THIS AGREEMENT made as of the 26th day of January, 2000, by and between Tosco
Corporation, a Nevada corporation ("TOSCO"), and Thomas D. O'Malley (the
"Executive").
W I T N E S S E T H:
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WHEREAS, the Executive is a key employee of Tosco; and
WHEREAS, Tosco deems it important and appropriate to assure to itself
the continued availability of certain services and assistance of Executive; and
WHEREAS, Executive is willing to perform certain services for, and to
make certain information available to, Tosco as Tosco may request, provided
Executive is appropriately compensated in the event his employment by Tosco
terminates.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, Tosco and the Executive agree as follows:
1. If during the term of this Agreement:
(a) Executive's employment with Tosco terminates, the Executive
shall be entitled to the benefits provided in Section 3(a) hereof, unless such
termination is (i) due to Executive's death or Disability (as hereinafter
defined), (ii) by Tosco for Cause (as hereinafter defined) or (iii) by the
Executive other than for Good Reason (as hereinafter defined);
(b) a Change of Control takes place, the provisions of Section
3(b) shall control in lieu of the provisions of Section l(a) above.
2. When used in this Agreement:
(a) "Cause" shall mean the material and intentional failure by
the Executive to substantially perform his duties as an employee of Tosco (other
than by reason of Disability or for Good Reason) after a written demand for
substantial performance is delivered to the Executive by the Board of Directors,
which demand specifically identifies such failure and provides a reasonable time
in which to perform; actual (as distinguished from statutory) fraud; intentional
misappropriation of material property of Tosco to the Executive's own use;
embezzlement of material property from Tosco; or substantial damage to property
of Tosco which property is material to Tosco's operations and which damage
results from an action by the Executive which intentionally causes such damage.
The burden of proving Cause shall be on Tosco. It is specifically agreed that
Cause shall not include any act of commission or omission by the Executive in
the exercise of the Executive's business judgment as an employee of Tosco or as
a member of the Board of Directors of Tosco.
(b) "Disability" shall mean Executive's incapacity due to
physical or mental illness resulting in his absence from full-time performance
of his functions for a period in excess of six (6) consecutive months.
(c) "Good Reason" shall mean, without Executive's express written
consent, any of the following:
(i) the assignment of Executive of duties inconsistent with
or of a lesser nature than his present position or a significant
reduction in the nature of Executive's responsibility;
(ii) a reduction in the fixed elements, or change in the
method of calculation of the variable elements that would reduce
the amount receivable, of the Executive's annual compensation;
(iii) the relocation of Executive's office to a location
more than 50 miles from the area where such offices are presently
located; or
(iv) Tosco shall have given notice pursuant to Section 6
hereof that it does not wish to extend the term of this
Agreement.
In the event Executive has attained the age of 55 years and terminates his
employment with Tosco, such voluntary termination of employment by Employee
shall be deemed, for purposes of this Agreement, to be termination for "Good
Reason", provided Executive agrees in writing to provide to Tosco at no further
expense to Tosco (except for payment of reasonable expenses), as Tosco may
reasonably request from time-to-time, information with respect to, or of a
similar nature to, Executive's duties at Tosco.
3. (a) Following the termination of the Executive's employment as
provided in Section 1(a) hereof, Tosco shall pay to the Executive a lump sum
severance payment (the "Lump Sum Severance Payment"), no later than five (5)
days after such termination, in an amount equal to thirty-six (36) months
multiplied by his monthly base salary then in effect [but not reduced by any
amount that could have constituted "Good Cause" under Sec. 2(c)ii], exclusive
of any bonuses.
(b) In the event Executive's employment with Tosco terminates in
conjunction with or following a change of control, Tosco shall pay to the
Executive a lump sum severance payment (the "Lump Sum Severance Payment"), no
later than five (5) days after such termination, in an amount equal the amount
set forth in 3(a) above plus three (3.0) times the annual average of Executive's
bonuses attributable to the two calendar years preceding termination.
(c) In the event that the employment of the Executive by Tosco is
terminated by reason of the provisions of paragraph 1(a) hereof, or if there has
been a Change of Control, all options or shares of stock which have been granted
or issued to the Executive by Tosco which are not vested or are subject to
restrictions at the time of termination shall vest immediately upon such
termination in the event of a termination pursuant to paragraph l(a) hereof, or
upon the date of Change of Control in the event of a Change in Control, and such
restrictions shall lapse. The amounts to be received by the Executive pursuant
to clauses (a) or (b) of this Section 3 and options and shares which become
vested pursuant to the provisions of this Section 3(c) are collectively referred
to herein as the "Total Severance Payments".
(d) If the Executive shall resort to any action or proceeding to
recover any amount from Tosco which Tosco has failed to pay as provided in this
Section 3 and the Executive shall be awarded any amounts in any such action or
proceeding, Tosco shall promptly pay and reimburse to the Executive all of the
costs and expenses (including attorneys' fees) incurred by the Executive in and
with respect to such action or proceeding.
(e) For the purposes of this Agreement, "Change of Control" shall
be deemed to have occurred if:
(i) any "person" or "group" (as defined in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than fifty percent (50%) of Common Stock of
Tosco. Common Stock of Tosco shall be computed on a fully diluted
basis and shall include the outstanding common stock par value of
$.75 per share of Tosco and all shares of common stock of Tosco
underlying outstanding convertible securities and warrants of
Tosco; or
(ii) the stockholders of Tosco approve (A) a merger or
consolidation of Tosco with any other corporation except a merger
or consolidation (an "Acquisition Transaction") which would
result in the voting securities of Tosco publicly outstanding
immediately prior thereto continuing to represent fifty percent
(50%) or more of the combined publicly traded voting power of the
voting securities of Tosco or such surviving entity outstanding
immediately after such merger or consolidation, or (B) a plan of
complete liquidation of Tosco or (C) the sale or disposition by
Tosco, directly or indirectly, of the Avon Refinery or a
substantial portion of its assets; or
(iii) there is a change in the composition of the Board of
Directors of Tosco by other than the individuals who constitute
the Board of Directors on the date hereof (the "Incumbent Board")
and individuals elected or nominated by a vote of the Board
constituting at least one person more than one-half of the
Incumbent Board (which individuals shall then be considered the
Incumbent Board) so that the Incumbent Board shall not constitute
a majority of the Board of Directors of Tosco after such
transaction.
4. Notwithstanding anything to the contrary, in the event that any
payment or benefit received or to be received by the Executive in connection
with the termination of his employment whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with Tosco (collectively
with his Total Severance Payments herein called ("Total Payments"), would not be
deductible, in whole or part, as a result of Section 280G of the Internal
Revenue Code of 1986, as hereafter amended (the "Code"), by Tosco, the Total
Severance Payments or Total Payments shall not be reduced. In the event
Executive is subject to an excise tax or penalty tax as a result of the receipt
of Total Severance Payments or Total Payments ("Excise Tax"), Tosco shall pay an
additional amount to Executive such that the net amount realized by Executive
after payment of any Excise Tax shall be equal to the amount Executive would
have realized, after tax, in the absence of such Excise Tax.
5. The Executive shall not be required to mitigate the amount of any
payment provided for in Section 3 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in Section 3 be reduced
by any compensation earned by the Executive as the result of the employment by
another employer, by retirement benefits, by offset against any amount claimed
to be owed by Executive to Tosco or otherwise.
6. This Agreement shall commence on the date hereof and shall continue
in effect for one (1) year from the date hereof; provided, however, that
commencing on the anniversary of this Agreement and each anniversary thereafter,
this Agreement shall automatically be extended for one additional year, unless
not later than six months prior to any anniversary, Tosco shall have given
notice to the Executive that it does not wish to extend this Agreement.
7. The terms of this Agreement shall supersede and replace any
employment or severance agreement which the Executive may have with Tosco or
and upon execution of this Agreement any such other employment agreement shall
be terminated and of no further force or effect. Nothing in this Agreement shall
be construed to be a commitment or guarantee of future employment with Tosco.
8. (i) Tosco 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 Tosco to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that Tosco would be
required to perform it if no such succession had taken place. Failure of Tosco
to obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from Tosco in the same amount and on the same terms to which the
Executive would be entitled hereunder if the Executive terminates his employment
for Good Reason upon a Change of Control.
(ii) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder if he had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee
or other designee or, if there is no such designee, to his estate.
9. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or when mailed by
United States certified or registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt:
To the Corporation: Tosco Corporation
72 Cummings Point Road
Stamford, CT 06902
To the Executive: Thomas D. O'Malley
Horse Island
Mead Point
Greenwich, CT 06830
10. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Executive and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Connecticut without
regard to its conflicts of law principles. All references to sections of the
code shall be deemed also to refer to any successor provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of Tosco
under Section 3 shall survive the expiration of the term of this Agreement.
11. Subject to the last sentence of this Section 11, after the date
hereof the Executive shall not become a member of the board of directors of or
perform a similar function with any other entity without the prior approval of
the Tosco Committee on Audit, Ethics, and Conflicts of Interest, which approval
shall not be unreasonably withheld. In the event that such approval is given,
the Executive confirms that the performance of his duties and obligations as an
employee of Tosco shall not be interfered with by his obligations to such other
board of directors or entity. In no case shall the Executive assume any position
with any entity which-shall violate the Conflicts of Interest policy of Tosco (a
copy of which has been received) or cause the Executive to divulge any
confidential information relating to Tosco or any affiliated entity. Approval of
the Committee on Audit, Ethics, and Conflicts of Interest shall not be required
for the Executive to become a member of the board of directors of, or perform a
similar function with, family, small private, non-profit, civic, or charitable
entities.
12. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
13. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officers,
employee or representative of any party hereof; and any prior agreement of the
parties hereto in respect of the subject matter contained herein is hereby
terminated and canceled.
15. Any controversy or claim arising out of or relating to this
Agreement, the interpretation thereof, or the breach therefor, shall be
submitted to arbitration and such arbitration shall follow the provisions of
Connecticut law governing arbitration.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
TOSCO CORPORATION
By:
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Chairman, Compensation Committee President
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Thomas D. O'Malley
Executive
SCHEDULE OF SIMILAR AGREEMENTS
Jefferson F. Allen
Wilkes McClave