, an office, secretarial and
clerical staff, and to fringe benefits, including, without limitation, the
payment or reimbursement of club dues, in each case at least equal to those
attached to his office immediately prior to the Effective Date, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5. EMPLOYEE BENEFIT PLANS.
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02 The Executive, his dependents and beneficiaries shall be entitled
to all payments and benefits and service credit, for benefits during the Period
of Employment to which officers of the Company, their dependents and
beneficiaries are entitled as a result of the employment of such officers under
the terms of employee plans and practices of the Company in effect immediately
prior to the Effective Date, including, without limitation, the Company's
retirement program (consisting of the Frontier Retirement Savings Plan, and the
Frontier Deferred Compensation Plan), the Company's stock purchase and savings,
thrift and investment plans, if any, the Frontier Oil Corporation Executive Life
Insurance Plan, its group life insurance plans, its accidental death and
dismemberment insurance, its business travel insurance, its long term
disability, medical, dental and health and welfare plans and other present or
successor plans and practices of the Company, its subsidiaries and divisions,
for which officers, their dependents and beneficiaries are eligible, and to all
payments or other benefits under any such plan or practice after the Period of
Employment as a result of participation in such plan or practice durinq the
Period of Employment.
5.03 Nothing in this Agreement shall preclude the Company from
amending or terminating any employee benefit plan or practice but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Period of Employment to perquisites as set forth in paragraph 4.03 above and
to benefits and service credit for benefits under paragraph 5.02 above at least
equal to those attached to his position immediately prior to the Effective Date,
and nothing in this Agreement shall operate as, or be construed to reduce or
authorize reduction without the Executive's written consent in the level of such
perquisites, benefits or service credit for benefits. In the event of any such
reduction by amendment or termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries shall continue to be entitled to
perquisites, benefits and service credit for benefits under such plans or
practices that he or his dependents and beneficiaries would have received if
such reduction had not taken place.
6. EFFECT OF DEATH OR DISABILITY.
6.01 In the event of the death of the Executive during the Period of
Employment, the legal representative of the Executive shall be entitled to the
compensation provided for in paragraph 4.01 during the balance of the Period of
Employment. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of the twelfth month following the month in
which death shall have occurred but without prejudice to any other payments due
in respect of the Executive's death hereunder or pursuant to any other
agreements or arrangements with the Company.
6.02 The term "Disability," as used in this Agreement, shall mean an
illness or accident which prevents the Executive from performing his duties
under this Agreement for a period of six consecutive months. In the event of the
Disability of the Executive during the Period of Employment, the Executive shall
be entitled to the full compensation provided for in this Agreement for the
period of such Disability (i.e., commencing on the date on which the Disability
occurred) but not in excess of six months. The Period of Employment shall be
deemed to have ended as of the close of business on the last day of such six
months' period but without prejudice to any payments due to the Executive in
respect of disability or any short term illness or accident which prevents the
Executive from performing his duties for a period of less than six months.
7. TERMINATION.
7.01 In the event of a Termination, as defined in paragraph 7.03
below, during the Period of Employment, the provisions of this Section 7 shall
apply.
7.02 In the event of a Termination the Company shall, as liquidated
damages or severance pay, or both, pay to the Executive and provide him, his
dependents, beneficiaries and estate, with the following:
(a) The Company shall continue to pay the Executive the base
salary compensation provided in paragraph 4.01 (a)(i) above at the rate in
effect at the time of Termination (which in accordance with the terms of this
Agreement shall be no less than the rate of base salary in effect immediately
prior to the Effective Date). Such base salary shall be paid no less than
monthly beginning at the end of the month in which Termination occurred and
continuing during the remainder of the Period of Employment.
(b) The Company shall also continue to pay the Executive the
annual performance bonus provided in paragraph 4.01(a)(ii) above. Such annual
performance bonus compensation shall be paid on an annual basis, so that a
payment will be made in each of the three years of the Employment Period.
(c) With regard to the employee benefits and perquisites
described in paragraphs 5.02 and 4.03, the Company shall pay the Executive an
amount no less than 30% of the total amount for the balance of the Period of
Employment of the unpaid base salary payable pursuant to subparagraph (a) above.
(d) In the event that the Executive shall at the time of
Termination hold an outstanding and unexercised (whether or not exercisable at
the time) option or options theretofore granted by the Company, the Company
shall, in addition to the amounts provided for above, pay to the Executive in a
lump sum an amount equal to the excess above the option price under each such
option of the Fair Market Value at the time of Termination of the shares subject
to each such option. Solely for the purpose of this subparagraph (d), Fair
Market Value at the time of Termination shall be deemed to mean the higher of
(i) the average of the reported closing prices of the Common Shares of the
Company, as reported on the New York Stock Exchange - Composite Transactions, on
the last trading day prior to the Termination and on the last trading day of
each of the two preceding thirty-day periods, and (ii) in the event that a
Change in Control, as defined in paragraph 1.02 above, prior to Termination
shall have taken place as the result of a tender offer and such Change in
Control was consummated within twelve months of Termination, the price paid for
a majority of the Common Shares of the Company in the course of such tender
offer.
(e) At the Company's option, the Company may pay Executive the
total of all amounts payable to Executive for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment. Executive may also elect, at any time during the remaining Term of
Employment, to receive all amounts payable to him for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment by providing written notice of such election to the Company. The
Company agrees to make a lump sum payment of the total of such amounts within 30
days of Executive's notice of election to receive lump sum payment. It is
acknowledged and agreed that no lump sum payment will shorten the Term of
Employment of Executive, or modify or obviate any obligations of the Company
other than the payments otherwise due during the Term of Employment pursuant to
subparagraphs (a) and (b) above.
7.03 The word "Termination," for the purpose of this Section 7 and any
other provisions of this Agreement, shall mean:
(a) Termination by the Company of the employment of the Executive by
the Company and its subsidiaries for any reason other than for Cause as defined
in paragraph 7.04 below or for Disability as defined in subparagraph 6.02 above;
or
(b) Termination by the Executive of his employment by the Company and
its subsidiaries upon the occurrence of any of the following events:
(i) Failure to elect or reelect the Executive to, or removal of
the Executive from, the office set forth in paragraph 3.01 above.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties of Executive as contemplated by
paragraph 3.01 above, or a reduction in compensation, and such change and/or
reduction is not remedied within 30 days after receipt by the Company of written
notice from the Executive.
(iii) A determination by the Executive made in good faith
that as a result of a Change in Control of the Company, as defined in paragraph
1.02 above, and a change in circumstances thereafter that significantly affects
his position, he is unable to carry out the authorities, powers, functions or
duties attached to his position as contemplated by Section 3 of this Agreement,
and such determination is not remedied within 30 days after receipt by the
Company of written notice from the Executive.
(iv) A breach by the Company of any provision of this Agreement
not embraced within the foregoing clauses (i), (ii) and (iii) of this
subparagraph 7.03(b) that is not remedied within 30 days after receipt by the
Company of written notice from the Executive .
(v) The liquidation, dissolution, consolidation or merger of the
Company or transfer of all or substantially all of the assets of the Company and
its Subsidiaries unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of the assets have been
transferred shall have assumed all duties and obligations of the Company under
this Agreement.
An election by the Executive to terminate his employment given under the
provisions of this paragraph 7.03 shall not be deemed a voluntary termination of
employment by the Executive for the purpose of this Agreement or any plan or
practice of the Company.
7.04 For the purpose of any provision of this Agreement, the
termination of the Executive's employment shall be deemed to have been for
"Cause" only if:
(a) termination of his employment shall have been the result of
an act or acts of dishonesty on the part of the Executive constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company; or
(b) there has been a breach by the Executive during the Period
of Employment of the provisions of paragraph 3.03 above, relating to the time to
be devoted to the affairs of the Company, or of Section 8.01, relating to
confidential information, and such breach results in demonstrably material
injury to the Company and with respect to any alleged breach of paragraph 3.03
or of section 8.01 hereof, the Executive after notice and an opportunity to be
heard either shall have failed to remedy such alleged breach or shall have
failed to take all reasonable steps to that end within thirty days from his
receipt of written notice by the Company pursuant to resolution duly adopted by
the Board of Directors of the Company; and provided that thereafter
(c) there shall have been delivered to the Executive a certified
copy of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraphs (a) or (b) above, specifying the particulars
thereof in detail.
Anything in this paragraph 7.04 or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (a) as the result of bad judgment or negligence on the
part of the Executive, or (b) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (c) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (d) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under the
Policies of the Company or the laws of the State of Wyoming or the directors'
and officers' liability insurance of the Company, in each case as in effect at
the time of such act or omission, or (e) as the result of an act or omission
which occurred more than twelve calendar months prior to the Executive's having
been given notice of the termination of his employment for such act or omission
unless the commission of such act or such omission could not at the time of such
commission or omission have been known to a member of the Board of Directors of
the Company (other than the executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar months from the date that
the commission of such act or such omission was or could reasonably have been so
known, or (f) as the result of a continuing course of action which commenced and
was or could reasonably have been known to a member of the Board of Directors of
the Company (other than the Executive) more than twelve calendar months prior to
notice having been given to the Executive of the termination of his employment.
7.05 In the event that the Executive's employment shall be terminated
by the Company during the Period of Employment and such termination is alleged
to be for Cause, or the Executive's right to terminate his employment under
paragraph 7.03(b) above shall be questioned by the Company or for any other
reason, the Executive shall have the right, in addition to all other rights and
remedies provided by law, at his election either to seek arbitration in Harris
County, Texas under the rules of the American Arbitration Association by serving
a notice to arbitrate upon the Company or to institute a judicial proceeding, in
either case within ninety days after having received notice of termination of
his employment under paragraph 7.03(b) is subject to question or that the
Company is withholding or proposes to withhold payments or provision of benefits
or within such longer period as may reasonably be necessary for the Executive to
take action in the event that his illness or incapacity should preclude his
taking such action within such ninety-day period.
8. CONFIDENTIAL INFORMATION
8.01 The Executive agrees not to disclose, either while in the
Company's employ or at any time thereafter, to any person not employed by the
Company, or not engaged to render services to the Company, any confidential
information obtained by him while in the employ of the Company, including,
without limitation, any of the Company's inventions, processes, methods of
distribution or customers or trade secrets; provided, however, that this
provision shall not preclude the Executive from use or disclosure of information
known generally to the public or of information not considered confidential by
persons engaged in the business conducted by the Company or from disclosure
required by law or Court order.
8.02 The Executive also agrees that upon leaving the Company's
employ he will not take with him, without the prior written consent of an
officer authorized to act in the matter by the Board of Directors of the
Company, any drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or without
limitation, relating to its or their methods of distribution, or any description
of any formulae or secret processes.
9. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be deemed to have been duly given if and when mailed in
the continental United States by registered or certified mail, return receipt
requested, postage prepaid, or personally delivered or sent by telex or other
telegraphic means to the party entitled thereto at the address stated below or
to such changed address as the addressee may have given by a similar notice:
To the Company: Frontier Oil Corporation
10000 Memorial Drive
Suite 600
Houston, Texas 77024
To the Executive: S. Clark Johnson
6505 E. Berry Avenue
Englewood, Colorado 80111
10. GENERAL PROVISIONS
10.01 There shall be no right of set-off or counterclaim in
respect of any claim, debt or obligation, against any payments to the Executive,
his dependents, beneficiaries or estate provided for in this Agreement.
10.02 The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of such agreements.
10.03 No right or interest or in any payments shall be assignable
by the Executive; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive's estate.
10.04 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
10.05 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to his beneficiary or beneficiaries.
10.06 The titles to sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
10.07 No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Company or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized.
10.08 Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a subsequent breach of such condition or provision
or a waiver of a similar or dissimilar provision or condition at the same or at
any prior or subsequent time.
10.09 In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
10.10 Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purpose of this Agreement), but
shall not otherwise be assignable by the Company.
10.11 This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the choice of law
principles thereof).
10.12 To the extent that any payment made to Executive pursuant to
the terms of this Agreement is subject to federal income, excise, or other tax
at a rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G (b)(1 ) and 4999 (a) of the Internal Revenue Code of
1954, as amended (the "Code"), any similar or analogous provisions of any
statute adopted subsequent to the date hereof, or otherwise, then the amount due
hereunder shall be increased by an amount ("the "Additional Amount") such that
the net amount received by Executive, after paying any applicable Penalty Tax
and any federal or state income tax on such Additional Amount, shall be equal to
the amount that Employee would have received if such Penalty Tax were not
applicable.
10.13 The Company shall pay all legal fees and expenses which the
Executive may incur as a result of the Company's (and its successors and
assigns) contesting the validity or enforceability of this Agreement. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and amounts
received from other employment or otherwise by the Executive shall not be
recoupable by the Company against the amounts paid to the Executive pursuant to
the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FRONTIER OIL CORPORATION
By: /s/ James R. Gibbs
---------------------
James R. Gibbs
ATTEST:
Julie H. Edwards
----------------------
Secretary
/s/ S. Clark Johnson
----------------------
S. Clark Johnson
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT executed as of the 25th day of February, 1999, by and
between Frontier Oil Corporation, a Wyoming corporation (the "Company"), and J.
Currie Bechtol (the "Executive").
W I T N E S S E T H:
WHEREAS the Executive is a principal officer of the Company and an integral
part of its management;
WHEREAS, the Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened change in
control of the Company;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive could reasonably expect in the
absence of a change in control of the Company and, accordingly, this Agreement
will be operative only upon a change in control of the Company, or if the
Executive's employment is terminated in anticipation of a change in control as
that term is hereafter defined.
NOW THEREFORE, in consideration of the premises and covenants herein
contained and other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties as follows:
1. OPERATION OF AGREEMENT.
1.01 This Agreement shall be binding immediately upon its execution by
the parties hereto, but, anything in this Agreement to the contrary
notwithstanding, neither the Agreement nor any provision thereof shall be
operative unless and until there has been a Change in Control of the Company, or
if the Executive's employment is terminated in anticipation of a change in
control as defined in paragraph 1.02 below. Upon the date of such a Change in
Control of the Company (the "Effective Date"), this Agreement and all provisions
thereof shall become operative immediately, without the necessity of any further
action on the part of either party hereto.
1.02 For the purpose of this Agreement, the term "Change in Control
of the Company" shall mean a change in control of a nature that would be
required to be disclosed in a proxy statement, governed by the rules of the
Securities and Exchange Commission as in effect on the date of this Agreement;
provided that without limitation, such a change in control shall be deemed to
have occurred upon the occurrence of any one of the following:
(a) the consummation of any transaction (including without
limitation, any merger, consolidation, tender offer, or exchange offer) the
result of which is that any individual or "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934 - the
"Exchange Act") is or becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities,
(b) the first day during any period of 24 consecutive months,
commencing before or after the date of this Agreement that the individuals, who
at the beginning of such 24 month period were directors of the Company for whom
the Executive shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company,
(c) the sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole,
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company, or
(e) the date the Company files a report or proxy statement with
the SEC stating that a change in control has or may occur pursuant to any then
existing contract or termination.
1.03 This Agreement shall terminate forthwith, and without more, in
the event that Executive ceases to be an executive officer of the Company at any
time prior to the Effective Date whether by reason of his death, Disability,
discharge, resignation or otherwise; except that either party wishing to
terminate the employment relationship, other than by reason of death, Disability
or discharge for Cause, hereby agrees to give the other party at least 60 days
prior written notice. Notwithstanding the foregoing, following the commencement
of any discussions of any third party that ultimately result in the occurrence
of a Change of Control, the Company shall not at the instance or upon the
suggestion of such third party terminate the employment or reduce the
compensation of Executive.
1.04 This Agreement shall terminate three years from the date hereof;
provided, however, that this Agreement shall be continued in full force and
effect for an additional period of three years following such term, unless the
Company elects to terminate this Agreement at the end of such term and provides
at least 30 days' prior written notice to Executive; and provided, further, that
following the commencement of any discussions with any third party that
ultimately result in the occurrence of a Change of Control, the Company shall
not make such election to terminate this Agreement at the instance or upon the
suggestion of such third party.
1.05 Except as provided in paragraphs 1.03 and 1.04 above, nothing
expressed or implied herein shall create any right or duty (on the part of the
Company or Executive) to have Executive remain in the employment of the Company
at any time prior to the Effective Date, each reserving all rights to terminate
the employment relationship at any time (subject to the notice requirement
contained in paragraphs 1.03 and 1.04 above) prior to the Effective Date, with
or without Cause.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
2.01 The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company,
or subject to the terms of this Agreement, such other corporate profit center as
shall then be the principal successor to the business, assets and the properties
of the Company, for the period set forth in paragraph 2.02 below (the "Period of
Employment") in the position and with the duties and responsibilities set forth
in Section 3 below, and upon the other terms and conditions hereinafter stated.
2.02 The Period of Employment, subject only to the provisions of
Section 6 below relating to death or Disability, shall continue for a period of
three years from the Effective Date.
3. POSITION, DUTIES, RESPONSIBILITIES.
3.01 It is contemplated that at all times during the Period of
Employment the Executive shall continue to serve as a principal officer of the
Company with the office and title of Vice President, General Counsel of the
Company and continue to have duties and responsibilities commensurate with those
duties and responsibilities imposed on the Executive immediately prior to the
Effective Date.
3.02 During the Period of Employment the Executive shall also serve
and continue to serve, if and when elected and reelected, as an officer or
director, or both, of any subsidiary, division or affiliate of the Company.
3.03 Throughout the Period of Employment the Executive shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations and except
for illness or incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods required for serving as a director or
member of a committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.04 The office of the Executive shall be located at the principal
executive offices of the Company at 10000 Memorial Drive, Suite 600, Houston,
Texas 77024. The Executive shall not be required to change the current situs of
his employment or residence. The Executive also shall not be required to be
absent therefrom on travel status or otherwise more than a total of 60 working
days in any calendar year nor more than 20 consecutive days at any one time.
4. COMPENSATION, COMPENSATION PLANS, PERQUISITES.
4.01 (a) For all services rendered by the Executive in any capacity
during the Period of Employment, including, without limitation, services as an
executive, officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, the Executive shall be paid as
compensation:
(i) A base salary at no less than the rate in effect immediately
prior to the Effective Date, with increases (if any) as shall be made from time
to time in accordance with the Employer's regular salary administration
practices;
(ii) An annual performance bonus in an amount no less than the
amount of 35% of the base salary determined pursuant to subparagraph 4.01
(a)(i).
(b) Any increase in salary pursuant to clause (i) of
subparagraph 4.01 (a) or in bonus or other compensation shall in no way diminish
any other obligation of the Company under this Agreement.
4.02 During the Period of Employment the Executive shall be and
continue to be a full participant in the Company's applicable stock option plans
and any other compensation plans in which the Executive participates immediately
prior to the Effective Date, or equivalent successor plans that may be adopted
by the Company, with at least the same reward opportunities to Executive that
have heretofore been provided. Nothing in this Agreement shall preclude
improvement of reward opportunities in such plans or other plans in accordance
with the present practice of the Company.
4.03 During the Period of Employment, the Executive shall be entitled
to perquisites, including, without limitation, an office, secretarial and
clerical staff, and to fringe benefits, including, without limitation, the
payment or reimbursement of club dues, in each case at least equal to those
attached to his office immediately prior to the Effective Date, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5. EMPLOYEE BENEFIT PLANS.
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02 The Executive, his dependents and beneficiaries shall be entitled
to all payments and benefits and service credit, for benefits during the Period
of Employment to which officers of the Company, their dependents and
beneficiaries are entitled as a result of the employment of such officers under
the terms of employee plans and practices of the Company in effect immediately
prior to the Effective Date, including, without limitation, the Company's
retirement program (consisting of the Frontier Retirement Savings Plan, and the
Frontier Deferred Compensation Plan), the Company's stock purchase and savings,
thrift and investment plans, if any, the Frontier Oil Corporation Executive Life
Insurance Plan, its group life insurance plans, its accidental death and
dismemberment insurance, its business travel insurance, its long term
disability, medical, dental and health and welfare plans and other present or
successor plans and practices of the Company, its subsidiaries and divisions,
for which officers, their dependents and beneficiaries are eligible, and to all
payments or other benefits under any such plan or practice after the Period of
Employment as a result of participation in such plan or practice durinq the
Period of Employment.
5.03 Nothing in this Agreement shall preclude the Company from
amending or terminating any employee benefit plan or practice but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Period of Employment to perquisites as set forth in paragraph 4.03 above and
to benefits and service credit for benefits under paragraph 5.02 above at least
equal to those attached to his position immediately prior to the Effective Date,
and nothing in this Agreement shall operate as, or be construed to reduce or
authorize reduction without the Executive's written consent in the level of such
perquisites, benefits or service credit for benefits. In the event of any such
reduction by amendment or termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries shall continue to be entitled to
perquisites, benefits and service credit for benefits under such plans or
practices that he or his dependents and beneficiaries would have received if
such reduction had not taken place.
6. EFFECT OF DEATH OR DISABILITY.
6.01 In the event of the death of the Executive during the Period of
Employment, the legal representative of the Executive shall be entitled to the
compensation provided for in paragraph 4.01 during the balance of the Period of
Employment. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of the twelfth month following the month in
which death shall have occurred but without prejudice to any other payments due
in respect of the Executive's death hereunder or pursuant to any other
agreements or arrangements with the Company.
6.02 The term "Disability," as used in this Agreement, shall mean an
illness or accident which prevents the Executive from performing his duties
under this Agreement for a period of six consecutive months. In the event of the
Disability of the Executive during the Period of Employment, the Executive shall
be entitled to the full compensation provided for in this Agreement for the
period of such Disability (i.e., commencing on the date on which the Disability
occurred) but not in excess of six months. The Period of Employment shall be
deemed to have ended as of the close of business on the last day of such six
months' period but without prejudice to any payments due to the Executive in
respect of disability or any short term illness or accident which prevents the
Executive from performing his duties for a period of less than six months.
7. TERMINATION.
7.01 In the event of a Termination, as defined in paragraph 7.03
below, during the Period of Employment, the provisions of this Section 7 shall
apply.
7.02 In the event of a Termination the Company shall, as liquidated
damages or severance pay, or both, pay to the Executive and provide him, his
dependents, beneficiaries and estate, with the following:
(a) The Company shall continue to pay the Executive the base
salary compensation provided in paragraph 4.01 (a)(i) above at the rate in
effect at the time of Termination (which in accordance with the terms of this
Agreement shall be no less than the rate of base salary in effect immediately
prior to the Effective Date). Such base salary shall be paid no less than
monthly beginning at the end of the month in which Termination occurred and
continuing during the remainder of the Period of Employment.
(b) The Company shall also continue to pay the Executive the
annual performance bonus provided in paragraph 4.01(a)(ii) above. Such annual
performance bonus compensation shall be paid on an annual basis, so that a
payment will be made in each of the three years of the Employment Period.
(c) With regard to the employee benefits and perquisites
described in paragraphs 5.02 and 4.03, the Company shall pay the Executive an
amount no less than 30% of the total amount for the balance of the Period of
Employment of the unpaid base salary payable pursuant to subparagraph (a) above.
(d) In the event that the Executive shall at the time of
Termination hold an outstanding and unexercised (whether or not exercisable at
the time) option or options theretofore granted by the Company, the Company
shall, in addition to the amounts provided for above, pay to the Executive in a
lump sum an amount equal to the excess above the option price under each such
option of the Fair Market Value at the time of Termination of the shares subject
to each such option. Solely for the purpose of this subparagraph (d), Fair
Market Value at the time of Termination shall be deemed to mean the higher of
(i) the average of the reported closing prices of the Common Shares of the
Company, as reported on the New York Stock Exchange - Composite Transactions, on
the last trading day prior to the Termination and on the last trading day of
each of the two preceding thirty-day periods, and (ii) in the event that a
Change in Control, as defined in paragraph 1.02 above, prior to Termination
shall have taken place as the result of a tender offer and such Change in
Control was consummated within twelve months of Termination, the price paid for
a majority of the Common Shares of the Company in the course of such tender
offer.
(e) At the Company's option, the Company may pay Executive the
total of all amounts payable to Executive for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment. Executive may also elect, at any time during the remaining Term of
Employment, to receive all amounts payable to him for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment by providing written notice of such election to the Company. The
Company agrees to make a lump sum payment of the total of such amounts within 30
days of Executive's notice of election to receive lump sum payment. It is
acknowledged and agreed that no lump sum payment will shorten the Term of
Employment of Executive, or modify or obviate any obligations of the Company
other than the payments otherwise due during the Term of Employment pursuant to
subparagraphs (a) and (b) above.
7.03 The word "Termination," for the purpose of this Section 7 and any
other provisions of this Agreement, shall mean:
(a) Termination by the Company of the employment of the Executive by
the Company and its subsidiaries for any reason other than for Cause as defined
in paragraph 7.04 below or for Disability as defined in subparagraph 6.02 above;
or
(b) Termination by the Executive of his employment by the Company and
its subsidiaries upon the occurrence of any of the following events:
(i) Failure to elect or reelect the Executive to, or removal of
the Executive from, the office set forth in paragraph 3.01 above.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties of Executive as contemplated by
paragraph 3.01 above, or a reduction in compensation, and such change and/or
reduction is not remedied within 30 days after receipt by the Company of written
notice from the Executive.
(iii) A determination by the Executive made in good faith
that as a result of a Change in Control of the Company, as defined in paragraph
1.02 above, and a change in circumstances thereafter that significantly affects
his position, he is unable to carry out the authorities, powers, functions or
duties attached to his position as contemplated by Section 3 of this Agreement,
and such determination is not remedied within 30 days after receipt by the
Company of written notice from the Executive.
(iv) A breach by the Company of any provision of this Agreement
not embraced within the foregoing clauses (i), (ii) and (iii) of this
subparagraph 7.03(b) that is not remedied within 30 days after receipt by the
Company of written notice from the Executive .
(v) The liquidation, dissolution, consolidation or merger of the
Company or transfer of all or substantially all of the assets of the Company and
its Subsidiaries unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of the assets have been
transferred shall have assumed all duties and obligations of the Company under
this Agreement.
An election by the Executive to terminate his employment given under the
provisions of this paragraph 7.03 shall not be deemed a voluntary termination of
employment by the Executive for the purpose of this Agreement or any plan or
practice of the Company.
7.04 For the purpose of any provision of this Agreement, the
termination of the Executive's employment shall be deemed to have been for
"Cause" only if:
(a) termination of his employment shall have been the result of
an act or acts of dishonesty on the part of the Executive constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company; or
(b) there has been a breach by the Executive during the Period
of Employment of the provisions of paragraph 3.03 above, relating to the time to
be devoted to the affairs of the Company, or of Section 8.01, relating to
confidential information, and such breach results in demonstrably material
injury to the Company and with respect to any alleged breach of paragraph 3.03
or of section 8.01 hereof, the Executive after notice and an opportunity to be
heard either shall have failed to remedy such alleged breach or shall have
failed to take all reasonable steps to that end within thirty days from his
receipt of written notice by the Company pursuant to resolution duly adopted by
the Board of Directors of the Company; and provided that thereafter
(c) there shall have been delivered to the Executive a certified
copy of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraphs (a) or (b) above, specifying the particulars
thereof in detail.
Anything in this paragraph 7.04 or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (a) as the result of bad judgment or negligence on the
part of the Executive, or (b) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (c) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (d) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under the
Policies of the Company or the laws of the State of Wyoming or the directors'
and officers' liability insurance of the Company, in each case as in effect at
the time of such act or omission, or (e) as the result of an act or omission
which occurred more than twelve calendar months prior to the Executive's having
been given notice of the termination of his employment for such act or omission
unless the commission of such act or such omission could not at the time of such
commission or omission have been known to a member of the Board of Directors of
the Company (other than the executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar months from the date that
the commission of such act or such omission was or could reasonably have been so
known, or (f) as the result of a continuing course of action which commenced and
was or could reasonably have been known to a member of the Board of Directors of
the Company (other than the Executive) more than twelve calendar months prior to
notice having been given to the Executive of the termination of his employment.
7.05 In the event that the Executive's employment shall be terminated
by the Company during the Period of Employment and such termination is alleged
to be for Cause, or the Executive's right to terminate his employment under
paragraph 7.03(b) above shall be questioned by the Company or for any other
reason, the Executive shall have the right, in addition to all other rights and
remedies provided by law, at his election either to seek arbitration in Harris
County, Texas under the rules of the American Arbitration Association by serving
a notice to arbitrate upon the Company or to institute a judicial proceeding, in
either case within ninety days after having received notice of termination of
his employment under paragraph 7.03(b) is subject to question or that the
Company is withholding or proposes to withhold payments or provision of benefits
or within such longer period as may reasonably be necessary for the Executive to
take action in the event that his illness or incapacity should preclude his
taking such action within such ninety-day period.
8. CONFIDENTIAL INFORMATION
8.01 The Executive agrees not to disclose, either while in the
Company's employ or at any time thereafter, to any person not employed by the
Company, or not engaged to render services to the Company, any confidential
information obtained by him while in the employ of the Company, including,
without limitation, any of the Company's inventions, processes, methods of
distribution or customers or trade secrets; provided, however, that this
provision shall not preclude the Executive from use or disclosure of information
known generally to the public or of information not considered confidential by
persons engaged in the business conducted by the Company or from disclosure
required by law or Court order.
8.02 The Executive also agrees that upon leaving the Company's
employ he will not take with him, without the prior written consent of an
officer authorized to act in the matter by the Board of Directors of the
Company, any drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or without
limitation, relating to its or their methods of distribution, or any description
of any formulae or secret processes.
9. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be deemed to have been duly given if and when mailed in
the continental United States by registered or certified mail, return receipt
requested, postage prepaid, or personally delivered or sent by telex or other
telegraphic means to the party entitled thereto at the address stated below or
to such changed address as the addressee may have given by a similar notice:
To the Company: Frontier Oil Corporation
10000 Memorial Drive
Suite 600
Houston, Texas 77024
To the Executive: J. Currie Bechtol
5917 Burgoyne
Houston, Texas 77057
10. GENERAL PROVISIONS
10.01 There shall be no right of set-off or counterclaim in
respect of any claim, debt or obligation, against any payments to the Executive,
his dependents, beneficiaries or estate provided for in this Agreement.
10.02 The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of such agreements.
10.03 No right or interest or in any payments shall be assignable
by the Executive; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive's estate.
10.04 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
10.05 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to his beneficiary or beneficiaries.
10.06 The titles to sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
10.07 No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Company or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized.
10.08 Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a subsequent breach of such condition or provision
or a waiver of a similar or dissimilar provision or condition at the same or at
any prior or subsequent time.
10.09 In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
10.10 Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purpose of this Agreement), but
shall not otherwise be assignable by the Company.
10.11 This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the choice of law
principles thereof).
10.12 To the extent that any payment made to Executive pursuant to
the terms of this Agreement is subject to federal income, excise, or other tax
at a rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G (b)(1 ) and 4999 (a) of the Internal Revenue Code of
1954, as amended (the "Code"), any similar or analogous provisions of any
statute adopted subsequent to the date hereof, or otherwise, then the amount due
hereunder shall be increased by an amount ("the "Additional Amount") such that
the net amount received by Executive, after paying any applicable Penalty Tax
and any federal or state income tax on such Additional Amount, shall be equal to
the amount that Employee would have received if such Penalty Tax were not
applicable.
10.13 The Company shall pay all legal fees and expenses which the
Executive may incur as a result of the Company's (and its successors and
assigns) contesting the validity or enforceability of this Agreement. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and amounts
received from other employment or otherwise by the Executive shall not be
recoupable by the Company against the amounts paid to the Executive pursuant to
the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FRONTIER OIL CORPORATION
By: /s/ James R. Gibbs
--------------------
James R. Gibbs
ATTEST:
/s/ Julie H. Edwards
----------------------
Secretary
/s/ J. Currie Bechtol
-----------------------
J. Currie Bechtol
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT executed as of the 25th day of February, 1999, by and
between Frontier Oil Corporation, a Wyoming corporation (the "Company"), and
Gerald B. Faudel (the "Executive").
W I T N E S S E T H:
WHEREAS the Executive is a principal officer of the Company and an integral
part of its management;
WHEREAS, the Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened change in
control of the Company;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive could reasonably expect in the
absence of a change in control of the Company and, accordingly, this Agreement
will be operative only upon a change in control of the Company, or if the
Executive's employment is terminated in anticipation of a change in control as
that term is hereafter defined.
NOW THEREFORE, in consideration of the premises and covenants herein
contained and other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties as follows:
1. OPERATION OF AGREEMENT.
1.01 This Agreement shall be binding immediately upon its execution by
the parties hereto, but, anything in this Agreement to the contrary
notwithstanding, neither the Agreement nor any provision thereof shall be
operative unless and until there has been a Change in Control of the Company, or
if the Executive's employment is terminated in anticipation of a change in
control as defined in paragraph 1.02 below. Upon the date of such a Change in
Control of the Company (the "Effective Date"), this Agreement and all provisions
thereof shall become operative immediately, without the necessity of any further
action on the part of either party hereto.
1.02 For the purpose of this Agreement, the term "Change in
Control of the Company" shall mean a change in control of a nature that would be
required to be disclosed in a proxy statement, governed by the rules of the
Securities and Exchange Commission as in effect on the date of this Agreement;
provided that without limitation, such a change in control shall be deemed to
have occurred upon the occurrence of any one of the following:
(a) the consummation of any transaction (including without
limitation, any merger, consolidation, tender offer, or exchange offer) the
result of which is that any individual or "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934 - the
"Exchange Act") is or becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities,
(b) the first day during any period of 24 consecutive months,
commencing before or after the date of this Agreement that the individuals, who
at the beginning of such 24 month period were directors of the Company for whom
the Executive shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company,
(c) the sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole,
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company, or
(e) the date the Company files a report or proxy statement with
the SEC stating that a change in control has or may occur pursuant to any then
existing contract or termination.
1.03 This Agreement shall terminate forthwith, and without more, in
the event that Executive ceases to be an executive officer of the Company at any
time prior to the Effective Date whether by reason of his death, Disability,
discharge, resignation or otherwise; except that either party wishing to
terminate the employment relationship, other than by reason of death, Disability
or discharge for Cause, hereby agrees to give the other party at least 60 days
prior written notice. Notwithstanding the foregoing, following the commencement
of any discussions of any third party that ultimately result in the occurrence
of a Change of Control, the Company shall not at the instance or upon the
suggestion of such third party terminate the employment or reduce the
compensation of Executive.
1.04 This Agreement shall terminate three years from the date hereof;
provided, however, that this Agreement shall be continued in full force and
effect for an additional period of three years following such term, unless the
Company elects to terminate this Agreement at the end of such term and provides
at least 30 days' prior written notice to Executive; and provided, further, that
following the commencement of any discussions with any third party that
ultimately result in the occurrence of a Change of Control, the Company shall
not make such election to terminate this Agreement at the instance or upon the
suggestion of such third party.
1.05 Except as provided in paragraphs 1.03 and 1.04 above, nothing
expressed or implied herein shall create any right or duty (on the part of the
Company or Executive) to have Executive remain in the employment of the Company
at any time prior to the Effective Date, each reserving all rights to terminate
the employment relationship at any time (subject to the notice requirement
contained in paragraphs 1.03 and 1.04 above) prior to the Effective Date, with
or without Cause.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
2.01 The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company,
or subject to the terms of this Agreement, such other corporate profit center as
shall then be the principal successor to the business, assets and the properties
of the Company, for the period set forth in paragraph 2.02 below (the "Period of
Employment") in the position and with the duties and responsibilities set forth
in Section 3 below, and upon the other terms and conditions hereinafter stated.
2.02 The Period of Employment, subject only to the provisions of
Section 6 below relating to death or Disability, shall continue for a period of
three years from the Effective Date.
3. POSITION, DUTIES, RESPONSIBILITIES.
3.01 It is contemplated that at all times during the Period of
Employment the Executive shall continue to serve as a principal officer of the
Company with the office and title of Vice President-Safety & Environmental of
the Company and continue to have duties and responsibilities commensurate with
those duties and responsibilities imposed on the Executive immediately prior to
the Effective Date.
3.02 During the Period of Employment the Executive shall also serve
and continue to serve, if and when elected and reelected, as an officer or
director, or both, of any subsidiary, division or affiliate of the Company.
3.03 Throughout the Period of Employment the Executive shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations and except
for illness or incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods required for serving as a director or
member of a committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.04 The office of the Executive shall be located at the executive
offices of the Company at 5340 S. Quebec, Suite 200N, Englewood, Colorado
80111-1911. The Executive shall not be required to change the current situs of
his employment or residence. The Executive also shall not be required to be
absent therefrom on travel status or otherwise more than a total of 60 working
days in any calendar year nor more than 20 consecutive days at any one time.
4. COMPENSATION, COMPENSATION PLANS, PERQUISITES.
4.01 (a) For all services rendered by the Executive in any capacity
during the Period of Employment, including, without limitation, services as an
executive, officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, the Executive shall be paid as
compensation:
(i) A base salary at no less than the rate in effect immediately
prior to the Effective Date, with increases (if any) as shall be made from time
to time in accordance with the Employer's regular salary administration
practices;
(ii) An annual performance bonus in an amount no less than the
amount of 30% of the base salary determined pursuant to subparagraph 4.01
(a)(i).
(b) Any increase in salary pursuant to clause (i) of
subparagraph 4.01 (a) or in bonus or other compensation shall in no way diminish
any other obligation of the Company under this Agreement.
4.02 During the Period of Employment the Executive shall be and
continue to be a full participant in the Company's applicable stock option plans
and any other compensation plans in which the Executive participates immediately
prior to the Effective Date, or equivalent successor plans that may be adopted
by the Company, with at least the same reward opportunities to Executive that
have heretofore been provided. Nothing in this Agreement shall preclude
improvement of reward opportunities in such plans or other plans in accordance
with the present practice of the Company.
4.03 During the Period of Employment, the Executive shall be entitled
to perquisites, including, without limitation, an office, secretarial and
clerical staff, and to fringe benefits, including, without limitation, the
payment or reimbursement of club dues, in each case at least equal to those
attached to his office immediately prior to the Effective Date, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5. EMPLOYEE BENEFIT PLANS.
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02 The Executive, his dependents and beneficiaries shall be entitled
to all payments and benefits and service credit, for benefits during the Period
of Employment to which officers of the Company, their dependents and
beneficiaries are entitled as a result of the employment of such officers under
the terms of employee plans and practices of the Company in effect immediately
prior to the Effective Date, including, without limitation, the Company's
retirement program (consisting of the Frontier Retirement Savings Plan, and the
Frontier Deferred Compensation Plan), the Company's stock purchase and savings,
thrift and investment plans, if any, the Frontier Oil Corporation Executive Life
Insurance Plan, its group life insurance plans, its accidental death and
dismemberment insurance, its business travel insurance, its long term
disability, medical, dental and health and welfare plans and other present or
successor plans and practices of the Company, its subsidiaries and divisions,
for which officers, their dependents and beneficiaries are eligible, and to all
payments or other benefits under any such plan or practice after the Period of
Employment as a result of participation in such plan or practice durinq the
Period of Employment.
5.03 Nothing in this Agreement shall preclude the Company from
amending or terminating any employee benefit plan or practice but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Period of Employment to perquisites as set forth in paragraph 4.03 above and
to benefits and service credit for benefits under paragraph 5.02 above at least
equal to those attached to his position immediately prior to the Effective Date,
and nothing in this Agreement shall operate as, or be construed to reduce or
authorize reduction without the Executive's written consent in the level of such
perquisites, benefits or service credit for benefits. In the event of any such
reduction by amendment or termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries shall continue to be entitled to
perquisites, benefits and service credit for benefits under such plans or
practices that he or his dependents and beneficiaries would have received if
such reduction had not taken place.
6. EFFECT OF DEATH OR DISABILITY.
6.01 In the event of the death of the Executive during the Period of
Employment, the legal representative of the Executive shall be entitled to the
compensation provided for in paragraph 4.01 during the balance of the Period of
Employment. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of the twelfth month following the month in
which death shall have occurred but without prejudice to any other payments due
in respect of the Executive's death hereunder or pursuant to any other
agreements or arrangements with the Company.
6.02 The term "Disability," as used in this Agreement, shall mean an
illness or accident which prevents the Executive from performing his duties
under this Agreement for a period of six consecutive months. In the event of the
Disability of the Executive during the Period of Employment, the Executive shall
be entitled to the full compensation provided for in this Agreement for the
period of such Disability (i.e., commencing on the date on which the Disability
occurred) but not in excess of six months. The Period of Employment shall be
deemed to have ended as of the close of business on the last day of such six
months' period but without prejudice to any payments due to the Executive in
respect of disability or any short term illness or accident which prevents the
Executive from performing his duties for a period of less than six months.
7. TERMINATION.
7.01 In the event of a Termination, as defined in paragraph 7.03
below, during the Period of Employment, the provisions of this Section 7 shall
apply.
7.02 In the event of a Termination the Company shall, as liquidated
damages or severance pay, or both, pay to the Executive and provide him, his
dependents, beneficiaries and estate, with the following:
(a) The Company shall continue to pay the Executive the base
salary compensation provided in paragraph 4.01 (a)(i) above at the rate in
effect at the time of Termination (which in accordance with the terms of this
Agreement shall be no less than the rate of base salary in effect immediately
prior to the Effective Date). Such base salary shall be paid no less than
monthly beginning at the end of the month in which Termination occurred and
continuing during the remainder of the Period of Employment.
(b) The Company shall also continue to pay the Executive the
annual performance bonus provided in paragraph 4.01(a)(ii) above. Such annual
performance bonus compensation shall be paid on an annual basis, so that a
payment will be made in each of the three years of the Employment Period.
(c) With regard to the employee benefits and perquisites
described in paragraphs 5.02 and 4.03, the Company shall pay the Executive an
amount no less than 30% of the total amount for the balance of the Period of
Employment of the unpaid base salary payable pursuant to subparagraph (a) above.
(d) In the event that the Executive shall at the time of
Termination hold an outstanding and unexercised (whether or not exercisable at
the time) option or options theretofore granted by the Company, the Company
shall, in addition to the amounts provided for above, pay to the Executive in a
lump sum an amount equal to the excess above the option price under each such
option of the Fair Market Value at the time of Termination of the shares subject
to each such option. Solely for the purpose of this subparagraph (d), Fair
Market Value at the time of Termination shall be deemed to mean the higher of
(i) the average of the reported closing prices of the Common Shares of the
Company, as reported on the New York Stock Exchange - Composite Transactions, on
the last trading day prior to the Termination and on the last trading day of
each of the two preceding thirty-day periods, and (ii) in the event that a
Change in Control, as defined in paragraph 1.02 above, prior to Termination
shall have taken place as the result of a tender offer and such Change in
Control was consummated within twelve months of Termination, the price paid for
a majority of the Common Shares of the Company in the course of such tender
offer.
(e) At the Company's option, the Company may pay Executive the
total of all amounts payable to Executive for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment. Executive may also elect, at any time during the remaining Term of
Employment, to receive all amounts payable to him for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment by providing written notice of such election to the Company. The
Company agrees to make a lump sum payment of the total of such amounts within 30
days of Executive's notice of election to receive lump sum payment. It is
acknowledged and agreed that no lump sum payment will shorten the Term of
Employment of Executive, or modify or obviate any obligations of the Company
other than the payments otherwise due during the Term of Employment pursuant to
subparagraphs (a) and (b) above.
7.03 The word "Termination," for the purpose of this Section 7 and any
other provisions of this Agreement, shall mean:
(a) Termination by the Company of the employment of the Executive by
the Company and its subsidiaries for any reason other than for Cause as defined
in paragraph 7.04 below or for Disability as defined in subparagraph 6.02 above;
or
(b) Termination by the Executive of his employment by the Company and
its subsidiaries upon the occurrence of any of the following events:
(i) Failure to elect or reelect the Executive to, or removal of
the Executive from, the office set forth in paragraph 3.01 above.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties of Executive as contemplated by
paragraph 3.01 above, or a reduction in compensation, and such change and/or
reduction is not remedied within 30 days after receipt by the Company of written
notice from the Executive.
(iii) A determination by the Executive made in good faith
that as a result of a Change in Control of the Company, as defined in paragraph
1.02 above, and a change in circumstances thereafter that significantly affects
his position, he is unable to carry out the authorities, powers, functions or
duties attached to his position as contemplated by Section 3 of this Agreement,
and such determination is not remedied within 30 days after receipt by the
Company of written notice from the Executive.
(iv) A breach by the Company of any provision of this Agreement
not embraced within the foregoing clauses (i), (ii) and (iii) of this
subparagraph 7.03(b) that is not remedied within 30 days after receipt by the
Company of written notice from the Executive .
(v) The liquidation, dissolution, consolidation or merger of the
Company or transfer of all or substantially all of the assets of the Company and
its Subsidiaries unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of the assets have been
transferred shall have assumed all duties and obligations of the Company under
this Agreement.
An election by the Executive to terminate his employment given under the
provisions of this paragraph 7.03 shall not be deemed a voluntary termination of
employment by the Executive for the purpose of this Agreement or any plan or
practice of the Company.
7.04 For the purpose of any provision of this Agreement, the
termination of the Executive's employment shall be deemed to have been for
"Cause" only if:
(a) termination of his employment shall have been the result of
an act or acts of dishonesty on the part of the Executive constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company; or
(b) there has been a breach by the Executive during the Period
of Employment of the provisions of paragraph 3.03 above, relating to the time to
be devoted to the affairs of the Company, or of Section 8.01, relating to
confidential information, and such breach results in demonstrably material
injury to the Company and with respect to any alleged breach of paragraph 3.03
or of section 8.01 hereof, the Executive after notice and an opportunity to be
heard either shall have failed to remedy such alleged breach or shall have
failed to take all reasonable steps to that end within thirty days from his
receipt of written notice by the Company pursuant to resolution duly adopted by
the Board of Directors of the Company; and provided that thereafter
(c) there shall have been delivered to the Executive a certified
copy of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraphs (a) or (b) above, specifying the particulars
thereof in detail.
Anything in this paragraph 7.04 or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (a) as the result of bad judgment or negligence on the
part of the Executive, or (b) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (c) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (d) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under the
Policies of the Company or the laws of the State of Wyoming or the directors'
and officers' liability insurance of the Company, in each case as in effect at
the time of such act or omission, or (e) as the result of an act or omission
which occurred more than twelve calendar months prior to the Executive's having
been given notice of the termination of his employment for such act or omission
unless the commission of such act or such omission could not at the time of such
commission or omission have been known to a member of the Board of Directors of
the Company (other than the executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar months from the date that
the commission of such act or such omission was or could reasonably have been so
known, or (f) as the result of a continuing course of action which commenced and
was or could reasonably have been known to a member of the Board of Directors of
the Company (other than the Executive) more than twelve calendar months prior to
notice having been given to the Executive of the termination of his employment.
7.05 In the event that the Executive's employment shall be terminated
by the Company during the Period of Employment and such termination is alleged
to be for Cause, or the Executive's right to terminate his employment under
paragraph 7.03(b) above shall be questioned by the Company or for any other
reason, the Executive shall have the right, in addition to all other rights and
remedies provided by law, at his election either to seek arbitration in Harris
County, Texas under the rules of the American Arbitration Association by serving
a notice to arbitrate upon the Company or to institute a judicial proceeding, in
either case within ninety days after having received notice of termination of
his employment under paragraph 7.03(b) is subject to question or that the
Company is withholding or proposes to withhold payments or provision of benefits
or within such longer period as may reasonably be necessary for the Executive to
take action in the event that his illness or incapacity should preclude his
taking such action within such ninety-day period.
8. CONFIDENTIAL INFORMATION
8.01 The Executive agrees not to disclose, either while in the
Company's employ or at any time thereafter, to any person not employed by the
Company, or not engaged to render services to the Company, any confidential
information obtained by him while in the employ of the Company, including,
without limitation, any of the Company's inventions, processes, methods of
distribution or customers or trade secrets; provided, however, that this
provision shall not preclude the Executive from use or disclosure of information
known generally to the public or of information not considered confidential by
persons engaged in the business conducted by the Company or from disclosure
required by law or Court order.
8.02 The Executive also agrees that upon leaving the Company's
employ he will not take with him, without the prior written consent of an
officer authorized to act in the matter by the Board of Directors of the
Company, any drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or without
limitation, relating to its or their methods of distribution, or any description
of any formulae or secret processes.
9. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be deemed to have been duly given if and when mailed in
the continental United States by registered or certified mail, return receipt
requested, postage prepaid, or personally delivered or sent by telex or other
telegraphic means to the party entitled thereto at the address stated below or
to such changed address as the addressee may have given by a similar notice:
To the Company: Frontier Oil Corporation
10000 Memorial Drive
Suite 600
Houston, Texas 77024
To the Executive: Gerald B. Faudel
1880 Arapahoe Street, #3412
Denver, Colorado 80202
10. GENERAL PROVISIONS
10.01 There shall be no right of set-off or counterclaim in
respect of any claim, debt or obligation, against any payments to the Executive,
his dependents, beneficiaries or estate provided for in this Agreement.
10.02 The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of such agreements.
10.03 No right or interest or in any payments shall be assignable
by the Executive; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive's estate.
10.04 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
10.05 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to his beneficiary or beneficiaries.
10.06 The titles to sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
10.07 No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Company or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized.
10.08 Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a subsequent breach of such condition or provision
or a waiver of a similar or dissimilar provision or condition at the same or at
any prior or subsequent time.
10.09 In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
10.10 Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purpose of this Agreement), but
shall not otherwise be assignable by the Company.
10.11 This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the choice of law
principles thereof).
10.12 To the extent that any payment made to Executive pursuant to
the terms of this Agreement is subject to federal income, excise, or other tax
at a rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G (b)(1 ) and 4999 (a) of the Internal Revenue Code of
1954, as amended (the "Code"), any similar or analogous provisions of any
statute adopted subsequent to the date hereof, or otherwise, then the amount due
hereunder shall be increased by an amount ("the "Additional Amount") such that
the net amount received by Executive, after paying any applicable Penalty Tax
and any federal or state income tax on such Additional Amount, shall be equal to
the amount that Employee would have received if such Penalty Tax were not
applicable.
10.13 The Company shall pay all legal fees and expenses which the
Executive may incur as a result of the Company's (and its successors and
assigns) contesting the validity or enforceability of this Agreement. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and amounts
received from other employment or otherwise by the Executive shall not be
recoupable by the Company against the amounts paid to the Executive pursuant to
the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FRONTIER OIL CORPORATION
By: /s/ James R. Gibbs
--------------------
James R. Gibbs
ATTEST:
Julie H. Edwards
---------------------
Secretary
/s/ Gerald B. Faudel
----------------------
Gerald B. Faudel
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT executed as of the 25th day of February, 1999, by and
between Frontier Oil Corporation, a Wyoming corporation (the "Company"), and Jon
D. Galvin (the "Executive").
W I T N E S S E T H:
WHEREAS the Executive is a principal officer of the Company and an integral
part of its management;
WHEREAS, the Company wishes to assure both itself and the Executive of
continuity of management in the event of any actual or threatened change in
control of the Company;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits that the Executive could reasonably expect in the
absence of a change in control of the Company and, accordingly, this Agreement
will be operative only upon a change in control of the Company, or if the
Executive's employment is terminated in anticipation of a change in control as
that term is hereafter defined.
NOW THEREFORE, in consideration of the premises and covenants herein
contained and other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties as follows:
1. OPERATION OF AGREEMENT.
1.01 This Agreement shall be binding immediately upon its execution by
the parties hereto, but, anything in this Agreement to the contrary
notwithstanding, neither the Agreement nor any provision thereof shall be
operative unless and until there has been a Change in Control of the Company, or
if the Executive's employment is terminated in anticipation of a change in
control as defined in paragraph 1.02 below. Upon the date of such a Change in
Control of the Company (the "Effective Date"), this Agreement and all provisions
thereof shall become operative immediately, without the necessity of any further
action on the part of either party hereto.
1.02 For the purpose of this Agreement, the term "Change in Control
of the Company" shall mean a change in control of a nature that would be
required to be disclosed in a proxy statement, governed by the rules of the
Securities and Exchange Commission as in effect on the date of this Agreement;
provided that without limitation, such a change in control shall be deemed to
have occurred upon the occurrence of any one of the following:
(a) the consummation of any transaction (including without
limitation, any merger, consolidation, tender offer, or exchange offer) the
result of which is that any individual or "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934 - the
"Exchange Act") is or becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities,
(b) the first day during any period of 24 consecutive months,
commencing before or after the date of this Agreement that the individuals, who
at the beginning of such 24 month period were directors of the Company for whom
the Executive shall have voted, cease for any reason to constitute at least a
majority of the Board of Directors of the Company,
(c) the sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole,
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company, or
(e) the date the Company files a report or proxy statement with
the SEC stating that a change in control has or may occur pursuant to any then
existing contract or termination.
1.03 This Agreement shall terminate forthwith, and without more, in
the event that Executive ceases to be an executive officer of the Company at any
time prior to the Effective Date whether by reason of his death, Disability,
discharge, resignation or otherwise; except that either party wishing to
terminate the employment relationship, other than by reason of death, Disability
or discharge for Cause, hereby agrees to give the other party at least 60 days
prior written notice. Notwithstanding the foregoing, following the commencement
of any discussions of any third party that ultimately result in the occurrence
of a Change of Control, the Company shall not at the instance or upon the
suggestion of such third party terminate the employment or reduce the
compensation of Executive.
1.04 This Agreement shall terminate three years from the date hereof;
provided, however, that this Agreement shall be continued in full force and
effect for an additional period of three years following such term, unless the
Company elects to terminate this Agreement at the end of such term and provides
at least 30 days' prior written notice to Executive; and provided, further, that
following the commencement of any discussions with any third party that
ultimately result in the occurrence of a Change of Control, the Company shall
not make such election to terminate this Agreement at the instance or upon the
suggestion of such third party.
1.05 Except as provided in paragraphs 1.03 and 1.04 above, nothing
expressed or implied herein shall create any right or duty (on the part of the
Company or Executive) to have Executive remain in the employment of the Company
at any time prior to the Effective Date, each reserving all rights to terminate
the employment relationship at any time (subject to the notice requirement
contained in paragraphs 1.03 and 1.04 above) prior to the Effective Date, with
or without Cause.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
2.01 The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company,
or subject to the terms of this Agreement, such other corporate profit center as
shall then be the principal successor to the business, assets and the properties
of the Company, for the period set forth in paragraph 2.02 below (the "Period of
Employment") in the position and with the duties and responsibilities set forth
in Section 3 below, and upon the other terms and conditions hereinafter stated.
2.02 The Period of Employment, subject only to the provisions of
Section 6 below relating to death or Disability, shall continue for a period of
three years from the Effective Date.
3. POSITION, DUTIES, RESPONSIBILITIES.
3.01 It is contemplated that at all times during the Period of
Employment the Executive shall continue to serve as a principal officer of the
Company with the office and title of Vice President- Controller of the Company
and continue to have duties and responsibilities commensurate with those duties
and responsibilities imposed on the Executive immediately prior to the Effective
Date.
3.02 During the Period of Employment the Executive shall also serve
and continue to serve, if and when elected and reelected, as an officer or
director, or both, of any subsidiary, division or affiliate of the Company.
3.03 Throughout the Period of Employment the Executive shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable vacations and except
for illness or incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods required for serving as a director or
member of a committee of any organization involving no conflict of interest with
the interests of the Company, from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
3.04 The office of the Executive shall be located at the executive
offices of the Company at 5340 S. Quebec, Suite 200N, Englewood, Colorado
80111-1911. The Executive shall not be required to change the current situs of
his employment or residence. The Executive also shall not be required to be
absent therefrom on travel status or otherwise more than a total of 60 working
days in any calendar year nor more than 20 consecutive days at any one time.
4. COMPENSATION, COMPENSATION PLANS, PERQUISITES.
4.01 (a) For all services rendered by the Executive in any capacity
during the Period of Employment, including, without limitation, services as an
executive, officer, director or member of any committee of the Company or of any
subsidiary, division or affiliate thereof, the Executive shall be paid as
compensation:
(i) A base salary at no less than the rate in effect immediately
prior to the Effective Date, with increases (if any) as shall be made from time
to time in accordance with the Employer's regular salary administration
practices;
(ii) An annual performance bonus in an amount no less than the
amount of 35% of the base salary determined pursuant to subparagraph 4.01
(a)(i).
(b) Any increase in salary pursuant to clause (i) of
subparagraph 4.01 (a) or in bonus or other compensation shall in no way diminish
any other obligation of the Company under this Agreement.
4.02 During the Period of Employment the Executive shall be and
continue to be a full participant in the Company's applicable stock option plans
and any other compensation plans in which the Executive participates immediately
prior to the Effective Date, or equivalent successor plans that may be adopted
by the Company, with at least the same reward opportunities to Executive that
have heretofore been provided. Nothing in this Agreement shall preclude
improvement of reward opportunities in such plans or other plans in accordance
with the present practice of the Company.
4.03 During the Period of Employment, the Executive shall be entitled
to perquisites, including, without limitation, an office, secretarial and
clerical staff, and to fringe benefits, including, without limitation, the
payment or reimbursement of club dues, in each case at least equal to those
attached to his office immediately prior to the Effective Date, as well as to
reimbursement, upon proper accounting, of reasonable expenses and disbursements
incurred by him in the course of his duties.
5. EMPLOYEE BENEFIT PLANS.
5.01 The compensation, together with other matters provided for in
Section 4 above, is in addition to the benefits provided for in this Section 5.
5.02 The Executive, his dependents and beneficiaries shall be entitled
to all payments and benefits and service credit, for benefits during the Period
of Employment to which officers of the Company, their dependents and
beneficiaries are entitled as a result of the employment of such officers under
the terms of employee plans and practices of the Company in effect immediately
prior to the Effective Date, including, without limitation, the Company's
retirement program (consisting of the Frontier Retirement Savings Plan, and the
Frontier Deferred Compensation Plan), the Company's stock purchase and savings,
thrift and investment plans, if any, the Frontier Oil Corporation Executive Life
Insurance Plan, its group life insurance plans, its accidental death and
dismemberment insurance, its business travel insurance, its long term
disability, medical, dental and health and welfare plans and other present or
successor plans and practices of the Company, its subsidiaries and divisions,
for which officers, their dependents and beneficiaries are eligible, and to all
payments or other benefits under any such plan or practice after the Period of
Employment as a result of participation in such plan or practice durinq the
Period of Employment.
5.03 Nothing in this Agreement shall preclude the Company from
amending or terminating any employee benefit plan or practice but, it being the
intent of the parties that the Executive shall continue to be entitled during
the Period of Employment to perquisites as set forth in paragraph 4.03 above and
to benefits and service credit for benefits under paragraph 5.02 above at least
equal to those attached to his position immediately prior to the Effective Date,
and nothing in this Agreement shall operate as, or be construed to reduce or
authorize reduction without the Executive's written consent in the level of such
perquisites, benefits or service credit for benefits. In the event of any such
reduction by amendment or termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries shall continue to be entitled to
perquisites, benefits and service credit for benefits under such plans or
practices that he or his dependents and beneficiaries would have received if
such reduction had not taken place.
6. EFFECT OF DEATH OR DISABILITY.
6.01 In the event of the death of the Executive during the Period of
Employment, the legal representative of the Executive shall be entitled to the
compensation provided for in paragraph 4.01 during the balance of the Period of
Employment. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of the twelfth month following the month in
which death shall have occurred but without prejudice to any other payments due
in respect of the Executive's death hereunder or pursuant to any other
agreements or arrangements with the Company.
6.02 The term "Disability," as used in this Agreement, shall mean an
illness or accident which prevents the Executive from performing his duties
under this Agreement for a period of six consecutive months. In the event of the
Disability of the Executive during the Period of Employment, the Executive shall
be entitled to the full compensation provided for in this Agreement for the
period of such Disability (i.e., commencing on the date on which the Disability
occurred) but not in excess of six months. The Period of Employment shall be
deemed to have ended as of the close of business on the last day of such six
months' period but without prejudice to any payments due to the Executive in
respect of disability or any short term illness or accident which prevents the
Executive from performing his duties for a period of less than six months.
7. TERMINATION.
7.01 In the event of a Termination, as defined in paragraph 7.03
below, during the Period of Employment, the provisions of this Section 7 shall
apply.
7.02 In the event of a Termination the Company shall, as liquidated
damages or severance pay, or both, pay to the Executive and provide him, his
dependents, beneficiaries and estate, with the following:
(a) The Company shall continue to pay the Executive the base
salary compensation provided in paragraph 4.01 (a)(i) above at the rate in
effect at the time of Termination (which in accordance with the terms of this
Agreement shall be no less than the rate of base salary in effect immediately
prior to the Effective Date). Such base salary shall be paid no less than
monthly beginning at the end of the month in which Termination occurred and
continuing during the remainder of the Period of Employment.
(b) The Company shall also continue to pay the Executive the
annual performance bonus provided in paragraph 4.01(a)(ii) above. Such annual
performance bonus compensation shall be paid on an annual basis, so that a
payment will be made in each of the three years of the Employment Period.
(c) With regard to the employee benefits and perquisites
described in paragraphs 5.02 and 4.03, the Company shall pay the Executive an
amount no less than 30% of the total amount for the balance of the Period of
Employment of the unpaid base salary payable pursuant to subparagraph (a) above.
(d) In the event that the Executive shall at the time of
Termination hold an outstanding and unexercised (whether or not exercisable at
the time) option or options theretofore granted by the Company, the Company
shall, in addition to the amounts provided for above, pay to the Executive in a
lump sum an amount equal to the excess above the option price under each such
option of the Fair Market Value at the time of Termination of the shares subject
to each such option. Solely for the purpose of this subparagraph (d), Fair
Market Value at the time of Termination shall be deemed to mean the higher of
(i) the average of the reported closing prices of the Common Shares of the
Company, as reported on the New York Stock Exchange - Composite Transactions, on
the last trading day prior to the Termination and on the last trading day of
each of the two preceding thirty-day periods, and (ii) in the event that a
Change in Control, as defined in paragraph 1.02 above, prior to Termination
shall have taken place as the result of a tender offer and such Change in
Control was consummated within twelve months of Termination, the price paid for
a majority of the Common Shares of the Company in the course of such tender
offer.
(e) At the Company's option, the Company may pay Executive the
total of all amounts payable to Executive for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment. Executive may also elect, at any time during the remaining Term of
Employment, to receive all amounts payable to him for the balance of the Term of
Employment pursuant to subparagraphs (a) and (b) of this Section 7.02 in a lump
sum payment by providing written notice of such election to the Company. The
Company agrees to make a lump sum payment of the total of such amounts within 30
days of Executive's notice of election to receive lump sum payment. It is
acknowledged and agreed that no lump sum payment will shorten the Term of
Employment of Executive, or modify or obviate any obligations of the Company
other than the payments otherwise due during the Term of Employment pursuant to
subparagraphs (a) and (b) above.
7.03 The word "Termination," for the purpose of this Section 7 and any
other provisions of this Agreement, shall mean:
(a) Termination by the Company of the employment of the Executive by
the Company and its subsidiaries for any reason other than for Cause as defined
in paragraph 7.04 below or for Disability as defined in subparagraph 6.02 above;
or
(b) Termination by the Executive of his employment by the Company and
its subsidiaries upon the occurrence of any of the following events:
(i) Failure to elect or reelect the Executive to, or removal of
the Executive from, the office set forth in paragraph 3.01 above.
(ii) A significant change in the nature or scope of the
authorities, powers, functions or duties of Executive as contemplated by
paragraph 3.01 above, or a reduction in compensation, and such change and/or
reduction is not remedied within 30 days after receipt by the Company of written
notice from the Executive.
(iii) A determination by the Executive made in good faith
that as a result of a Change in Control of the Company, as defined in paragraph
1.02 above, and a change in circumstances thereafter that significantly affects
his position, he is unable to carry out the authorities, powers, functions or
duties attached to his position as contemplated by Section 3 of this Agreement,
and such determination is not remedied within 30 days after receipt by the
Company of written notice from the Executive.
(iv) A breach by the Company of any provision of this Agreement
not embraced within the foregoing clauses (i), (ii) and (iii) of this
subparagraph 7.03(b) that is not remedied within 30 days after receipt by the
Company of written notice from the Executive .
(v) The liquidation, dissolution, consolidation or merger of the
Company or transfer of all or substantially all of the assets of the Company and
its Subsidiaries unless a successor or successors (by merger, consolidation or
otherwise) to which all or a significant portion of the assets have been
transferred shall have assumed all duties and obligations of the Company under
this Agreement.
An election by the Executive to terminate his employment given under the
provisions of this paragraph 7.03 shall not be deemed a voluntary termination of
employment by the Executive for the purpose of this Agreement or any plan or
practice of the Company.
7.04 For the purpose of any provision of this Agreement, the
termination of the Executive's employment shall be deemed to have been for
"Cause" only if:
(a) termination of his employment shall have been the result of
an act or acts of dishonesty on the part of the Executive constituting a felony
and resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company; or
(b) there has been a breach by the Executive during the Period
of Employment of the provisions of paragraph 3.03 above, relating to the time to
be devoted to the affairs of the Company, or of Section 8.01, relating to
confidential information, and such breach results in demonstrably material
injury to the Company and with respect to any alleged breach of paragraph 3.03
or of section 8.01 hereof, the Executive after notice and an opportunity to be
heard either shall have failed to remedy such alleged breach or shall have
failed to take all reasonable steps to that end within thirty days from his
receipt of written notice by the Company pursuant to resolution duly adopted by
the Board of Directors of the Company; and provided that thereafter
(c) there shall have been delivered to the Executive a certified
copy of a resolution of the Board of Directors of the Company adopted by the
affirmative vote of not less than three-fourths of the entire membership of the
Board of Directors called and held for that purpose and at which the Executive
was given an opportunity to be heard, finding that the Executive was guilty of
conduct set forth in subparagraphs (a) or (b) above, specifying the particulars
thereof in detail.
Anything in this paragraph 7.04 or elsewhere in this Agreement to the
contrary notwithstanding, the employment of the Executive shall in no event be
considered to have been terminated by the Company for Cause if termination of
his employment took place (a) as the result of bad judgment or negligence on the
part of the Executive, or (b) as the result of an act or omission without intent
of gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled, or (c) because of an act or omission believed by the
Executive in good faith to have been in or not opposed to the interest of the
Company, or (d) for any act or omission in respect of which a determination
could properly be made that the Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or payment of expenses under the
Policies of the Company or the laws of the State of Wyoming or the directors'
and officers' liability insurance of the Company, in each case as in effect at
the time of such act or omission, or (e) as the result of an act or omission
which occurred more than twelve calendar months prior to the Executive's having
been given notice of the termination of his employment for such act or omission
unless the commission of such act or such omission could not at the time of such
commission or omission have been known to a member of the Board of Directors of
the Company (other than the executive, if he is then a member of the Board of
Directors), in which case more than twelve calendar months from the date that
the commission of such act or such omission was or could reasonably have been so
known, or (f) as the result of a continuing course of action which commenced and
was or could reasonably have been known to a member of the Board of Directors of
the Company (other than the Executive) more than twelve calendar months prior to
notice having been given to the Executive of the termination of his employment.
7.05 In the event that the Executive's employment shall be terminated
by the Company during the Period of Employment and such termination is alleged
to be for Cause, or the Executive's right to terminate his employment under
paragraph 7.03(b) above shall be questioned by the Company or for any other
reason, the Executive shall have the right, in addition to all other rights and
remedies provided by law, at his election either to seek arbitration in Harris
County, Texas under the rules of the American Arbitration Association by serving
a notice to arbitrate upon the Company or to institute a judicial proceeding, in
either case within ninety days after having received notice of termination of
his employment under paragraph 7.03(b) is subject to question or that the
Company is withholding or proposes to withhold payments or provision of benefits
or within such longer period as may reasonably be necessary for the Executive to
take action in the event that his illness or incapacity should preclude his
taking such action within such ninety-day period.
8. CONFIDENTIAL INFORMATION
8.01 The Executive agrees not to disclose, either while in the
Company's employ or at any time thereafter, to any person not employed by the
Company, or not engaged to render services to the Company, any confidential
information obtained by him while in the employ of the Company, including,
without limitation, any of the Company's inventions, processes, methods of
distribution or customers or trade secrets; provided, however, that this
provision shall not preclude the Executive from use or disclosure of information
known generally to the public or of information not considered confidential by
persons engaged in the business conducted by the Company or from disclosure
required by law or Court order.
8.02 The Executive also agrees that upon leaving the Company's
employ he will not take with him, without the prior written consent of an
officer authorized to act in the matter by the Board of Directors of the
Company, any drawing, blueprint, specification or other document of the Company,
its subsidiaries, affiliates and divisions, which is of a confidential nature
relating to the Company, its subsidiaries, affiliates and divisions, or without
limitation, relating to its or their methods of distribution, or any description
of any formulae or secret processes.
9. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be deemed to have been duly given if and when mailed in
the continental United States by registered or certified mail, return receipt
requested, postage prepaid, or personally delivered or sent by telex or other
telegraphic means to the party entitled thereto at the address stated below or
to such changed address as the addressee may have given by a similar notice:
To the Company: Frontier Oil Corporation
10000 Memorial Drive
Suite 600
Houston, Texas 77024
To the Executive: Jon D. Galvin
1700 E. Green Oaks Dr.
Littleton, Colorado 80121
10. GENERAL PROVISIONS
10.01 There shall be no right of set-off or counterclaim in
respect of any claim, debt or obligation, against any payments to the Executive,
his dependents, beneficiaries or estate provided for in this Agreement.
10.02 The Company and the Executive recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, the Company and the
Executive hereby agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy to enforce
performance of such agreements.
10.03 No right or interest or in any payments shall be assignable
by the Executive; provided, however, that this provision shall not preclude him
from designating one or more beneficiaries to receive any amount that may be
payable after his death and shall not preclude the legal representative of his
estate from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive's estate.
10.04 No right, benefit or interest hereunder, shall be subject to
anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted by law,
be null, void and of no effect.
10.05 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to his beneficiary or beneficiaries.
10.06 The titles to sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
10.07 No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver shall be authorized by the
Board of Directors of the Company or any authorized committee of the Board of
Directors and shall be agreed to in writing, signed by the Executive and by an
officer of the Company thereunto duly authorized.
10.08 Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a subsequent breach of such condition or provision
or a waiver of a similar or dissimilar provision or condition at the same or at
any prior or subsequent time.
10.09 In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
10.10 Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company, including, without limitation, any corporation or corporations
acquiring directly or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise (and such successor
shall thereafter be deemed "the Company" for the purpose of this Agreement), but
shall not otherwise be assignable by the Company.
10.11 This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (other than the choice of law
principles thereof).
10.12 To the extent that any payment made to Executive pursuant to
the terms of this Agreement is subject to federal income, excise, or other tax
at a rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of Sections 280G (b)(1 ) and 4999 (a) of the Internal Revenue Code of
1954, as amended (the "Code"), any similar or analogous provisions of any
statute adopted subsequent to the date hereof, or otherwise, then the amount due
hereunder shall be increased by an amount ("the "Additional Amount") such that
the net amount received by Executive, after paying any applicable Penalty Tax
and any federal or state income tax on such Additional Amount, shall be equal to
the amount that Employee would have received if such Penalty Tax were not
applicable.
10.13 The Company shall pay all legal fees and expenses which the
Executive may incur as a result of the Company's (and its successors and
assigns) contesting the validity or enforceability of this Agreement. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and amounts
received from other employment or otherwise by the Executive shall not be
recoupable by the Company against the amounts paid to the Executive pursuant to
the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
FRONTIER OIL CORPORATION
By: /s/ James R. Gibbs
-------------------
James R. Gibbs
ATTEST:
Julie H. Edwards
------------------
Secretary
/s/ Jon D. Galvin
-------------------
Jon D. Galvin
