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Exhibit 10.34
EXECUTIVE CHANGE IN CONTROL
SEVERANCE AGREEMENT
THIS EXECUTIVE CHANGE IN CONTROL SEVERANCE AGREEMENT
(“Agreement”), effective as of July 30th, 2007
(the “Effective Date”), by and between Frontier Oil
Corporation, a Wyoming corporation (the “Company”), and
Michael F. Milam (the “Executive”).
WITNESSETH:
WHEREAS , the parties desire to enter into this Agreement;
and
WHEREAS , the parties agree that on and after the Effective
Date and prior to a Change in Control (as defined below) the
Executive is an “at will” employee of the
Company;
NOW, THEREFORE , in consideration of the premises and
covenants herein contained and other good, valuable and binding
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
Operation of Agreement.
1.01
This
Agreement is effective as of the Effective Date. Unless
terminated earlier as provided herein, this Agreement shall
terminate on the third anniversary of the Effective Date; provided,
however, if a Change in Control (as defined below) of the Company
occurs during the term of this Agreement, the term of this
Agreement automatically shall terminate on the eighteen month
anniversary of the effective date of the Change in Control (the
“CiC Date”), regardless of the length of the term
remaining as of the CiC Date. Notwithstanding any
provision of this Agreement to the contrary, termination of this
Agreement shall not alter or impair any rights or benefits of the
Executive (or his estate or beneficiaries) that have arisen under
this Agreement on or prior to such termination, including any
contingent rights under paragraph 1.03.
1.02
For
the purpose of this Agreement, the term “Change in
Control” of the Company means the occurrence of any one of
the following on or after the Effective Date:
(a)
the
consummation of any transaction (including without limitation, any
merger, consolidation, tender offer, or exchange offer) the result
of which is that any individual, entity, group or
“person” (as such term is used in Sections 13(d)(3) and
14(d)(2), of the Securities Exchange Act of 1934 (the
“Exchange Act”)) , other than the
Company, a subsidiary or an employee benefit plan of either,
becomes the “beneficial owner” (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of stock and/or securities of the Company representing
25% or more of the combined voting power of the Company’s
then outstanding voting securities,
(b)
a
change in the composition of the Board of Directors of the Company,
as a result of which fewer than a majority of the non-employee
directors are Incumbent Directors. “Incumbent
Directors” shall mean non-employee directors who either (A)
are non-employee Directors as of the date the Plan is adopted, or
(B) are elected, or nominated for election, thereafter to the Board
of Directors with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination,
but “Incumbent Director” shall not include an
individual whose election or nomination is in connection with (i)
an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934) or an actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board of Directors or (ii) a plan or agreement to replace a
majority of the then Incumbent Directors,
(c)
the
consummation of the sale, lease, transfer, conveyance or other
disposition (including by merger or consolidation) in one or a
series of related transactions, of all or substantially all of the
assets of the Company and its subsidiaries, taken as a whole (other
than to an entity wholly owned, directly or indirectly, by the
Company), unless, following such transaction all or substantially
all of the persons who were the beneficial owners of the
outstanding voting stock and securities of the Company immediately
prior to such transaction beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding voting stock
and securities of the entity resulting from such transaction in
substantially the same proportions as immediately prior to such
transaction, or
(d)
the
adoption of a plan relating to the liquidation or dissolution of
the Company.
1.03
Except
as provided below, this Agreement automatically shall terminate in
the event the Executive ceases for any reason to be an employee of
the Company and its affiliates prior to a Change in Control;
provided, however, if the Executive’s employment is
terminated during the six-month period preceding a Change in
Control that would have occurred during the term of this Agreement
but for the termination of this Agreement upon the
Executive’s termination of employment, and if his termination
would have qualified as a Termination of Employment under paragraph
7.02(a) or paragraph 7.02(b)(ii) (without regard to the 30/60 day
periods provided in paragraph 7.02(b)(ii)), then within 30 days of
such Change in Control the Company shall pay the Executive a lump
sum amount equal to 1.5 (one and one half) times the sum of (i) his
annual Base Salary, (ii) the annual Target Bonus amount, and (iii)
in recognition of the benefits and perquisites described in
paragraphs 5.02 and 4.03, an amount equal to 30% of his annual Base
Salary. Further, if at the time of his termination of
employment the Executive held any equity-based compensation awards
that were forfeited by the Executive upon such termination, the
Company shall pay the Executive a lump sum amount equal to the sum
of the Fair Market Value of the shares subject to such forfeited
awards less the sum of the exercise prices, if any, of such awards;
provided, however, with respect to any such forfeited award that
was a stock option, the Company, in its sole discretion, may, in
lieu of a cash payment with respect to such forfeited stock option,
reinstate and fully vest such stock option in which event such
reinstated stock option shall continue for the remainder of its
full term notwithstanding the Executive’s earlier termination
of employment. Solely for the purpose of this paragraph,
Fair Market Value shall mean the reported closing price of the
common shares of the Company on the date of the Change in
Control. In addition, any stock options held by the
Executive on the CiC Date shall remain exercisable for the
remainder of their terms as if the Executive’s employment had
not terminated.
1.04
Nothing
in this Agreement shall operate or be construed to create any right
or duty on the part of the Company or the Executive to remain in
the employment of the Company for any period of time prior to the
date of a Change in Control, each reserving all rights to terminate
the “at will” employment relationship of the Executive
at any time prior to a Change in Control.
2.
Period of Employment.
2.01
If
a Change in Control occurs during the term of this
Agreement, the Company agrees to continue the Executive in its
employ for the period set forth in paragraph 2.02 below (the
“Period of Employment”) in the position and with the
duties and responsibilities set forth in Section 3 below, and upon
the other terms and conditions hereinafter provided.
2.02
Subject
to (i) the provisions of Section 6 below, (ii) the termination of
the Executive by the Company for Cause or (iii) a termination by
the Executive other than pursuant to Section 7.02(b), the Period of
Employment shall continue for a period of eighteen months from the
CiC Date.
3.
Position, Duties, Responsibilities.
3.01
During
the Period of Employment, the Executive shall continue to serve as
the Vice President and Refinery Manager of Frontier Refining Inc.
and continue to have the duties and responsibilities of such
position that the Executive possessed immediately prior to the CiC
Date.
3.02
During
the Period of Employment, the Executive shall also serve and
continue to serve, if and when elected and reelected, as an officer
or director, or both, of any affiliate of the Company.
3.03
Throughout
the Period of Employment, the Executive shall devote his full time
and undivided attention during normal business hours to the
business and affairs of the Company, except for reasonable
vacations, illness or incapacity; however, nothing in this
Agreement shall preclude the Executive from (i) devoting reasonable
periods required for serving as a director or member of a committee
of any organization that does not involve a conflict of interest
with the interests of the Company, (ii) engaging in charitable and
community activities, and (iii) managing his personal investments,
provided that such activities do not materially interfere with the
regular performance of his duties and responsibilities under this
Agreement. The Board of Directors of the Company shall
give the Executive written notice of any such activities that it
believes materially interfere with his duties hereunder and provide
the Executive with a reasonable period of time to correct such
activities.
3.04
During
the Period of Employment, the Executive shall be based at the
Cheyenne, Wyoming refinery. The Executive shall not be
required to be absent from the office on travel status or otherwise
more than a total of 60 business days in any calendar year nor more
than 20 consecutive days at any one time.
4.
Compensation, Compensation Plans, Perquisites.
4.01
During
the Period of Employment, the Executive shall be:
(a)
paid
an annual base salary at no less than the rate in effect
immediately prior to the CiC Date, with increases (if any) as shall
be made from time to time thereafter in accordance with the
Company’s regular salary administration practices for key
executives (“Base Salary”); and
(b)
provided
an annual bonus opportunity in an amount no less than 35% of his
Base Salary (“Target Bonus”).
Any
increase in Base Salary or the Target Bonus or other
compensation shall in no way diminish any other obligation of
the Company under this Agreement.
4.02
During
the Period of Employment, the Executive shall continue to be
eligible to participate in the Company’s equity-based
compensation plans and all other compensation and incentive plans
and programs in which the Executive participates immediately prior
to the CiC Date (or equivalent successor plans that may be adopted
by the Company), including, without limitation, an annual bonus
plan, and the Executive shall be provided thereunder with at least
the same reward opportunities in the aggregate that were provided
to the Executive immediately prior to the CiC Date, unless there
has been a material diminution in the Executive’s performance
or duties. Nothing in this Agreement (i) shall be construed as
requiring the Executive to receive during the Period of Employment
payments or benefits under such equity, compensation and incentive
plans or programs that are at least equal to those the Executive
received thereunder immediately prior to the CiC Date, it being the
intent of the parties that the payments and benefits provided
thereunder shall be subject to being earned by the Executive under
the then existing criteria for awards under such plans and
programs, which criteria shall be based on substantially the same
performance standards and criteria used by the Company immediately
prior to the CiC Date, or (ii) shall preclude improvement of any
reward opportunities in such plans or other plans or programs in
accordance with the practice of the Company.
4.03
During
the Period of Employment, the Executive shall be entitled to
perquisites, including, without limitation, an office, secretarial
and clerical staff, and to fringe benefits, including, without
limitation, the payment or reimbursement of club dues, in each case
at least equal to those provided to the Executive immediately prior
to the CiC Date, as well as to reimbursement, upon proper
accounting, of reasonable expenses and disbursements incurred by
him in the course of his duties.
5.
Employee Benefit Plans.
5.01
The
compensation and other matters provided for in Section 4 above are
in addition to the benefits provided for in this Section
5.
5.02
During
the Period of Employment, the Executive, his dependents and
eligible beneficiaries shall be entitled to all coverage,
participation, payments and benefits, including service credit for
benefits, to which officers of the Company, their dependents and
beneficiaries are entitled under the terms of the employee benefit
plans and practices of the Company in effect immediately prior to
the CiC Date, including, without limitation, the Company’s
qualified and nonqualified retirement programs, 401(k) and profit
sharing plans, the Frontier Oil Corporation Executive Life
Insurance Plan, group life insurance plans, accidental death and
dismemberment insurance, business travel insurance, long term
disability, medical, dental and health and other welfare benefit
plans and any successor benefit plans and practices of the Company
and its affiliates for which officers, their dependents and
beneficiaries are eligible.
5.03
Nothing
in this Agreement shall preclude the Company during the Period of
Employment from amending or terminating any perquisites provided to
the Executive or any of its employee benefit plans or practices in
which the Executive participates, provided that in the event of any
such amendment or termination, the Executive shall be entitled
during the remaining Period of Employment to perquisites and
benefits (and service credit for benefits) in one or more successor
plans or arrangements that are at least as comparable in the
aggregate to those he received immediately prior to the CiC
Date.
6.
Effect of Death or Disability.
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