Document:

Unassociated Document

EXHIBIT 10.1

Executive Agreement

EXECUTIVE AGREEMENT

THIS EXECUTIVE AGREEMENT (the “Agreement”) is entered into effective as of the 1st day of February, 2011 by and between ATWOOD OCEANICS, INC., a Texas corporation (the “Company”), and ARTHUR MCGINNIS POLHAMUS (the “Executive”).

W I T N E S S E T H:

WHEREAS, it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined in Section 2 below) of the Company; and

WHEREAS, it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control; and

WHEREAS, it is imperative to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.

NOW, THEREFORE, in order to accomplish these objectives, and in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

1.           Certain Definitions.  The following terms shall have the indicated meanings:

(a)           The “Change of Control Date” shall mean the first date during the Change of Control Period (as defined in Section 1(b)) on which a Change of Control occurs.  Notwithstanding anything in this Agreement to the contrary, if a Change of Control occurs and if the Executive’s employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control or (ii) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the “Change of Control Date” shall mean the date immediately prior to the date of such termination of employment.

(b)           The “Change of Control Period” shall mean the period commencing on the date hereof and ending on the third anniversary of such date; provided that commencing on the date hereof, the term of this Agreement shall be extended automatically for one (1) additional day for each day that has then elapsed since the date hereof, unless, at any time thereafter, the Board of Directors of the Company, on behalf of the Company, gives written notice to the Executive, in accordance with Section 13 below, that such automatic extension of the term of this Agreement shall cease.  Any such notice shall be effective immediately upon delivery.

2.           Change of Control.  For the purposes of this Agreement, a “Change of Control” shall mean the occurrence of any one or more of the following:

(a)           The acquisition or formal tender offer by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (i) the then outstanding shares of common stock of the Company or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that the following acquisitions shall not constitute a Change of Control:  (i) any acquisition directly from the Company; (ii) any acquisition by the Company or any subsidiary of the Company; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or

 

 

  

1

  

(b)           The Company shall sell substantially all of its assets to another corporation which is not a wholly owned subsidiary; or

(c)           Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

For the purposes of this Agreement, ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) promulgated under the Exchange Act.

3.           Post-Change of Control Employment Period.  The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, in accordance with the terms and provisions of this Agreement, for the period commencing on the Change of Control Date and ending on the expiration of one year and six months thereafter (the “Post-Change of Control Employment Period”).

4.           Terms of Employment.  The following terms shall govern the Executive’s employment during the Post-Change of Control Employment Period:

(a)           Position and Duties.

	
  

	
(i)

	
During the Post-Change of Control Employment Period, the Executive shall be employed by the Company (or its successor) as Vice President, Operations or in an equivalent bona fide executive position with corresponding authority, duties and responsibilities, and the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Change of Control Date or any office which is the headquarters of the Company and is within the Greater Houston Statistical Metropolitan Area.

    (ii)           During the Post-Change of Control Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.  During the Post-Change of Control Employment Period, it shall not be a violation of this Agreement for the Executive to serve on corporate, civic or charitable boards or committees, deliver lectures, fulfill speaking engagements, teach at educational institutions, and manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.  It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Change of Control Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Change of Control Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company.

(b)           Compensation.  During the Post-Change of Control Employment Period, and prior to the termination of the Executive’s employment as described in Section 5 hereof, the Executive shall be entitled to the following items of compensation:

 

 

  

2

  

    (i)           Base Salary.  During the Post-Change of Control Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid in equal installments on a semi-monthly basis, at least equal to twelve times the highest monthly base salary paid or payable to the Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Change of Control Date occurs.  Any discretionary increase in Annual Base Salary during the Post-Change of Control Employment Period shall not serve to limit or reduce any other obligation to the Executive under this Agreement.  Annual Base Salary shall not be reduced after any such increase, and the term “Annual Base Salary” as utilized in this Agreement shall refer to Annual Base Salary as so increased.  As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

    (ii)           Annual Bonus.  During the Post-Change of Control Employment Period, in addition to Annual Base Salary, the Executive shall be eligible for a bonus (the “Annual Bonus”) on the same basis as other members of senior executive officers of the Company based upon criteria established by the Compensation and Human Resources Committee of the Board of Directors of the Company (the “Committee”), for each fiscal year ending during the Post-Change of Control Employment Period.  Each Annual Bonus payment shall be made to the Executive at the same time as bonuses are paid to other members of senior executive officers of the Company, but no later than two and one-half months after the end of the fiscal year for which the Annual Bonus is awarded.

    (iii)           Incentive, Savings and Retirement Plans.  During the Post-Change of Control Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, including without limitation, the Atwood Oceanics, Inc. 2007 Long-Term Incentive Plan, as amended as may be further amended or restated from time to time; any other similar stock incentive plans adopted by the Company and approved by its shareholders from time to time; the Atwood Oceanics, Inc. 401(k) Savings Plan, as amended and as may be further amended from time to time; and subject to Section 7 hereof, the Atwood Oceanics, Inc. Retention Plan for Certain Salaried Employees, as may be amended or in place from time to time (the “Retention Plan”), but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the  Executive under such plans, practices, policies and programs as in effect at any time during the 90-day period immediately preceding the Change of Control Date or, if more favorable to the Executive, those provided generally at any time after the Change of Control Date to other peer executives of the Company and its affiliated companies.

    (iv)           Welfare Benefit Plans.  During the Post-Change of Control Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, supplemental health, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 90-day period immediately preceding the Change of Control Date or, if more favorable to the Executive, those provided generally at any time after the Change of Control Date to other peer executives of the Company and its affiliated companies.

    (v)           Executive Life Insurance Plan.  During the Post-Change of Control Employment Period, the Company shall continue to maintain the Atwood Oceanics, Inc. Executive Life Insurance Plan, with its associated Salary Continuation Agreement, as may be amended from time to time, or pay to the Executive a lump sum representing the value of all benefits under such plan.

 

 

  

3

  

    (vi)           Indemnification Arrangements.  During the Post-Change of Control Employment Period, those certain Indemnification Agreements entered into between the Company and certain of its Executives shall remain in full force and effect and the Executive shall remain entitled to all of the benefits and protections afforded thereby.

    (vii)           Expenses.  During the Post-Change of Control Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable employment expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 90-day period immediately preceding the Change of Control Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

    (viii)           Vacation.  During the Post-Change of Control Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 90-day period immediately preceding the Change of Control Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

5.           Termination of Employment.

(a)           Death or Disability.  The Executive’s employment shall terminate automatically upon the Executive’s death during the Post-Change of Control Employment Period.  If the Company determines in good faith that the Disability of the Executive has occurred during the Post-Change of Control Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 13(b) hereof of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Change of Control Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative (such agreement as to acceptability not to be withheld unreasonably).

(b)           Termination by the Company for Cause.  The Company may terminate the Executive’s employment during the Post-Change of Control Employment Period for Cause.  For purposes of this Agreement, “Cause” shall mean (i) a material breach by the Executive of the Executive’s obligations under Section 4(a) (other than as a result of incapacity due to physical or mental illness) which is demonstrably willful and deliberate on the Executive’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company and which is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach, or (ii) the conviction of the Executive of a felony involving moral turpitude.

(c)           Voluntary Termination by Executive for Good Reason; Window Period; Voluntary Termination by Executive Not for Good Reason.  The Executive’s employment may be terminated during the Post-Change of Control Employment Period by the Executive for (i) Good Reason; (ii) during the Window Period by the Executive without any reason; or (iii) not for Good Reason.  For purposes of this Agreement, “Window Period” shall mean the 30-day period immediately following the Change of Control Date.  For purposes of this Agreement, “Good Reason” shall mean:

 

 

  

4

  

    (i)           the assignment to the Executive of any duties inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

    (ii)           any failure by the Company to comply with any of the provisions of Section 4(b), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

    (iii)            the Company’s requiring the Executive to be based at any office or location other than that described in Section 4(a)(i) hereof without the Executive’s consent and reasonable compensation for relocation expenses;

    (iv)           any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

    (v)           any failure by the Company to comply with and satisfy Section 12(c) hereof, provided that such successor has received at least ten days, prior written notice from the Company or the Executive of the requirements of Section 12(c) hereof.

For purposes of this Section 5(c), any good faith determination of “Good Reason” made by the Executive shall be conclusive.  The Executive’s employment may be terminated by the Executive for a reason other than for Good Reason pursuant to the terms of this Agreement.

(d)           Notice of Termination.  Any termination of the Executive’s employment shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 13(b).  For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 15 days after the giving of such notice).  The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

(e)           Date of Termination.  ”Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause or by the Executive, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Change of Control Date, as the case may be.

6.           Obligations of the Company Upon the Occurrence of Certain Events.

(a)           Termination by the Executive for Good Reason or During the Window Period or by the Company Other Than for Cause, Death or Disability.  If, during the Post-Change of Control Employment Period, the Company shall terminate the Executive’s employment other than for Cause, death or Disability or the Executive shall terminate employment either for Good Reason or without any reason during the Window Period:

 

 

  

5

  

    (i)           the Company shall pay to the Executive in a lump sum in cash:

A.           the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of the highest Annual Bonus that the Executive has received for any fiscal year preceding the current fiscal year and a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon), and (4) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2), (3), and (4) shall be hereinafter referred to as the “Accrued Obligations”), such sum to be paid to the Executive within 30 days after the Date of Termination; and

B.           the amount (such amount shall be hereinafter referred to as the “Severance Amount”) equal to the sum of (i) the Executive's Annual Base Salary, calculated from the Date of Termination through the remainder of the Post-Change of Control Employment Period and (ii) the product of the highest Annual Bonus that the Executive has received for any fiscal year preceding the current fiscal year and a fraction, the numerator of which is the number of days from the Date of Termination through the remainder of the Post-Change of Control Employment Period and the denominator of which is 365, such sum to be paid to the Executive within 30 days after the Date of Termination; provided, however, that such amount shall be reduced by the present value (determined as provided in Section 280G(d)(4) of the Internal Revenue Code of 1986, as amended (the “Code”)) of any other amount of severance relating to salary or bonus continuation, if any, to be received by the Executive upon termination of employment of the Executive under any severance plan, policy or arrangement of the Company to the extent such amounts are for the same categories of payments and are duplicative; and

    (ii)           all stock based incentive awards shall become fully vested and exercisable and any restriction periods shall terminate to the extent allowed by law and the terms of any plans and arrangements governing same and, where applicable and allowable, the Committee shall take such action to effectuate the foregoing; provided, however, that if any such awards cannot become fully vested or a restriction period cannot be early terminated pursuant to such plan or arrangement on account of limitations imposed by law or the terms of such plan or arrangement, the Executive shall be entitled, to the extent permitted by law, to receive from the Company an amount in cash payable within 30 days of the Date of Termination equal to the total amount of benefits or payments which the Executive will have to forfeit pursuant to such plan or arrangement on account of such termination of employment; and

    (iii)           for the remainder of the Post-Change of Control Employment Period, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) if the Executive’s employment had not been terminated in accordance with the most favorable plans, practices, programs or policies of the Company and its affiliated companies as in effect and applicable generally to other peer executives and their families during the 90-day period immediately preceding the Change of Control Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families; provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility, and provided, moreover, that during the period of the first six (6) months following the Executive’s Date of Termination, except in the case of health plan premiums or other medical benefits the payment of which would generally constitute deductible medical expenses under Section 213 of the Code, the Executive’s receipt of such benefits and coverages shall be at the Executive’s cost, paid to the Company by the Executive monthly in cash, and the Company shall reimburse the total amount of such cost paid by the Executive to him in a single cash payment as soon as administratively feasible following the end of such six-month period; and

    (iv)           subject to the provisions of Section 7, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive and/or the Executive’s family any other amounts or benefits required to be paid or provided or which the Executive and/or the Executive’s family is eligible to receive pursuant to this Agreement and under any plan, program, policy or practice of or contract or agreement with the Company and its affiliated companies as in effect and applicable generally to other peer executives and their families during the 90-day period immediately preceding the Change of Control Date or, if more favorable to the Executive, as in effect generally thereafter with respect to other peer executives of the Company and its affiliated companies and their families (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

 

 

  

6

  

(b)           Death.  If the Executive’s employment is terminated by reason of the Executive’s death during the Post-Change of Control Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for (i) payment of Accrued Obligations (which shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination), (ii) the timely payment or provision of any and all Other Benefits, which under their terms are available in the event of death, and (iii) the obligation to allow the Executive’s family to be eligible to participate in the plans, programs, practices and policies described in Section 4(b)(iv) for such period as provided for therein.

(c)           Disability.  If the Executive’s employment is terminated by reason of the Executive’s Disability during the Post-Change of Control Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for (i) payment of Accrued Obligations (which shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination), (ii) the timely payment or provision of any and all Other Benefits, which under their terms are available in the event of a Disability, and (iii) the obligation to allow the Executive and/or the Executive’s family to be eligible to participate in the plans, programs, practices and policies described in Section 4(b)(iv) for such period as provided for therein.

(d)           Cause; Other than for Good Reason.  If the Executive’s employment shall be terminated for Cause during the Post-Change of Control Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive Annual Base Salary through the Date of Termination plus the amount of any compensation previously deferred by the Executive, in each case to the extent theretofore unpaid.  If the Executive terminates employment during the Post-Change of Control Employment Period, excluding a termination either for Good Reason or without any reason during the Window Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits.  In such case, all Accrued Obligations and Other Benefits (if applicable) shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

7.           Waiver of Rights Under Retention Plan and for Other Severance. The Executive hereby agrees any and all benefits or payments due to Executive which arise out of or which relate to the Retention Plan or any other plan, program, policy or practice of or contract or agreement with the Company and its affiliated companies relating to the severance of employment in place from time to time (“Other Severance”), shall be offset against any benefits or payments due and owing hereunder, but only to the extent such payments are for the same categories of payments due hereunder and only to the extent that such payments are duplicative.

8.           Non-Exclusivity of Rights.  At any time prior to a Change of Control, and except as provided in Sections 6(a)(iii), 6(b) and 6(c), nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided after such Change of Control by the Company, its affiliated companies, or any successor thereof, and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies.  Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

 

 

  

7

  

 

     9.           Full Settlement; Resolution of Disputes.

(a)           The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as provided in Section 6(a)(iii), such amounts shall not be reduced whether or not the Executive obtains other employment.  The Company agrees to pay promptly as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

(b)           If there shall be any dispute between the Company and the Executive (i) in the event of any termination of the Executive’s employment by the Company for any reason other than death, or (ii) in the event of any termination of employment by the Executive, whether Good Reason existed or whether the termination occurred during the Window Period, then, unless and until there is a final, nonappealable judgment by a court of competent jurisdiction declaring that such termination by the Company was for Cause or Disability or that the determination by the Executive of the existence of Good Reason was not made in good faith or that the Executive terminated his employment during the Window Period, as the case may be, the Company shall pay all amounts, and provide all benefits, to the Executive and/or the Executive’s family or other beneficiaries, as the case may be, that the Company would be required to pay or provide pursuant to Section 6(a) as though such termination were by the Company without Cause and not for Disability or by the Executive with Good Reason or for no reason during the Window Period; provided, however, that the Company shall not be required to pay any disputed amounts pursuant to this paragraph except upon receipt of an undertaking by or on behalf of the Executive and/or the Executive’s family or other beneficiaries, as the case may be, to repay all such amounts to which the Executive is ultimately adjudged by such court not to be entitled.

10.           Taxes.  It is the objective of this Agreement to maximize the Executive’s Net After-Tax Benefit (as defined herein) if payments or benefits provided under this Agreement are subject to excise tax under Section 4999 of the Code.  Therefore, in the event it is determined that any payment or benefit by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including, by example and not by way of limitation, acceleration by the Company or otherwise of the date of vesting or payment or rate of payment under any plan, program or arrangement of the Company, would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall first make a calculation under which such payments or benefits provided to the Executive under this Agreement are reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code (the “4999 Limit”).  The Company shall then compare (x) the Executive’s Net After-Tax Benefit assuming application of the 4999 Limit with (y) the Executive’s Net After-Tax Benefit without the application of the 4999 Limit and the Executive shall be entitled to the greater of (x) or (y).  “Net After-Tax Benefit” shall mean the sum of (i) all payments and benefits which the Executive receives or is then entitled to receive from the Company, less (ii) the amount of federal income taxes payable with respect to the payments and benefits described in (i) above calculated at the maximum marginal income tax rate for each year in which such payments and benefits shall be paid to the Executive (based upon the rate for such year as set forth in the Code at the time of the first payment of the foregoing), less (iii) the amount of excise taxes imposed with respect to the payments and benefits described in (i) above by Section 4999 of the Code.  The determination of whether a payment or benefit constitutes an excess parachute payment shall be made by tax counsel selected by the Company and reasonably acceptable to the Executive.  The costs of obtaining this determination shall be borne by the Company.

 

 

  

8

  

The Company and the Executive intend that no provision of this Agreement will result in a payment to Executive, or in a vesting in Executive of, nonqualified deferred compensation under Section 409A of the Code that does not comply with the requirements of Section 409A of the Code.  If any provision of this Agreement can be interpreted or administered either in a way that would provide for a payment to Executive, or a vesting in Executive of, nonqualified deferred compensation under Section 409A of the Code that would not comply with the requirements of Section 409A of the Code or alternatively in a way that would provide for a payment that would not be nonqualified deferred compensation under Section 409A of the Code that would not comply with the requirements of Section 409A of the Code, the latter interpretation or administrative measure or practice shall be adopted in interpreting or administering the Agreement. Additionally, in the case of any payment that is to be made under this Agreement upon Executive’s “termination” or “termination of the Executive’s employment” and that implicates the requirements of Section 409A of the Code, the word “termination” or the phrase “termination of the Executive’s employment,” as the case may be, shall have the same meaning under this Agreement as the phrase “separation from service” has in regulations under Section 409A of the Code.  The Company and the Executive agree that if it is determined that any payment hereunder is subject to the requirements of Section 409A of the Code, such payment shall be made in accordance with the then current requirements of Section 409A of the Code including deferral of payments, if any.

11.           Confidential Information.                                           The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement).  After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.  In no event shall an asserted violation of the provisions of this Section 11 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

12.           Successors and Assigns.

(a)           This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

(b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c)           The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

13.           Miscellaneous.

(a)           This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without reference to principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b)           All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

 

  

9

  

If to the Executive:               Arthur McGinnis Polhamus

c/o Atwood Oceanics, Inc.

15835 Park Ten Place Drive

Houston, Texas 77084

If to the Company:               Atwood Oceanics, Inc.

15835 Park Ten Place Drive

Houston, Texas 77084

Attention: Chairman of the Board of Directors

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

(c)           The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d)           The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e)           The Executive’s or the Company’s failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) hereof, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)           The Executive and the Company acknowledge that, except as specifically provided herein or as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is “at will” and, prior to the Change of Control Date, may be terminated by either the Executive or the Company at any time, for any reason.  Moreover, if prior to the Change of Control Date the Executive’s employment with the Company terminates, then the Executive shall have no further rights under this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

Executive:

/s/ Arthur McGinnis Polhamus

Arthur McGinnis Polhamus

 

 

Company:

ATWOOD OCEANICS, INC.

By:  /s/ Robert J. Saltiel

Name:  Robert J. Saltiel

Title: President and Chief Executive Officerex10-1.htm

Exhibit 10.1

TESORO CORPORATION

 

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL PLAN

 

EFFECTIVE JANUARY 12, 2011

 

 

 

  

  

  

TESORO CORPORATION

 

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL PLAN

 

PREAMBLE

 

The principal objective of this Executive Severance and Change in Control Plan (the "Plan") is to reduce uncertainty to select executives of the Company and its Subsidiaries in the event of certain fundamental events involving the control or existence of the Company as well as to provide a benefit in the event of an executive’s termination of employment under certain conditions that are beyond the executive’s control.  The Plan is designed to provide a benefit that will meet the objectives described above.  The Plan is intended to conform to the requirements of Section 409A of the Code, together with the Regulations, and is intended to qualify as an unfunded plan maintained primarily for the purpose of providing benefits for a select group of management and highly compensated employees of the Company and its Subsidiaries.

 

SECTION I

DEFINITIONS

 

	
 1.1  

	
"Affiliate" means each entity that would be considered a single employer with the Company under Section 414(b) or Section 414(c) of the Code, except that the phrase "at least 50%" shall be substituted for the phrase "at least 80%" as used therein.

 

	
 1.2  

	
"Aggregated Plan" means all agreements, methods, programs and other arrangements that are aggregated with this Plan under Section 1.409A-1(c) of the Regulations.

 

	
 1.3  

	
"Base Salary" means the rate of base pay as in effect for a Participant on the effective date of such Participant’s eligibility for a benefit hereunder, as provided in Section II hereof.

 

	
 1.4  

	
"Board" means the Board of Directors of the Company.

 

	
 1.5  

	
“Bonus” means the target bonus applicable to a Participant for the year in which such Participant’s employment terminates under conditions that result in the eligibility of such Participant to a benefit hereunder, as provided in Section II hereof.

 

	
 1.6  

	
“Cause” means the conviction of or a plea of nolo contendere to the charge of a felony (which, through lapse of time or otherwise, is not subject to appeal); a willful refusal without proper legal cause to perform, or gross negligence in performing, the Participant’s duties and responsibilities; a material breach of fiduciary duty to the Company through the misappropriation of Company funds or property; or the unauthorized absence of the Participant from work (other than for sick or approved disability leave or leave under the Family Medical Leave Act) for a period of thirty (30) or more working days out of a consecutive forty-five (45)-working day period.

 

  

  

  

	
 1.7  

	
"Change in Control" means (i) there shall be consummated (A) any consolidation or merger of Company in which Company is not the continuing or surviving corporation or pursuant to which shares of Company's common stock would be converted into cash, securities or other property, other than a merger of Company where a majority of the board of directors of the surviving corporation are, and for a one-year period after the merger continue to be, persons who were directors of Company immediately prior to the merger or were elected as directors, or nominated for election as director, by a vote of at least two-thirds of the directors then still in office who were directors of Company immediately prior to the merger, or (B) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Company, or (ii) the shareholders of Company shall approve any plan or proposal for the liquidation or dissolution of Company, or (iii) (A) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than Company or a Subsidiary thereof or any employee benefit plan sponsored by Company or a Subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13c-3 under the Securities Exchange Act of 1934) of securities of Company representing thirty-five percent (35%) or more of the combined voting power of Company's then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, and (B) at any time during a period of one-year thereafter, individuals who immediately prior to the beginning of such period constituted the Board shall cease for any reason to constitute at least a majority thereof, unless election or the nomination by the Board for election by Company's shareholders of each new director during such period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

 

	
 1.8  

	
“Change in Control Benefit” means the benefit payable under Section 3.1 hereof in the event of an involuntary termination of employment without Cause or a voluntary termination of employment for Good Reason following a Change in Control.

 

	
 1.9  

	
"Chief Executive Officer" means the Chief Executive Officer of the Company.

 

	
 1.10  

	
"Code" means the Internal Revenue Code of 1986, as amended from time to time.

 

	
 1.11  

	
"Committee" means the Compensation Committee of the Board.

 

	
 1.12  

	
"Company" means Tesoro Corporation, a Delaware corporation, or any successor thereto.

 

	
 1.13  

	
“Compensation” means a Participant’s Base Salary and Bonus.

 

	
 1.14  

	
“Good Reason” means the occurrence of any of the following:

 

	
(a)  

	
without Participant's express written consent, the assignment to Participant of any duties inconsistent with the employment of Participant immediately prior to the Change in Control, or a significant diminution of Participant's positions, duties, responsibilities and status with the Company from those immediately prior to a Change in Control or a diminution in Participant's titles or offices as in effect immediately prior to a Change in Control, or any removal of Participant from, or any failure to reelect Participant to, any of such positions;

 

  

  

  

	
(b)  

	
a material reduction by the Company in Participant's Base Salary, as in effect immediately prior to a Change in Control;

 

	
(c)  

	
the failure by the Company to continue benefits, including but not limited to, thrift, pension, life insurance, and health plans, substantially equal in value, in the aggregate, to those in which Participant is participating or is eligible to participate at the time of the Change in Control except as otherwise required by the terms of such plans as in effect at the time of any Change in Control;

 

	
(d)  

	
the failure by the Company to continue in effect any incentive plan or arrangement in which Participant is participating at the time of a Change in Control (or to substitute and continue other plans or arrangements providing the Participant with substantially similar benefits), except as otherwise required by the terms of such plans as in effect at the time of any Change in Control;

 

	
(e)  

	
the occurrence of an event that meets the criteria set forth under the Company's relocation policy, as in effect from time to time, with respect to which either (i) the Participant fails to provide express written consent to the relocation or (ii) the Company fails to provide the relocation benefit set forth in such policy; or

 

	
(f)  

	
any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company;

 

	
 1.15  

	
"Participant" means an individual who, on the date of his or her termination of employment under the circumstances described in Section II hereof, is either:  (i) an officer of the Company or a Subsidiary with the title of Senior Vice President or above whose compensation is approved by the Committee or (ii) an officer of the Company or a Subsidiary with the title of Vice President who is approved for participation by the Chief Executive Officer, and, in each case, who is not otherwise entitled to a change in control or severance benefit, as applicable, under an employment agreement, management stability agreement, or similar type of agreement.

 

	
 1.16  

	
"Plan" means the Tesoro Corporation Executive Severance and Change in Control Plan, effective January 12, 2011, as amended from time to time.

 

	
 1.17  

	
"Regulations" means the Treasury Regulations promulgated under the Code.

 

	
 1.18  

	
"Separation from Service" means a termination of employment of a Participant under the circumstances described in Section II hereof that will result in a reasonably anticipated permanent reduction in the level of bona fide services performed by the Participant for the Company and its Affiliates to 20% or less of the average level of bona fide services performed by the Participant for the Company and its Affiliates (whether as an employee or an independent contractor) in the immediately preceding thirty-six (36) months (or the full period of service to the Company and its Affiliates if the Participant has been providing services to the Company and its Affiliates for fewer than thirty-six (36) months).  The determination of whether a Separation from Service has occurred shall be made by the Committee in accordance with the provisions of Section 409A of the Code and the Regulations.

 

  

  

  

	
 1.19  

	
“Severance Benefit” means the benefit payable under Section 3.2 hereof in the absence of a Change in Control but in the event of an involuntary termination of employment without Cause.

 

	
 1.20  

	
"Subsidiary" means any entity in which the Company owns or otherwise controls, directly or indirectly, stock or other ownership interests having the voting power to elect a majority of the board of directors, or other governing group having functions similar to a board of directors, as determined by the Committee.

 

The masculine gender, where appearing in the Plan, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary.

 

SECTION II

ELIGIBILITY FOR BENEFITS

 

	
 2.1  

	
Eligibility for Change in Control Benefit.  Each Participant is eligible to receive a Change in Control Benefit if, within the two-year period following a Change in Control, such Participant’s employment with the Company or a Subsidiary is terminated by reason of: (i) involuntary termination other than for Cause or by reason of death, or (ii) voluntary termination by the Participant for Good Reason.  The determination of whether a termination of employment shall be for Cause or Good Reason shall be made in the sole and absolute discretion of the Committee.  Such benefit shall commence as provided in Section 4.1 hereof.

 

	
 2.2  

	
Eligibility for Severance Benefit.

 

	
(a)  

	
Chief Executive Officer and Executive Vice Presidents.  Each Participant who is the Chief Executive Officer or an Executive Vice-President of the Company is eligible to receive a Severance Benefit if such Participant’s employment with the Company or a Subsidiary is terminated in the absence of a Change in Control by reason of either: (i) involuntary termination other than for Cause or by reason of death or (ii) voluntary termination following the occurrence or failure of any of the following:

 

	
(i)  

	
Chief Executive Officer.  Without the Chief Executive Officer’s express written consent, a material adverse change in the governing body to which the Chief Executive Officer regularly reports, including a requirement that the Chief Executive Officer report to another corporate officer rather than to the Board.

 

  

  

  

	
(ii)  

	
Executive Vice-Presidents.  Without the Executive Vice President’s express written consent, a material adverse change in the level of executive officer to whom the Executive Vice President regularly reports.

 

	
(b)  

	
Senior Vice Presidents.  A Senior Vice President of the Company is eligible to receive a Severance Benefit if such Participant’s employment with the Company or a Subsidiary is terminated in the absence of a Change in Control by reason of involuntary termination other than for Cause or by reason of death.

 

The determination of whether a termination of employment shall be for Cause or whether a material adverse change in the reporting relationship has occurred under Section 2.2 (a)(i) or (ii) shall be made in the sole and absolute discretion of the Committee.  Severance benefits shall commence as provided in Section 4.1 hereof.

 

SECTION III

AMOUNT AND FORM OF BENEFIT

 

	
 3.1  

	
Change in Control Benefit.  The Change in Control Benefit to which an eligible Participant shall be entitled shall be as follows:

 

	
(a)  

	
Chief Executive Officer.  The Chief Executive Officer shall be entitled to a Change in Control Benefit, payable in cash, equal to three (3) times his Compensation.  Furthermore, the Chief Executive Officer and his or her eligible dependents shall be entitled to participate in the Company's group medical plan (excluding dental and vision benefits) for the thirty (30)-month period commencing on the date of the Chief Executive Officer's Separation from Service.

 

	
(b)  

	
Executive Vice-Presidents.  Each Executive Vice-President shall be entitled to a Change in Control Benefit, payable in cash, equal to two and one-half (2.5) times his Compensation.  Furthermore, the Executive Vice-President and his or her eligible dependents shall be entitled to participate in the Company's group medical plan (excluding dental and vision benefits) for the thirty (30)-month period commencing on the date of the Executive Vice-President's Separation from Service.

 

	
(c)  

	
Senior Vice-Presidents.  Each Senior Vice-President shall be entitled to a Change in Control Benefit, payable in cash, equal to two (2) times his Compensation.  Furthermore, the Senior Vice-President and his or her eligible dependents shall be entitled to participate in the Company's group medical plan (excluding dental and vision benefits) for the twenty-four (24)-month period commencing on the date of the Senior Vice-President's Separation from Service.

 

	
(d)  

	
Vice-Presidents.  Each Vice-President who is a Participant in this Plan shall be entitled to a Change in Control Benefit, payable in cash, equal to either one (1) times or one and one-half (1.5) times his Compensation, as determined by the Chief Executive Officer in his sole and absolute discretion.  Furthermore, the Vice-President and his or her eligible dependents shall be entitled to participate in the Company's group medical plan (excluding dental and vision benefits) for a period of either twelve (12) or eighteen (18) months (as determined by the Chief Executive Officer in his sole and absolute discretion) commencing on the date of the Vice-President's Separation from Service.

 

  

  

  

	
 3.2  

	
Severance Benefit.  The Severance Benefit to which an eligible Participant shall be entitled shall be as follows:

 

	
(a)  

	
Chief Executive Officer.  The Chief Executive Officer shall be entitled to a Severance Benefit, payable as a lump sum cash payment, equal to two (2) times his Compensation, together with the benefits described in Section 3.2(d) hereof.

 

	
(b)  

	
Executive Vice-Presidents.  Each Executive Vice-President shall be entitled to a Severance Benefit, payable in cash, equal to one and three-fourths (1.75) times his Compensation, together with the benefits described in Section 3.2(d) hereof.

 

	
(c)  

	
Senior Vice-Presidents.  Each Senior Vice-President shall be entitled to a Severance Benefit, payable in cash, equal to one and one-half (1.5) times his Compensation, together with the benefits described in Section 3.2(d) hereof.

 

	
(d)  

	
Additional Benefits.  Each of the foregoing eligible Participants set forth in this Section 3.2 shall be entitled to the following benefits, in addition to the benefits described in (a), (b) and (c) above:

 

	
(i)  

	
participation in the Company's medical plan (excluding dental and vision benefits) for a period of eighteen (18) months commencing on the date of the Participant’s Separation from Service; and

 

	
(ii)  

	
receipt of reasonable outplacement services, at no cost to the Participant, for up to twelve (12) months, such twelve (12)-month period to commence on the date of the Participant’s Separation from Service.

 

SECTION IV

PAYMENT OF BENEFITS

 

	
 4.1  

	
Benefits payable in accordance with Section III as cash payments will be paid in a single lump sum payment on the first day of the seventh (7th) calendar month beginning after the Participant's Separation from Service.  If a Participant who is entitled to continued coverage under the Company’s group medical plan elects to continue such participation, the Company shall pay the applicable premium for such coverage (which amount shall be the employer-subsidized portion of the premium that applies to active employees of the Company) in accordance with the Company's standard payroll practices for the period of coverage that applies under Section III hereof. The continued medical plan coverage described herein and the payment of the applicable premium in connection therewith may not affect the benefit to be provided in any other taxable year and may not be liquidated or exchanged for any other benefit.

 

	
 4.2  

	
The Company will be liable for all benefits due the Participants under the Plan.

 

  

  

  

	
 4.3  

	
The Plan is a general corporate commitment and each Participant must rely upon the general credit of the Company for the fulfillment of its obligations under the Plan.  Under all circumstances the rights of Participants to any asset held by the Company shall be no greater than the rights expressed in this Plan.  Nothing contained in this Plan shall constitute a guarantee by the Company that the assets of the Company will be sufficient to pay any benefits under the Plan or would place the Participant in a secured position ahead of general creditors and judgment creditors of the Company.  Though the Company may establish or become a signatory to a rabbi trust to accumulate assets to help fulfill its obligations, the Plan and any trust created, shall not create any lien, claim, encumbrance, right, title or other interest of any kind in any Participant in any asset held by the Company, contributed to any trust created, or otherwise be designated to be used for payment of any of its obligations created in this agreement.  No specific assets of the Company have been or will be set aside, or will be transferred to a trust or will be pledged for the performance of the Company's obligations under the Plan which would remove those assets from being subject to the general creditors and judgment creditors of the Company.

 

	
 4.4  

	
It is intended that this Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

 

	
 4.5  

	
Notwithstanding any provision of this Section IV to the contrary, the benefits payable hereunder may, to the extent expressly provided in this Section 4.5, be paid prior to or later than the date on which they would otherwise be paid to the Participant.

 

	
(a)  

	
Distribution in the Event of Income Inclusion Under Code Section 409A.  If any portion of a Participant's benefit hereunder is required to be included in income by the Participant prior to receipt due to a failure of this Plan or any Aggregated Plan to comply with the requirements of Section 409A of the Code or the Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the portion of his or her benefit required to be included in income as a result of the failure of the Plan or any Aggregated Plan to comply with the requirements of Section 409A of the Code or the Regulations.

 

	
(b)  

	
Distribution Necessary to Satisfy Applicable Tax Withholding.  If the Company is required to withhold amounts to pay the Participant’s portion of the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) or 3121(v)(2) with respect to amounts that are or will be paid to the Participant under the Plan before they otherwise would be paid, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of:  (i) the amount of the Participant's benefit hereunder or (ii) the aggregate of the FICA taxes imposed and the income tax withholding related to such amount.

 

	
(c)  

	
Delay for Payments in Violation of Federal Securities Laws or Other Applicable Law.  In the event the Company reasonably anticipates that the payment of benefits as specified hereunder would violate Federal securities laws or other applicable law, the Committee may delay the payment of such benefit hereunder until the earliest date at which the Company reasonably anticipates that the making of such payment would not cause such violation.

 

  

  

  

	
(d)  

	
Delay for Insolvency or Compelling Business Reasons.  In the event the Company determines that the making of any payment of benefits on the date specified hereunder would jeopardize the ability of the Company to continue as a going concern, the Committee may delay the payment of such benefits until the first calendar year in which the Company notifies the Committee that the payment of benefits would not have such effect.

 

	
(e)  

	
Administrative Delay in Payment.  The payment of benefits hereunder shall begin at the date specified in accordance with the provisions of the foregoing paragraphs of this Section IV; provided that, in the case of administrative necessity, the payment of such benefits may be delayed up to the later of the last day of the calendar year in which payment would otherwise be made or the 15th day of the third calendar month following the date on which payment would otherwise be made.  Further, if, as a result of events beyond the control of the Participant, it is not administratively practicable for the Committee to calculate the amount of benefits due to the Participant as of the date on which payment would otherwise be made, the payment may be delayed until the first calendar year in which calculation of the amount is administratively practicable.

 

SECTION V

CLAIMS PROCEDURES 

 

	
 5.1  

	
Claims for Benefits.  The Committee shall determine the rights of any Participant to any benefits hereunder.  Any Participant who believes that he has not received the benefits to which he is entitled under the Plan may file a claim in writing with the Committee.  The Committee shall, no later than 90 days after the receipt of a claim (plus an additional period of 90 days if required for processing, provided that notice of the extension of time is given to the claimant with the first 90-day period), either allow or deny the claim in writing.

 

A denial of a claim by the Committee, wholly or partially, shall be written in a manner intended to be understood by the claimant and shall include:

 

	
(a)  

	
the specific reasons for the denial;

 

	
(b)  

	
specific reference to pertinent Plan provisions on which the denial is based;

 

	
(c)  

	
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

 

	
(d)  

	
an explanation of the claim review procedure and the time limits applicable to such procedures, including a statement of the claimant's right, if applicable, to bring a civil action under Section 502(a) of ERISA.

 

	
 5.2  

	
Appeal Provisions.  A claimant whose claim is denied (or his duly authorized representative) may within 60 days after receipt of denial of a claim file with the Committee a written request for a review of such claim.  If the claimant does not file a request for review of his claim within such 60-day period, the claimant shall be deemed to have acquiesced in the original decision of the Committee on his claim, the decision shall become final and the claimant will not be entitled to bring a civil action under Section 502(a) of ERISA.  If such an appeal is so filed within such 60-day period the Committee (or its delegate) shall conduct a full and fair review of such claim.  During such review, the claimant (or the claimant's authorized representative) shall be given the opportunity to review all documents that are pertinent to his claim and to submit issues and comments in writing.

 

  

  

  

The Committee shall mail or deliver to the claimant a written decision on the matter based on the facts and the pertinent provisions of the Plan within 60 days after the receipt of the request for review (unless special circumstances require an extension of up to 60 additional days, in which case written notice of such extension shall be given to the claimant prior to the commencement of such extension).  Such decision shall be written in a manner intended to be understood by the claimant, shall state the specific reasons for the decision and the specific Plan provisions on which the decision was based and shall, to the extent permitted by law, be final and binding on all interested persons.

 

SECTION VI

MISCELLANEOUS

 

	
 6.1  

	
The Board, or its delegate, may, in its sole discretion, terminate, suspend or amend this Plan at any time, in whole or in part.  However, the termination, amendment or suspension of this Plan will not operate to decrease the benefit to which a Participant has become entitled but which has not yet been paid.  Notwithstanding the foregoing, the Plan shall automatically terminate, without further action of the Company, upon Insolvency of the Company.  For this purpose, Insolvency shall mean the inability of the Company to continue as a going concern.

 

	
 6.2  

	
Notwithstanding any provision of the Plan to the contrary, the Committee may at any time (without the consent of any Participant) modify, amend or terminate any or all of the provisions of this Plan to the extent necessary to conform the provisions of the Plan with Section 409A of the Code, regardless of whether such modification, amendment or termination of this Plan shall adversely affect the rights of a Participant under the Plan.

 

	
 6.3  

	
Nothing contained herein will confer upon any Participant the right to be retained in the service of the Company, nor will it interfere with the right of the Company to discharge or otherwise deal with a Participant without regard to the existence of this Plan.

 

	
 6.4  

	
No benefit under this Plan shall be assignable or subject to any manner of alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind.

 

	
 6.5  

	
The Committee may adopt rules and regulations to assist it in the administration of the Plan and may delegate such of its duties hereunder as it may deem advisable.

 

  

  

  

	
 6.6  

	
This Plan is established under and will be construed according to the laws of the State of Texas, except to the extent preempted by federal law.

 

	
 6.7  

	
The effective date of this Plan, as signed this 12th day of  January, 2011, is January 12, 2011.

 

 

TESORO CORPORATION

By:           /s/ SUSAN A. LERETTE                                                      

Name:     Susan A. Lerette                                                      

	
  

	
Title:

	
Senior Vice President, Human Resources and Communications

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00183-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00183-of-00352.parquet"}]]