Document:

exv10w2

 

Exhibit 10.2

CONSULTING AGREEMENT

     This Consulting Agreement (this “Agreement”) is made effective as of March 1, 2005,
by and between Tesoro Corporation, a Delaware corporation (the “Company”), and Thomas E. Reardon
(“Consultant”).

W I T N E S S E T H:

     Whereas, Consultant’s employment with the Company as Executive Vice President, Human
Resources will terminate, by voluntary retirement, at the close of business on February 28, 2005;

     Whereas, Consultant possesses business knowledge and expertise which may be of
substantial assistance to the Company based on his long tenure with the Company; and

     Whereas, the Company desires to engage Consultant as a consultant to provide certain
services to the Company, and Consultant desires to be so engaged, on the terms and conditions set
forth below.

     Now, Therefore, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto do hereby agree:

     1. Engagement. The Company hereby agrees to employ Consultant as a consultant, and
Consultant agrees to serve the Company in such capacity on the terms and subject to the conditions
set forth in this Agreement.

     2. Term. Subject to the provision for earlier termination set forth in Section 5
hereof, the term of this Agreement shall begin on March 1, 2005 and continue to, and including,
February 28, 2006. Thereafter, the term of this Agreement shall renew automatically on a
month-to-month basis, unless terminated earlier by thirty (30) days written notice or “for cause”
as provided in Section 5(c). In the event of the renewal of this Agreement, all of the other terms
of this Agreement shall remain in full force and effect, except as may be specifically modified by
the mutual written agreement of the parties. Should the Company desire that this Agreement not
automatically renew on March 1, 2006 on a month-to-month basis, it shall provide notice in writing
of its intention to let this Agreement lapse to Consultant no later than January 29, 2006.

     3. Duties and Responsibilities.

     (a) During the term of this Agreement, the Company shall retain Consultant as a
part-time, independent consultant with respect to the matters set forth in Section 3(b).
Within reason, Consultant shall make himself available to the Company up to forty-eight (48)
hours each calendar month to render such advice and assistance regarding the consulting
services as may be reasonably requested of Consultant by the Company. While Consultant and
Company agree that circumstances might reasonably require Consultant to work more than
forty-eight (48) hours in any given calendar month, it is the intention of the parties that
the average number of hours worked by Consultant during the

 

 

initial 12-month term of this Agreement not exceed forty-eight (48) hours per month.
If the aggregate number of hours worked during the initial 12-month period exceeds 576
hours, Consultant shall be entitled to receive additional compensation as provided in
Section 4. In the event of the renewal of this Agreement, in no event shall the running
12-month average number of hours worked by Consultant, including the preceding eleven (11)
months, exceed forty-eight (48) hours per month, unless Consultant is paid additional
compensation in the same manner. Nothing herein shall be construed to require the
Consultant to work any such additional hours.

     (b) Consultant will report to the Chief Executive Officer of the Company and agrees to
provide such consulting services to the Company as the Company may from time to time request
during the term of this Agreement, regarding (i) general assistance with the Human Resources
core areas, (ii) coaching for the business process team, (iii) assistance with the
development of PACE negotiations strategies for 2006 contract, and (iv) assistance with the
on-going development of the enterprise risk program.

     (c) Consultant will comply with all applicable laws, corporate documents governing the
conduct of the business and affairs of the Company, and policies of the Company.

     4. Compensation for Engagement.

     (a) Fee. As compensation for the services to be rendered by Consultant during
the term of this Agreement, Consultant shall be entitled to receive a fee at an annual rate
of $210,000 (the “Consulting Fee”), payable in cash in monthly installments. In the event
of the renewal of this Agreement in accordance with Section 2 hereof, the Company shall pay
Consultant the monthly pro-rata portion of the Consulting Fee. If the Consultant provides
services in excess of 48 hours a month on average for the first 12 months, he shall be
entitled to compensation equal to $364 per hour for each hour over the 576 hours during such
12-month period and such amount shall be added to (without duplication) and included as part
of the Consulting Fee upon the earlier of the time of payment of the next monthly consulting
fee after Consultant shall have worked 576 hours in any applicable 12-month period or at the
end of any such 12-month period. The Company shall pay for such additional hours worked
each month within 10 days of the end of the first year of this Agreement. If this Agreement
continues thereafter on a month-to-month basis, the Company shall pay for such excess hours
on a month-by-month basis. All fees shall be payable in accordance with the customary
payroll practices of the Company as of the date hereof.

     (b) Bonus. After March 1, 2006 and on or before March 30, 2006, the Chief
Executive Officer of the Company, in his reasonable discretion, shall evaluate the
Consultant’s performance hereunder and shall determine a bonus in an amounts ranging from $0
to two times the total Consulting Fee paid or payable to Consultant during the initial 12
month term of this Agreement for the Consultant’s services hereunder. Such bonus shall be
paid to the Consultant within five days of its determination.

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     (c) Taxes. There shall be no withholdings from the Consulting Fee or any bonus
received in accordance with this Agreement. The Consultant shall be solely responsible, and
liable, for all social security and other state and federal taxes or assessments. The
Consultant hereby warrants to the Company, and indemnifies the Company against, Consultant’s
non-payment of any and all social security and other state and federal taxes or assessments.

     (d) Indemnification. (i) Consultant shall be indemnified, and the Company
shall obligate itself contractually to indemnify Consultant, to the same extent and under
the same conditions that Consultant is presently indemnified pursuant to that certain
Indemnification Agreement, by and between Tesoro Corporation and Thomas E. Reardon, dated
May 2, 1996 (the “Indemnification Agreement”), as if Consultant were an officer and employee
of the Company.

     (ii) With respect to Proceedings (as defined in Section 1(g) of the Indemnification
Agreement) brought by or in the right of the Company, however, and not withstanding the
provisions of Section 5 of the Indemnification Agreement, Consultant shall be further
indemnified against Expenses (as defined in Section 1(e) of the Indemnification Agreement)
actually and reasonably incurred by him or on his behalf in connection with any such
Proceeding unless the court in which such Proceeding shall have been brought or is pending
determines that Consultant engaged in willful misconduct or acted with gross negligence.

     (iii) In addition to the foregoing, the Company shall indemnify and hold harmless the
Consultant from any Expense and all judgments, penalties, fines and amounts paid in
settlement actually and reasonable incurred by him or on his behalf in connection with any
Proceeding alleging, based on or related to his performance of services hereunder or in his
capacity as a consultant as contemplated hereby, except for any judgment, penalty or fine
based on and arising solely out of his gross negligence or willful misconduct. THE COMPANY
RECOGNIZES, UNDERSTANDS AND AGREES THAT THE EFFECT OF THIS PROVISION IS TO INDEMNIFY THE
CONSULTANT WITH RESPECT TO HIS OWN NEGLIGENCE AND THE COMPANY INTENDS THAT IT BE ENFORCEABLE
AGAINST THE COMPANY NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR REQUIREMENT
THAT WOULD PROHIBIT OR LIMIT SUCH INDEMNIFICATION.

     (iv) With respect to Proceedings related to this Consulting Agreement following a
Change in Control, including a Proceeding initiated by Consultant to enforce his rights
hereunder, Consultant shall be further indemnified against and promptly reimbursed for
Expenses actually and reasonably incurred by him or on his behalf in connection with any
such Proceeding unless the court in which such Proceeding shall have been brought or is
pending determines that Consultant acted in bad faith with respect to initiating such
Proceeding or with respect to substantially the entirety of his defense thereof.

     (e) Reimbursement of Expenses. The Company agrees to promptly reimburse
Consultant for all appropriately documented, reasonable travel and other business

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expenses incurred by Consultant in the course of providing services requested by the
Company or otherwise incurred in his capacity as a Consultant.

     5. Termination.

     (a) Death or Disability. This Agreement shall terminate automatically upon
Consultant’s death or permanent disability. For purposes of this Agreement, Consultant
shall be deemed to be “permanently disabled” if Consultant shall be considered to be
permanently and totally disabled in accordance with the Company’s disability plan, if any,
for a period of ninety (90) days or more. If there should be a dispute between the Company
and Consultant as to Consultant’s physical or mental disability for purposes of this
Agreement, the question shall be settled by the opinion of an impartial reputable physician
or psychiatrist agreed upon by the parties or their representatives, or if the parties
cannot agree within ten (10) calendar days after a request for designation of such party,
then a physician or psychiatrist shall be designated by the Mayo Clinic Hospital in
Scottsdale, Arizona. The parties agree to be bound by the final decision of such physician
or psychiatrist.

     (b) By Consultant. This Agreement may be terminated by Consultant for any
reason upon delivery of ninety (90) days prior written notice to the Company.

     (c) By the Company. This Agreement may be terminated by the Company for any
reason upon delivery of ninety (90) days prior written notice to Consultant; provided,
however, that the Company may terminate this Agreement at any time if such termination is
“for cause”, as defined below, by delivering to Consultant written notice describing the
cause of termination ten (10) days before the effective date of such termination and by
granting Consultant at least ten (10) days to cure the cause (except with regard to any
disclosures of proprietary information for which no such period to cure shall be required).

               “For cause” shall be limited to the occurrence of the following events:

	 	(i)  	Failure, or absence of a good
faith effort, by Consultant to adhere to the terms of this
Agreement after thirty (30) days written notice and an
opportunity to cure,
	 
	 	(iii)  	Gross negligence on the part of
Consultant, or
	 
	 	(iv)  	Consultant is involved in
fraudulent acts against the Company.

     (d) Termination by the Company Other Than “For Cause” or as a Result of a Change
in Control. This Agreement shall be terminated by the Company in the event of a Change
in Control (as defined in Section 5(e) hereunder). In the event of a termination other than
“for cause” by the Company or as a result of a Change in Control, Consultant shall be
entitled to receive the balance of the Consulting Fee for the initial 12-month term of this
Agreement in one lump sum cash payment. In addition, the Consultant shall receive a bonus
of $420,000 in a lump sum upon the occurrence of Change of Control;

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provided that, if the Consultant is paid such a bonus, then the aggregate of bonuses
paid to Consultant pursuant to Section 4(b) shall not exceed $420,000.

     (e) Change in Control. For purposes of this Agreement, “Change in Control”
means the occurrence of any of the following events: (i) there shall be consummated (A)
any consolidation or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company’s Common Stock would be
converted into cash, securities or other property, other than a merger of the Company where
a majority of the Board of Directors of the surviving corporation are, and for a two-year
period after the merger continue to be, persons who were directors of the Company
immediately prior to the merger or were elected as directors, or nominated for election as
director, by a vote of at least two-thirds of the directors then still in office who were
directors of the Company immediately prior to the merger, or (B) any sale, lease, exchange
or transfer (in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company, or

     (ii) the shareholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company, or

     (iii) (A) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Company or
a subsidiary thereof or any employee benefit plan sponsored by the Company or a subsidiary
thereof, shall become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of the Company representing twenty (20) percent or more of the
combined voting power of the Company’s then outstanding securities ordinarily (and apart
from rights accruing in special circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, and (B) at any time during a period of two (2) years
thereafter, individuals who immediately prior to the beginning of such period constituted
the Board of Directors of the Company shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination by the Board of Directors for
election by the Company’s shareholders of each new director during such period was approved
by a vote of at least two-thirds of the directors then still in office who were directors at
the beginning of such period.

     6. Proprietary Information.

     (a) Confidential Treatment. Consultant acknowledges and agrees that he has
acquired, and may in the future acquire as a result of his engagement by the Company or
otherwise, “Proprietary Information” (as defined below) of the Company which is of a
confidential or trade secret nature, and all of which has a great value to the Company and
is a substantial basis and foundation upon which the Company’s business is predicated.
Accordingly, Consultant agrees to regard and preserve as confidential at all times all
Proprietary Information and to refrain from publishing or disclosing any part of it and from
using, copying or duplicating it in any way by any means whatsoever. Consultant further
agrees that he will not use or disclose the Proprietary Information to any person or entity
without the prior written consent of the Company. “Proprietary Information”

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includes all information and data in whatever form, tangible or intangible, pertaining
in any manner to any business interests of the Company or any affiliate thereof, unless the
information is or becomes publicly known through lawful means.

     (b) Property of the Company. Upon termination of Consultant’s engagement with
the Company, Consultant shall surrender to the Company any and all work papers, reports,
manuals, documents, and the like (including all originals and copies thereof) in his
possession which contain Proprietary Information relating to the business, prospects or
plans of the Company or its affiliates. Consultant acknowledges that all Proprietary
Information and other property of the Company or any affiliate thereof which Consultant
accumulates during his engagement are the property of the Company and shall be returned to
the Company immediately upon the termination of this Agreement.

     (c) Cooperation. Consultant agrees that following any termination of his
engagement with the Company, he will not disclose or cause to be disclosed any negative,
adverse or derogatory comments or information of a substantial nature about the Company or
its affiliates, the management of the Company or its affiliates, any product or service
provided by the Company or its affiliates or the future prospects of the Company or its
affiliates unless required by court order. The Company may seek the assistance, cooperation
or testimony of Consultant following any such termination in connection with any
investigation, litigation or proceeding arising out of matters within the knowledge of
Consultant and related to his engagement by the Company, and in any instance, Consultant
shall provide such assistance, cooperation or testimony and the Company shall pay
Consultant’s reasonable costs and expenses in connection therewith.

     (d) Breach. In the event of a breach or a threatened breach of the terms of
this Section by Consultant, the Company shall, in addition to all other remedies, be
entitled to a temporary or permanent injunction or a decree for specific performance, in
accordance with the provisions hereof, without showing any actual damage or that monetary
damages would not provide an adequate remedy and without any bond or other security being
required.

     7. Independent Contractor. The Company and Consultant hereby expressly acknowledge
and agree that (a) Consultant is to provide certain services set forth in Section 3(b) to the
Company in the capacity of independent contractor and not as employee of the Company and the
Company is to have no right to control or direct the manner in which such services are to be
performed and (b) Consultant is not authorized to enter into any contract or agreement on behalf of
the Company or any other affiliate of the Company without the prior written authorization of such
party. Consultant agrees to make no representation to any person or entity inconsistent in any
manner with the provisions of the preceding sentence.

     8. Notice. All notices, requests, consents, directions and other instruments and
communications required or permitted to be given under this Agreement shall be in writing and shall
be deemed to have been duly given if (i) delivered personally, (ii) mailed first-class, postage
prepaid, registered or certified mail, or (ii) sent by overnight courier, telegram, telex,
facsimile, telecommunication or other similar form of communication (with receipt confirmed), as
follows:

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	 	To the Company:
	 	Tesoro Corporation
	

	 	 	 	Attention: Chief Executive Officer
	

	 	 	 	300 Concord Plaza
	

	 	 	 	San Antonio, Texas 78216
	 
	 	 	 	 
	

	 	To Consultant:
	 	Thomas E. Reardon
	

	 	 	 	105 Park Ridge
	

	 	 	 	Boerne, Texas 78006

or to such other address and to the attention of such other person(s) or officer(s) as any party
may designate by written notice. Any notice mailed shall be deemed to have been given and received
on the third business day following the day of mailing. Any notice sent by overnight courier,
telegram, telex, facsimile, telecommunication or other similar form of communication (with receipt
confirmed) shall be deemed to have been given and received on the next business day following the
day such communication is sent.

     9. Nonassignment. This Agreement is personal to Consultant and to the Company and
shall not be assigned by either party without the other’s written consent.

     10. Further Assurances. Each party hereto agrees to perform such further actions, and
to execute and deliver such additional documents, as may be reasonably necessary to carry out the
provisions of this Agreement.

     11. Severability. In the event that any of the provisions, or portions thereof, of
this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the
validity and enforceability or the remaining provisions, or portions thereof, shall not be affected
thereby.

     12. Governing Law. This Agreement shall be governed and construed under and
interpreted in accordance with the laws of the State of Texas without giving effect to the doctrine
of conflict of laws.

     13. Entire Agreement; Interpretation. This Agreement constitutes the entire agreement
of the parties, and supersedes all prior agreements, oral or written, with respect to any
consulting arrangement between the Company and Consultant. No change or modification of this
Agreement shall be enforceable unless contained in a writing signed by the party against whom
enforcement is sought. No presumption shall be construed against the party drafting this
Agreement.

     14. Consultant’s Representations. Consultant represents and warrants that:

     (a) he is free to enter into this Agreement and to perform each of the terms and
covenants contained herein;

     (b) he has been advised by legal counsel as to the terms and provisions hereof and the
effect thereof and fully understands the consequences thereof;

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     15. Waiver. The failure of any party to insist, in any one or more instances, upon
strict performance of any one or more of the provisions, terms and conditions of this Agreement, or
to exercise any right or rights hereunder shall not be construed as a waiver thereof, and any and
all such provisions, terms, conditions and rights shall continue and remain in full force and
effect.

     16. Non-Competition. Consultant hereby covenants and agrees that, for so long as this
Agreement is in force, Consultant will not compete with the Company in the United States unless he
has received prior written approval from the Company, which approval shall be in the sole and
absolute discretion of the Company. For purposes of this Agreement, the term “compete” shall
include (a) providing consulting services of a nature similar to those services to be provided
under this Agreement and (b) engaging in activities of a nature similar to those conducted by the
Company. In the event of a breach or a threatened breach of the terms of this Section by
Consultant, the Company shall, in addition to all other remedies, be entitled to a temporary or
permanent injunction or a decree for specific performance, in accordance with the provisions
hereof, without showing any actual damage or that monetary damages would not provide an adequate
remedy and without any bond or other security being required. In the event of litigation to
enforce this covenant, the courts are hereby specifically authorized to reform this covenant as and
to the extent, but only to such extent, necessary in order to give full force and effect hereto to
the maximum degree permitted by law.

[SIGNATURES ON FOLLOWING PAGE]

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

	 	 	 	 	 
	 	TESORO CORPORATION

 	 
	 	By:  	/s/ BRUCE A. SMITH	 
	 	 	Bruce A. Smith 	 
	 	 	Chairman of the Board of Directors,

President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	CONSULTANT

 	 
	 	By:  	/s/
THOMAS E. REARDON	 
	 	 	Thomas E. Reardon 	 
	 	 	 	 
	 

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Exhibit 10.1

AMENDMENT NO. 1 TO

HYPERION SOLUTIONS CORPORATION

EMPLOYEE STOCK PURCHASE PLAN

(as amended and restated as of November 10, 2003)

     WHEREAS, Hyperion Solutions Corporation (the “Corporation”) maintains the Employee Share
Purchase Plan, as amended (the “Plan”), to promote the interests of the Corporation by providing
eligible employees with the opportunity to acquire a proprietary interest in the Corporation
through participation in a payroll-deduction based employee stock purchase plan designed to qualify
under Section 423 of the Internal Revenue Code of 1986, as amended;

     WHEREAS, pursuant to the Article of the Plan entitled “Effective Date and Term of the Plan,”
the Board of Directors of the Corporation (the “Board”) is vested with the authority to modify
certain terms of the Plan, including extending the term of the Plan; and

     WHEREAS, the Corporation now deems it expedient to extend the term of the Plan until May 1,
2006.

     NOW, THEREFORE, the Plan is hereby amended, effective March 1, 2005, by deleting Paragraph B.
of the Article of the Plan entitled “Effective Date and Term of the Plan” and inserting the
following as Paragraph B.:

     “B. Unless sooner terminated by the Board, the Plan shall terminate upon the earliest of (i)
May 1, 2006, (ii) the date on which all shares available for issuance under the Plan shall have
been sold pursuant to purchase rights exercised under the Plan or (iii) the date on which all
purchase rights are exercised in connection with a Corporate Transaction (unless the Plan is
continued or assumed by the surviving corporation after such Corporate Transaction). No further
purchase rights shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following its termination.”

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