EXHIBIT 10.14
PENNZOIL-QUAKER STATE COMPANY EXECUTIVE SEVERANCE PLAN
(AS AMENDED AND RESTATED EFFECTIVE OCTOBER 4, 2001)
I. PURPOSES OF PLAN AND DEFINITIONS
1.1 Purposes. This Pennzoil-Quaker State Company Executive Severance Plan,
as amended and restated effective October 4, 2001 (the "Plan"), for selected
senior management employees is intended to provide greater incentives to attain
and maintain the high standards of performance, to retain executives of
outstanding competence and ability, to reward such executives for outstanding
performance and to provide protection for loss of salary in the event of
certain changes in control of the Company.
1.2 Definitions.
(a) "Beneficial Owner" has the meaning set forth in Rule 13d-3
promulgated under the Exchange Act.
(b) "Board" means the Board of Directors of the Company.
(c) "Change in Control" has the meaning set forth in Section 4.2.
(d) "Company" means Pennzoil-Quaker State Company or any successor.
(e) "Compensation Committee" means the Compensation Committee of the
Board.
(f) "Good Reason" means the Company's failure to (i) maintain a
Participant's total compensation package at a level competitive with
comparative Company practices; or (ii) maintain a Participant's employment
without materially changing the Participant's duties and responsibilities
as they exist as of the Effective Date of a Change in Control and such
failure is not cured by the Company within ten days after the
Participant's written notice to the Company of such failure to comply.
(g) "Effective Date of a Change in Control" has the meaning set forth
in Section 4.3.
(h) "Employee" means any employee of the Company or any Subsidiary
(whether or not he is also a director thereof), who is compensated for
employment of the Company or any Subsidiary by a regular salary and who is
considered by the Compensation Committee to be a senior management
employee.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Participant" means an Employee who has been selected by the
Compensation Committee to participate in the Plan.
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(k) "Person" has the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that
such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
stock of the Company.
(l) "Subsidiary" means any corporation in which the Company owns,
directly or indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock or any affiliated company which is
controlled by the Company by reason of a management contract and stock
ownership.
II. ADMINISTRATION OF THE PLAN - COMPENSATION COMMITTEE
2.1 Interpretations. The Compensation Committee shall have full power and
authority to interpret, construe and administer this Plan.
2.2 Compensation Committee Determinations Conclusive. All determinations
by the Compensation Committee as to which Employees shall be offered the
opportunity to participate herein shall be final, binding and conclusive upon
all persons. The interpretation adopted by the Compensation Committee with
respect to any provision of the Plan and the effect thereof shall be final,
binding and conclusive upon all persons.
III. ELIGIBILITY OF EMPLOYEES
3.1 Eligibility Requirements. The Compensation Committee shall in its sole
discretion from time to time designate those Employees who are to participate
herein. The foregoing notwithstanding, subject to Section 3.3, an Employee who
is a Participant immediately preceding the effective date of this amendment and
restatement of the Plan shall continue to be a Participant in this Plan as of
such effective date.
3.2 Notification of Participation. Each Employee who is denominated a
Participant herein by the Compensation Committee shall be provided a
participation certification, in the form attached hereto as Exhibit A,
specifying that the Employee is a Participant in this Plan together with a copy
of the Plan.
3.3 Termination of Participation. An Employee's status as a Participant
shall terminate at such time as may be determined by the Compensation
Committee; provided, however, that in the case of an Employee who is a
Participant immediately prior to the Effective Date of a Change in Control,
such Participant's coverage by this Plan may not be terminated without the
consent of the Participant within three years of the Effective Date of such
Change in Control.
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IV. EXECUTIVE SEVERANCE BENEFITS
4.1 Cash Severance Payment. In the event of the termination of a
Participant's employment with the Company and any Subsidiary within three years
following the Effective Date of a Change in Control (i) by the Company or
Subsidiary for any reason other than cause (as defined in Section 4.4) or (ii)
by the Participant for Good Reason, the Company shall pay to such a
Participant, not later than 90 days following the date of his termination of
employment, an amount in cash equal to the product of "A" multiplied by "B",
where:
"A" is equal to three times the sum of (1) the Participant's annual
salary (at a rate equal to the higher of (a) the rate of salary in effect
on the date immediately prior to the Effective Date of a Change in Control
or (b) the annual rate of salary in effect on the date of termination of
employment) and (2) the Participant's highest target annual bonus during
the 12 months preceding his termination of employment; and
"B" is equal to a fraction (not to exceed one), the numerator of
which is the number of days between the date of the Participant's
termination of employment and the date the Participant will attain age 65
and the denominator of which is 1095.
4.2 Change in Control of the Company. For purposes of this Plan, a "Change
in Control" of the Company shall conclusively be deemed to have occurred if an
event set forth in any one of the following paragraphs shall have occurred:
(a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
date hereof, constitute the Board of the Company and any new director
(other than a director whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of
directors of the Company) whose appointment or election by the Board of
the Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was
previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least 50% of the
combined voting power of the
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securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates other than
in connection with the acquisition by the Company or its Affiliates of a
business) representing 35% or more of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed
to have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
4.3 Effective Date of a Change in Control. The "Effective Date of a Change
in Control" shall be:
(a) the first date that the direct or indirect ownership of 35% or
more combined voting power of the Company's outstanding securities results
in a Change in Control as described in Section 4.2(a); or
(b) the date of the election of directors that results in a Change in
Control as described in Section 4.2(b); or
(c) the date of the merger or consideration that results in a Change
in Control as described in Section 4.2(c); or
(d) the date of stockholder approval that results in a Change in
Control as described in Section 4.2(d).
4.4 Termination for Cause. For purposes of this Plan, a termination of
employment for cause shall be considered to have occurred only as specifically
described in this Section 4.4 and shall include termination of employment only
if termination of the Participant's employment is as a result of an act or acts
of dishonesty on the part of the Participant constituting a felony and
resulting or intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company.
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4.5 Medical Benefits Continuation. Any Participant entitled to a Severance
Benefit under this Article IV of the Plan shall be entitled to receive for the
12 months following his termination of employment continued coverage under the
Company's medical benefits plan in which the Participant is participating as of
the Effective Date of a Change in Control at a rate no less favorable than that
in effect on such Effective Date of a Change in Control.
V. RIGHTS OF PARTICIPANTS
5.1 Limitation of Rights. Nothing in this Plan shall be construed to:
(a) give any Employee of the Company or a Subsidiary any right to
participate in this Plan; or
(b) limit in any way the right of the Company or any Subsidiary to
terminate a Participant's employment with the Company or any Subsidiary at
any time; or
(c) give a Participant or any spouse of a deceased Participant any
interest in any fund or any specific asset or assets of the Company or any
Subsidiary; or
(d) be evidence of any agreement or understanding, express or
implied, that the Company or any Subsidiary will employ a participant in
any particular position or at any particular rate of remuneration.
5.2 Non-alienation of Benefits. No right or benefit under this Plan shall
be subject to anticipation, alienation, sale, assignment, pledge, encumbrance
or charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber or charge the same will be void. No right or benefit hereunder shall
in any manner be liable for or subject to any debts, contracts, liabilities or
torts of the person entitled to such benefits.
5.3 Prerequisites to Benefits. No Participant, or any person claiming
through a Participant shall have any right or interest in the Plan, or any
benefits hereunder unless and until all of the terms, conditions and provisions
of the Plan which affect such Participant or such other person shall have been
complied with as specified herein.
VI. MISCELLANEOUS
6.1 Amendment or Termination of the Plan. The Board may amend or terminate
this Plan at any time; provided, however, that the terms of the Plan as in
effect as of the Effective Date of a Change in Control may not be changed in a
manner which would adversely affect the rights of any Employee who, as of the
date immediately prior to such Effective Date of a Change in Control is a
Participant in the Plan.
6.2 Applicable Laws. This Plan shall be construed, administered and
governed in all respects under the laws of the State of Texas.
PENNZOIL-QUAKER STATE COMPANY
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EXHIBIT A
PENNZOIL-QUAKER STATE COMPANY EXECUTIVE SEVERANCE PLAN
PARTICIPATION CERTIFICATE
This Participation Certificate given this ___ day of ___________,
_____, by Pennzoil-Quaker State Company, a Delaware corporation (the
"Company"), to __________________ ("Employee"), with capitalized terms herein
having the meaning assigned to such terms in the Pennzoil-Quaker State Company
Executive Severance Plan, as amended and restated effective October 4, 2001
(the "Plan"), unless otherwise stated.
1. The Compensation Committee hereby designates Employee as a
Participant in the Plan effective as of --------------------.
2. Upon Employee's termination of employment following a Change in
Control of the Company under the circumstances and subject to the terms
and conditions described Article IV of the Plan, Employee will be entitled
to the benefits specified in Section 4.1 of the Plan.
3. Employee's status as a Participant in the Plan may be terminated
by action of the Compensation Committee but only after formal written
notice to the Employee; provided, however, that Employee's status as a
Participant may not be terminated after the Effective Date of a Change in
Control until the expiration of three years from such Effective Date of a
Change in Control.
Compensation Committee
By:
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