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EXHIBIT 10.7
PENNZOIL-QUAKER STATE COMPANY
SALARY CONTINUATION PLAN
I. PURPOSES OF PLAN, DEFINITIONS AND DURATION.
1.1 Purposes. This Salary Continuation Plan (the "Plan") of
Pennzoil-Quaker State Company (the "Company") for selected executives is
intended to reward executives of outstanding competence and ability for past
services by providing benefits to their surviving spouses and dependents in the
event of an executive's death during employment.
1.2 Definitions.
(a) "Company" means Pennzoil -Quaker State Company or any
successor.
(b) "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.
(c) "Board" means the Board of Directors of the Company.
(d) "Closing Date" means the date of Closing described in the
Agreement and Plan of Merger, dated as of April 14, 1998, among
Pennzoil Company, Pennzoil Products Company, Downstream Merger Company
and Quaker State Corporation ("Merger Agreement").
(e) "Employee" means any person, including an officer of the
Company or any Subsidiary (whether or not he is also a director
thereof), who, at the time such person is designated a Participant
hereunder, is employed by the Company or any Subsidiary on a full-time
basis, who is compensated for such employment by a regular salary and
who, in the opinion of the Committee, is one of the key executives of
the Company or any Subsidiary.
(f) "Participant" means an Employee who has been designated
by the Committee to participate in the Plan.
(g) "Spouse" means (1) the surviving spouse of a Participant
who has been married to the Participant for more than one year at the
time of his death and (2) a surviving spouse assigned to receive
benefits under this Plan by the Merger Agreement pursuant to Section
4.4 of this Plan.
(h) "Retirement Plan" means the Pennzoil-Quaker State Company
Salaried Employees Retirement Plan.
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(i) "Normal Retirement Date" means the normal retirement date
under the Retirement Plan.
1.3 Term. The effective date of the Plan is the Closing Date. The Plan
shall continue until terminated by the Board as herein provided.
II. ADMINISTRATION OF THE PLAN - COMMITTEE.
2.1 Appointment of Committee. The Plan shall be administered by the
Compensation Committee or such other committee of the Board as may be
designated by the Board from time to time (the "Committee").
2.2 Committee Powers. The Committee shall be deemed to have and to be
exercising all of the powers of the Board in the performance of any of the
powers and duties delegated to it under the Plan, including, but without
limiting the generality of the foregoing, the selection of Participants. The
Committee may from time to time establish rules for the administration of the
Plan which are not inconsistent with the provisions and purposes of the Plan.
2.3 Committee Action. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. All action taken by the
Committee at a meeting shall be by the vote of a majority of those present at
such meeting, but any action may be taken by the Committee without a meeting
upon written consent signed by all of the members of the Committee. Members of
the Committee may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.
2.4 Committee Determinations Conclusive. The determination of the
Committee as to any disputed question of construction or interpretation arising
under the Plan shall be final, binding, and conclusive upon all persons.
III. ELIGIBILITY OF EMPLOYEES.
3.1 Eligibility Requirements. The Committee may from time to time
establish eligibility requirements for Employees to participate in the Plan.
3.2 Designation of Participants. From time to time during the
continuation of the Plan, the Committee may designate one or more eligible
Employees to participate in the Plan and shall advise each such Employee of his
selection. If a Participant's employment is terminated for any reason his
participation in this Plan shall be terminated.
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IV. SALARY CONTINUATION PAYMENTS.
4.1 Salary Continuation Payable to Spouse. In the event of the death
of a Participant while in the employment of the Company or any Subsidiary, the
Committee shall cause the Company to pay to the Participant's Spouse a Monthly
Salary Continuation Benefit for the remainder of his or her life in an amount
determined under paragraph 4.2 hereof.
4.2 Amount of Monthly Salary Continuation Benefit. The Spouse of a
deceased Participant shall be entitled to receive a Monthly Salary Continuation
Benefit, commencing on the first day of the month following the deceased
Participant's death and continuing for the life of the Spouse, determined under
whichever of the following provisions is then applicable:
(a) Monthly benefits payable before the Normal Retirement
Date of the deceased Participant. The Monthly Salary Continuation
Benefit payable to a Spouse for a month preceding the deceased
Participant's Normal Retirement Date shall be in an amount equal to
55% of the Participant's monthly salary on the date of his death less
amounts received by the Spouse as a Spouse's benefit under the
Retirement Plan and/or under any individual contractual agreement with
the Company, and less any amounts received by her under the U.S.
Social Security Act and less any amounts from any retirement or other
plan or individual contractual agreement of a former employer.
(b) After the deceased Participant's Normal Retirement Date.
The Monthly Salary Continuation Benefit payable to the Spouse of a
deceased Participant on and after his Normal Retirement Date shall
thereafter be changed to an amount equal to the monthly Spouse's
benefit which would have been payable under the Retirement Plan if the
deceased Participant had continued his employment as an Employee of
the Company or any Subsidiary until his Normal Retirement Date, at the
same monthly salary as in effect on the date of his death, and had
died on the day preceding his Normal Retirement Date, less any
Spouse's benefits received by the Spouse from the Retirement Plan
and/or under any individual contractual agreement between the Company
and the Participant, and less any amounts received by her under the
U.S. Social Security Act, and less any amounts from any retirement or
other plan or individual contractual agreement of a former employer.
4.3 Medical Expenses Reimbursement. During the period that an
Employee's Spouse is receiving benefits under Section 4.2 of this Plan, medical
expenses incurred by such Spouse and the eligible dependents of the deceased
Employee and his Spouse shall be reimbursed in the same manner and to the same
extent as if coverage under the Pennzoil-Quaker State Company Medical Expenses
Reimbursement Plan as in effect on the Closing Date had continued in full force
and effect. Any reimbursement of medical expenses pursuant to this Section 4.3
shall be made only if the medical expense, or portion thereof sought to be
reimbursed, is not otherwise reimbursable or paid by another plan or program of
the Company or by U.S. Social Security, Medicare, Medicaid or any
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analogous state or federal program, assuming in all cases that any person
eligible for such otherwise reimbursable expense had properly applied for
reimbursement from such federal or state program.
4.4 Salary Continuation Payments in Respect of Former Employees of
PennzEnergy Company (formerly Pennzoil Company). Benefits payable under the
PennzEnergy Company Salary Continuation Plan (formerly, the Pennzoil Company
Salary Continuation Plan) which were in pay status as of the "Distribution
Date," as defined in the Merger Agreement, will continue under this Plan in
lieu of any further payments under the PennzEnergy Company Salary Continuation
Plan after the Closing Date with respect to the spouse of any former employee
(which person shall be a Spouse under this Plan) who (i) was employed by a
member of the "Downstream Group" as of his date of death, (ii) would have been
classified as a "Downstream Former Employee," or (iii) who is assigned to the
Company under the Merger Agreement, as terms in quotes are defined in the
Merger Agreement.
4.5 Withholding of Taxes. The Company shall deduct from the amount of
all benefits paid to Spouses under the Plan any taxes required to be withheld
by the Federal or any state or local government.
V. RIGHTS OF PARTICIPANTS AND SPOUSES.
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 participant 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 in 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 Nonalienation of Benefits. No benefit when granted under this Plan
shall be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge of any nature, and any attempt to anticipate, alienate,
sell, assign, pledge, encumber or charge the same will be void. No such 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 Spouse shall have any right or
interest in the Plan, or any benefits hereunder, unless and until all the
terms, conditions and provisions of the Plan which affect such Spouse or the
deceased Participant shall have been complied with as specified herein.
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VI. MISCELLANEOUS.
6.1 Amendment or Termination of the Plan. The Board may amend or
terminate this Plan at any time. Any such amendment or termination shall not,
however, affect the rights of the Spouse of any deceased Participant to the
benefits provided hereunder.
6.2 Reliance upon Information. The Board and the Committee shall not
be liable for any decision or action taken in good faith in connection with the
administration of this Plan. Without limiting the generality of the foregoing,
any such decision or action taken by the Board or the Committee in reliance
upon any information supplied to them by an officer of the Company, the
Company's legal counselor or by the Company's independent accountants in
connection with the administration of this Plan shall be deemed to have been
taken in good faith.
6.3 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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