Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Vec Dec 1997 10-K 76± 365K
2: EX-4.2 Amended and Restated Credit Agreement 58± 239K
3: EX-10.12 Employment Agreement - Weg 10± 39K
4: EX-10.13 Employment Agreement - Ecb 9± 35K
5: EX-10.14 Management Stability - Gck 8± 37K
6: EX-10.15 Schedule of Management Stability Agreements 1 7K
7: EX-11.1 Computation of Earnings Per Share 2± 10K
8: EX-21.1 Vec Subsidiaries 1 6K
9: EX-23.1 Consent of Arthur Andersen LLP 1 7K
10: EX-27.1 Financial Data Schedule 1997 1 9K
11: EX-27.2 Restated Financial Data Schedule 1996 1 7K
12: EX-27.3 Restated Financial Data Schedule 1995 1 7K
EX-10.13 — Employment Agreement – Ecb
Exhibit 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is between Valero Refining and
Marketing Company, a Delaware corporation ("Valero"), and Edward C. Benninger,
a resident of San Antonio, Texas, ("Benninger"). This Agreement is effective
on the day that all of the capital stock of Valero is distributed by Valero
Energy Corporation ("VEC") to its stockholders ("Effective Date"). Valero and
Benninger are sometimes referred to herein individually as a "Party", and
collectively as the "Parties". The Parties hereby agree as follows:
1. Employment. Valero hereby employs Benninger as President and
Benninger hereby accepts employment with Valero, subject to the terms and
conditions set forth in this Agreement.
2. Term. Subject to the provisions for termination of employment as
provided in Section 9(a), this Agreement shall be in effect for a period of
two years beginning on the Effective Date and ending on the second anniversary
of the Effective Date ("Initial Period"). If Benninger notifies Valero at
least ninety (90) days prior to the end of the Initial Period of his intention
to extend this Agreement, then this Agreement shall be extended on a
month-to-month basis ("Extension Period"). Benninger may terminate this
Agreement within the Extension Period by giving Valero ninety (90) calendar
days written notice of termination.
3. Compensation. Benninger's compensation during his employment under
the terms of this Agreement and prior to his retirement shall be as follows:
(a) Base Salary. Valero shall pay to Benninger a base salary (the
"Base Salary") of Four Hundred Thousand Dollars ($400,000) per year. In
addition, the Board of Directors of Valero shall in good faith consider
granting annual increases to the Base Salary based upon such factors as
Benninger's performance and the growth and profitability of Valero, but it
shall have no obligation to grant any such increases in compensation. Any
such increase to the Base Salary shall be deemed thereafter to be the Base
Salary; provided, however, based upon the same such factors, the Board of
Directors of Valero may thereafter reduce the Base Salary to an amount that is
not below the amount first set forth above in this Paragraph 3(a). The Base
Salary shall be payable in equal, semi-monthly installments on the 15th day
and last day of each month or at such other times and in such installments as
may be agreed between Valero and Benninger. All payments shall be subject to
the deduction of payroll taxes, income tax withholdings, and similar
deductions and withholdings as required by law.
(b) Bonus. In addition to the Base Salary, Benninger shall be
eligible to receive bonus compensation in such amounts and at such times as
the Board of Directors of Valero shall from time to time determine. In the
year of his retirement, Benninger shall receive a pro-rata share of bonus
compensation in such amount as the Board of Directors of Valero shall
determine at the customary time annual bonuses are determined and paid to
executive officers of Valero.
(c) Stock Option Grant. Benninger shall receive a nonqualified
stock option grant to purchase 110,000 shares of Valero Energy Corporation
common stock, granted on the fifth (5th) business day following approval of
said grant by the Board of Directors of Valero Energy Corporation ("Grant
Date") with an exercise price per share equal to the fair market value of
Valero Energy Corporation common stock on the Grant Date. These options shall
vest at the rate of 50% on the first anniversary of the Grant Date and the
remaining 50% on the second anniversary of the Grant Date, and shall have a
total term of ten years from the Grant Date. These vesting periods shall not
be modified by the accelerated vesting provisions set forth in Paragraph 7(c).
4. Expenses and Benefits. During his employment, Benninger is
authorized to incur reasonable expenses in connection with the business of
Valero, including expenses for entertainment, travel and similar matters.
Valero will reimburse Benninger for such expenses upon presentation by
Benninger of such accounts and records as Valero may from time to time
reasonably require. Valero also agrees to provide Benninger with the
following benefits during employment:
(a) Employee Benefit Plans. Participation in any employee benefit
plans now existing or hereafter adopted by Valero for its executives or other
officers and employees.
(b) Club Memberships. Valero shall reimburse Benninger for all
monthly dues and fees for Benninger's present country club memberships and for
any expenses incurred by Benninger in connection with such club memberships in
representing Valero's interests.
(c) Vacations. Benninger shall be entitled (in addition to the
usual Valero holidays) to a paid vacation for a period in each calendar year
not exceeding five weeks.
(d) Working Facilities. Benninger shall be furnished by Valero
with an office, secretarial help and other facilities and services, including
but not limited to full use of Valero's mail and communication facilities and
services reasonably suitable to his position and reasonably necessary for the
performance of his duties under this Agreement.
(e) Tax Planning. Benninger will be furnished tax planning
services by an independent certified public accounting firm of the type
furnished to executive officers of Valero.
(f) Other. Such other items as Valero shall from time to time
consider necessary or appropriate to assist Benninger in or to provide
incentives or compensation for the performance of his duties under this
Agreement.
5. Positions and Duties. Benninger is employed as President of Valero.
In addition, if requested to do so, Benninger shall serve as President of any
subsidiary or affiliate of Valero. Such duties shall be performed at Valero's
principal place of business in San Antonio, Texas.
6. Extent of Service. Benninger shall, during his employment under the
terms of this Agreement, devote substantially all of his working time,
attention, energies and business efforts to his duties as an employee of
Valero and to the business of Valero generally, and shall not, during the term
of this Agreement, engage in any other business activity whatsoever, whether
or not such business activity is pursued for gain, profit or other pecuniary
advantage; however, this Paragraph 6 shall not be construed to prevent
Benninger from serving as a member of the board of directors of other
companies, or from investing his personal, private assets as a passive
investor in such form or manner as will not require any active services on the
part of Benninger in the management or operation of the affairs of the
companies, partnerships, or other business entities in which any such passive
investments are made.
7. Retirement. Notwithstanding the term and notice provisions of
Paragraph 2, Benninger may retire at any time as President of Valero under the
terms of this Agreement by giving Valero written notice of his intention to
retire 90 days in advance of the designated retirement date. Upon retirement,
and provided that Valero has not terminated Benninger for cause pursuant to
Paragraph 9(a), Benninger shall no longer be employed by Valero, but he shall
have the following rights and obligations:
(a) Working Facilities. Valero shall provide Benninger with
off-site office facilities and secretarial and other office services
reasonably commensurate with Benninger's position as retired President of
Valero. The office facilities and secretarial and other services to be
provided to Benninger following his retirement shall continue for two years
from his retirement date.
(b) Dominion Country Club Membership. Valero will transfer to
Benninger the corporate Dominion Country Club membership currently assigned to
him, with Valero paying or reimbursing any membership transfer fee, and with
Benninger being responsible for all membership dues and fees.
(c) Vesting and Option Exercise Periods. Upon retirement,
Benninger's stock options, stock appreciation rights, restricted stock grants,
performance share awards, and any other similar stock or long-term incentive
rights or benefits previously granted to Benninger, which have not fully
vested, shall immediately fully vest, except for any unvested stock options
granted to Benninger pursuant to Paragraph 3(c). Benninger shall have the
right to exercise any vested stock options, stock appreciation rights,
restricted stock grants, performance share awards, and other similar stock or
long-term incentive rights or benefits for the full remaining term thereof.
Any outstanding performance share award shall be deemed to have been earned at
the target level for the full term.
(d) Retirement Benefits and Supplemental Retirement Benefits.
Benninger shall be entitled to all retirement benefits provided under the
Valero Energy Corporation Pension Plan ("Pension Plan") and Supplemental
Executive Retirement Plan (SERP), with the following supplemental benefits:
(i) retiree medical coverage consistent with coverage amount
and/or deductibles and costs as provided to Valero retirees;
(ii) a total of eight "points" under the SERP to be added to
his years of credited service, or his age, or divided between both in such
proportion that total eight, as he elects at time of retirement. The amount
per month equal to the difference between Benninger's normal monthly
retirement benefit under the Pension Plan and the SERP with the eight added
points shall constitute a supplemental monthly retirement payment, payable at
the time each payment is made under the Pension Plan. The eight "points" will
also be applied to other age or service related benefits.
Benninger shall not be entitled to participate in nor receive the
benefits of any special "window" retirement or early retirement program, if
any, that may be offered to other employees of Valero or subsidiaries at or
about the time of Benninger's giving notice of retirement or actual
retirement; and
(iii) payments under any other employee benefit plan(s),
which are due as a result of separation of service.
8. Death and Disability.
(a) Death. If during the term of Benninger's employment under this
Agreement and prior to the date of retirement Benninger dies, then in addition
to all other employee benefits to which Benninger's estate, spouse or other
beneficiaries may be entitled, Valero shall pay in equal semi-monthly
installments to the beneficiary designated by Benninger, or his estate if no
such beneficiary has been designated in writing to Valero, the Base Salary
which Benninger would have received if he had remained employed to the end of
the Initial Period or if his employment has been extended pursuant to
Paragraph 2, to the end of the Extension Period.
(b) Disability. If during the term of Benninger's employment under
this Agreement Benninger becomes unable to perform his duties as President as
a result of illness or physical injury as defined in Valero's Long Term
Disability Plan, Benninger shall be deemed to have retired and be entitled to
the benefits described in Paragraph 7(b), (c), and (d).
9. Termination by Valero. Valero shall have the right to terminate
Benninger's employment as hereinafter provided.
(a) Termination for Cause. Valero shall have the right to
terminate Benninger's employment under this Agreement for cause. As used
herein, "cause" shall mean and be strictly limited to:
(i) Benninger's conviction of a crime constituting a felony
under federal or state law or involving moral turpitude;
(ii) an illegal act or acts that were intended to and did
defraud Valero; or
(iii) the willful refusal by Benninger to fulfill
responsibilities under this Agreement after written notice of such willful
refusal from the Board and the failure to correct such refusal within 30 days
from the date such notice is given.
If Valero terminates this Agreement pursuant to the provisions of this
Paragraph 9(a): (i) all compensation or other benefits due Benninger pursuant
to Paragraphs 3 and 4 hereto shall be paid by Valero to Benninger to the date
of such termination; and (ii) all supplemental and additional benefits and
rights granted to Benninger at retirement by Paragraph 7 are revoked and
become null and void; and, upon such payment by Valero, all obligations of
Valero to Benninger hereunder shall be totally and completely satisfied, and
Valero shall have no further obligations of any type to Benninger pursuant to
this Agreement.
(b) Termination other than for Cause. Valero shall have the right
to terminate Benninger's employment as President under this Agreement without
cause, and Benninger's employment under this Agreement shall be deemed
terminated upon the giving of 90 days written notice to such effect by Valero
to Benninger. A termination of employment other than as a result of death,
retirement, disability, or in accordance with Paragraph 9(a) shall be deemed a
termination without cause. In the event of termination without cause:
(i) Valero shall pay Benninger in cash a lump sum amount equal
to the product of Benninger's semi-monthly Base Salary being paid to Benninger
at the date of such termination multiplied by the number of semi-monthly pay
periods remaining to the end of the Initial Period (or successive period if
employment has been extended pursuant to Paragraph 2), plus an amount equal to
the highest annual bonus paid to Benninger during the five years preceding the
time of such termination. Such amount shall be paid within five days of
termination;
(ii) Benninger shall receive all the payments and benefits to
which he is entitled pursuant to Paragraph 7(b), (c), and (d).
10. Executive Severance Agreement. In the event Benninger receives any
cash payments under that certain Executive Severance Agreement dated December
15, 1982 between Valero and Benninger, Valero shall be entitled to credit any
cash payments that are made to Benninger pursuant to his Executive Severance
Agreement against any cash payments that it is obligated to make under this
Agreement. Valero agrees that if remuneration or benefits of any form paid to
Benninger by Valero during or after his employment with Valero are excess
parachute payments as defined in Section 280G of the Internal Revenue Code of
1986, as amended ("Code"), and are subject to the 20% excise tax imposed by
Section 4999 of the Code, Valero shall pay Benninger a bonus no later than
seven days prior to the earliest of the due date for the excise tax return or
initial estimated payment, in an amount equal to the excise tax payable as a
result of the excess parachute payment and any additional federal income taxes
(including any additional excise taxes) payable by him as a result of the
bonus, assuming that he will be subject to federal income taxes at the highest
individual marginal rate. It is the intention of the Parties that the bonus
be "grossed up" so that the bonus contains sufficient funds to pay the excise
and all additional federal income taxes due as a result of the bonus payment
so that Benninger will suffer no detriment from the excise tax payable as a
result of the excess golden parachute payments.
11. Disclosure of Confidential Information. Except to the extent
absolutely required in the performance of his duties and obligations to Valero
as expressly authorized herein, or by prior written consent of a duly
authorized officer or director of Valero, Benninger will not, directly or
indirectly, at any time during his employment with Valero, or at any time
subsequent to the termination thereof, for any reason whatsoever, with or
without cause, breach the confidence reposed in him by Valero by using,
disseminating, disclosing, divulging or in any manner whatsoever disclosing or
permitting to be divulged or disclosed in any manner to any person, firm,
corporation, association or other business entity, trade secrets, secret
methods or "Confidential Information" of Valero, nor will Benninger lecture on
or publish articles concerning any trade secrets, secret methods or
"Confidential Information" of Valero. As used herein, the term "Confidential
Information" means any and all information concerning Valero's products,
processes, sources of supply, and services, including information relating to
research, development, inventions, manufacture, purchasing, accounting,
engineering, marketing, merchandising, or the selling of any product or
products to any customers of Valero, disclosed to Benninger or known by
Benninger as a consequence of or through his employment by Valero (or any
parent, subsidiary or affiliated corporations of Valero) including, but not
necessarily limited to, any person, firm, corporation, association or other
business entity with which Valero has any type of agency agreement, or any
shareholders, directors, or officers of any such person, firm, corporation,
association or other business entity, if such information is not generally
known in any industry in which Valero is or may become engaged during the term
of this Agreement. On termination of employment with Valero, all documents,
records, notebooks, or similar repositories of or containing Confidential
Information, including all copies of any documents, records, notebooks, or
similar repositories of or containing Confidential Information, then in
Benninger's possession or in the possession of any third party under the
control of Benninger or pursuant to any agreement with Benninger, whether
prepared by Benninger or any other person, firm, corporation, association or
other business entity, will be delivered to Valero by Benninger.
12. Noncompetition. Benninger recognizes and understands that in
performing the responsibilities of his employment, he will occupy a position
of fiduciary trust and confidence, pursuant to which he will develop and
acquire experience and knowledge with respect to Valero's business. It is the
expressed intent and agreement of Benninger and Valero that such knowledge and
experience shall be used exclusively in the furtherance of the interests of
Valero and not in any manner which would be detrimental to Valero's interests.
Benninger further understands and agrees that Valero conducts its business
within a specialized market segment throughout the United States, and that it
would be detrimental to the interests of Valero if Benninger used the
knowledge and experience which he currently possesses or which he acquires
pursuant to his employment hereunder for the purpose of directly or indirectly
competing with Valero or for the purpose of aiding other persons or entities
in so competing with Valero. In consideration for the benefits herein,
Benninger therefore agrees that so long as he is employed by Valero and for a
period of two years after termination of Benninger's employment, unless he
first secures the written consent of Valero, Benninger will not directly or
indirectly invest, engage or participate in any entity in direct or indirect
competition with Valero's business or contract to do so, other than
investments in amounts aggregating less than 1% in any securities of any
company that is obligated under the 1934 Act to file periodic reports pursuant
to Section 13 thereunder. In the event that the provisions of this Paragraph
12 should ever be deemed to exceed the time or geographic limitations
permitted by applicable laws, then such provisions shall be reformed to the
maximum time or geographic limitations permitted by applicable law.
13. Insurance. Valero may, in its sole and absolute discretion, at any
time after the Effective Date, apply for and procure, as owner and for its own
benefit, insurance on the life of Benninger, in such amounts and in such forms
as Valero may choose. Unless otherwise agreed by Valero, Benninger shall have
no interest whatsoever in any such policy or policies, but Benninger shall, at
Valero's request, submit to such medical examinations, supply such
information, and execute and deliver such documents as may be required by the
insurance company or companies to which Valero has applied for such insurance.
14. Acknowledgment of Benninger. Benninger hereby acknowledges that his
execution of this Agreement is given in consideration of the following, any of
which Benninger acknowledges is adequate consideration:
(i) Valero's employment of Benninger under the terms and conditions
contained herein; and
(ii) The termination by Valero of any previous employment agreement
between Valero and Benninger.
15. Notice. Any notice, request, reply, instruction, or other
communication provided or permitted in this Agreement must be given in writing
and may be served by depositing same in the United States mail in certified or
registered form, postage prepaid, addressed to the Party to be notified with
return receipt requested, or by delivering the notice in person to such Party.
Unless actual receipt is required by any provision of this Agreement, notice
deposited in the United States mail in the manner herein prescribed shall be
effective on dispatch. For purposes of notice, the address of Benninger, his
spouse, any purported donee or transferee or any administrator, executor or
legal representative of Benninger or his estate, as the case may be, shall be
as follows:
Mr. Edward C. Benninger
21 Devon Wood
San Antonio, Texas 78257
The address of Valero shall be:
Valero Refining and Marketing Company
Post Office Box 500
San Antonio, Texas 78292
Attention: General Counsel
Valero and Benninger shall have the right from time to time and at any time to
change their respective addresses and shall have the right to specify as their
respective addresses any other address by giving at least ten days written
notice to the other Party as provided hereby.
16. Termination of other Employment Agreements. On the Effective Date,
all other prior employment agreements between the Parties in effect on the
Effective Date shall terminate and forever be from the date null, void and of
no further force or effect whatsoever, and any and all such agreements shall
be superseded in their entirety by this Agreement.
17. Litigation. In the event litigation shall be brought by either
Party to enforce or interpret any provision contained in this Agreement the
following provisions shall apply:
(a) if Benninger brings such an action, and it is not established
by clear and convincing evidence that Benninger has no meritorious bases for
such action, Valero shall pay all of Benninger's and Valero's legal fees
incurred in connection with such litigation;
(b) in the event Valero brings such an action, and it is not
established by clear and convincing evidence that Benninger has no meritorious
defenses to such action, Valero shall pay all of Benninger's and Valero's
legal fees incurred in connection with such litigation; and
(c) any claim by Valero of a right to terminate this Agreement
pursuant to Paragraph 9(a) which is subjected to litigation must be
established by Valero by clear and convincing evidence.
18. Controlling Law. The execution, validity, interpretation, and
performance of this Agreement shall be determined and governed by the laws of
the State of Texas.
19. Additional Instruments. Valero and Benninger shall execute and
deliver any and all additional instruments and agreements which may be
necessary or proper to carry out this Agreement.
20. Entire Agreement. This Agreement contains the entire agreement of
the Parties. This Agreement may not be changed orally but only by an
agreement in writing signed by the Party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
21. Separability. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Valero and
Benninger shall promptly meet and negotiate substitute provisions for those
rendered and declared illegal or unenforceable, and all the remaining
provisions of this Agreement shall remain in full force and effect.
22. Effect of Agreement. This Agreement shall be binding upon Benninger
and his heirs, executors, legal representatives, successors and assigns, and
Valero and its legal representatives, successors and assigns.
23. Execution. This Agreement may be executed in multiple counterparts
each of which shall be deemed an original and all of which shall constitute
one instrument.
24. Waiver of Breach. The waiver by Valero of a breach of any provision
of the Agreement by Benninger shall not operate or be construed as a waiver by
Valero of any subsequent breach by Benninger. The waiver by Benninger of a
breach of any provision of the Agreement by Valero shall not operate or be
construed as a waiver by Benninger of any subsequent breach by Valero.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date below written.
____________________________________
Edward C. Benninger
Valero Refining and Marketing Company
By:___________________________________
William E. Greehey
Chief Executive Officer
Date: June 18, 1997
Dates Referenced Herein and Documents Incorporated by Reference
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