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SEVERANCE AND NON-COMPETITION AGREEMENT
by and between
CORE-MARK INTERNATIONAL, INC.
and
GARY L. WALSH
Dated as of August 7, 1996
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TABLE OF CONTENTS
PAGE
1. Severance............................................................... 2
2. Acknowledgments......................................................... 2
3. Non-Competition......................................................... 3
4. Confidential Information................................................ 5
5. Employees of the Company................................................ 5
6. Consultants of the Company, Etc......................................... 6
7. Rights and Remedies Upon Breach......................................... 6
8. Severability of Covenants............................................... 7
9. Blue Pencilling......................................................... 8
10. Enforceability in Jurisdictions......................................... 8
11. Amendment and Modification.............................................. 8
12. Notices................................................................. 8
13. Assignment.............................................................. 9
14. Governing Law........................................................... 10
15. Counterparts............................................................ 10
16. Entire Agreement........................................................ 10
SEVERANCE AND NON-COMPETITION AGREEMENT
SEVERANCE AND NON-COMPETITION AGREEMENT, dated as of August 7, 1996,
by and between Gary L. Walsh (the "MANAGEMENT STOCKHOLDER") and CORE-MARK
INTERNATIONAL, INC., a Delaware corporation (the "COMPANY").
WHEREAS, concurrently with the execution of this Agreement, Jupiter
Partners L.P., a Delaware limited partnership ("JUPITER"), is acquiring from the
Company a majority of the common stock, par value $.01 per share, of the Company
(the "COMMON STOCK") in a transaction in which the Management Stockholder is
reducing his indirect interest in the Company in exchange for significant
proceeds;
WHEREAS, concurrently with the execution of this Agreement, the
Company and all of the holders of its Common Stock, including the Management
Stockholder, are entering into a Stockholders Agreement (the "STOCKHOLDERS
AGREEMENT");
WHEREAS, in order to induce the Management Stockholder to continue to
serve as a key employee of the Company, the Company is willing to provide
severance compensation to the Management Stockholder to the extent provided
herein; and
WHEREAS, as a condition to Jupiter's obligation to acquire a majority
interest in the Company pursuant to the Stockholders Agreement, thus resulting
in significant proceeds to the Management Stockholder, the Management
Stockholder has agreed to certain non-competition arrangements as provided
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
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1. SEVERANCE. If the Management Stockholder's employment by the
Company and its subsidiaries is terminated (a) by the Company, other than for
Cause (as defined in Section 3) or (b) due to the resignation of the Management
Stockholder for Good Reason (as defined below), the Company may, in its sole
discretion, continue to pay to the Management Stockholder, for a period of up to
one year following such termination, the Management Stockholder's base salary as
in effect at the effective date of such termination, less such deductions or
amounts to be withheld as required by applicable law and regulations (the
"SEVERANCE"). As used in this Agreement, "GOOD REASON" means (i) a reduction of
such Management Stockholder's base salary payable during any fiscal year by the
Company and its Subsidiaries, (ii) the failure of the Company to pay such
Management Stockholder his base salary or any of his benefits to which he is
entitled to be paid during any fiscal year, if such failure is not cured within
ten days thereof, or (iii) a relocation of such Management Stockholder's
principal base of operation to any location other than a location within 50
miles of San Francisco during the term of such Management Stockholder's
employment with the Company.
2. ACKNOWLEDGMENTS. The Management Stockholder hereby acknowledges
that the agreements and covenants contained in Section 3 (Non-Competition),
Section 4 (Confidential Information), Section 5 (Employees of the Company),
Section 6 (Consultants of the Company), and Section 7 (Rights and Remedies Upon
Breach) of this Agreement are essential to protect the business and goodwill of
the Company. As used in Sections 2, 3, 4, 5 and 6 of this Agreement, the term
"COMPANY" shall be deemed to include the Company and its subsidiaries.
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3. NON-COMPETITION. During (A) the period the Management
Stockholder is an employee of the Company (the "EMPLOYMENT PERIOD") and (B)
provided that the Company has become bound to provide, and for so long as the
Company shall pay, the Severance to such Management Stockholder, for a period of
one year thereafter, if the Management Stockholder's employment with the Company
is terminated by the Company for Cause (as defined below) or terminates as a
result of his resignation other than a resignation for Good Reason, the
Management Stockholder agrees that he shall not in the United States of America
or Canada, or any other geographic region in which the Company is doing business
at the time of such termination, directly or indirectly, (i) engage in any
activities that compete, directly or indirectly, with the Company for the
Management Stockholder's own account; (ii) enter the employ of, or render any
services to, any person engaged, directly or indirectly, in such activities in
any capacity that involves engaging, directly or indirectly, in activities that
compete, directly or indirectly, with the Company; or (iii) acquire an active
interest in any person engaged in such activities, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; PROVIDED, HOWEVER,
that the Management Stockholder may own, directly or indirectly, solely as an
investment, securities of any person which are traded on any national securities
exchange or quoted on the NASDAQ National Market System or NASDAQ National List
if the Management Stockholder is not a controlling person of, or a member of a
group which controls, such person, and does not, directly or indirectly, own
more than 1% of any class of securities of such person.
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For purposes of this Agreement, "CAUSE" shall mean (a) a reasonable, good faith
determination by the Board of Directors of the Company (the "BOARD") that the
Management Stockholder has, in any material respect, willfully failed to follow
any of the Company's written policies or any written directives of the Board
(other than by reason of a resignation for Good Reason) and, if such failure is
susceptible of being cured as reasonably determined by the Board in good faith,
the failure of the Management Stockholder to cure such failure within 10 days of
receiving written notice (stating with specificity the nature of such failure)
from the Board; or (b) any act of gross negligence, willful misconduct, fraud or
personal dishonesty by the Management Stockholder involving the assets of the
Company or any of its affiliates resulting in economic or reputational harm to
the Company, or (c) the conviction of, or a plea of guilty or NOLO CONTENDERE by
the Management Stockholder to, a charge of any crime involving moral turpitude
or a felony; or (d) the breach by the Management Stockholder in any material
respect of any contract or other agreement between the Company or any of its
affiliates and such Management Stockholder and, if such breach is susceptible of
being cured as reasonably determined by the Board in good faith, the failure of
the Management Stockholder to cure such breach within 10 days after receiving
written notice (stating with specificity the nature of such failure) from the
Board. A termination for Cause shall be deemed to have occurred if the
Management Stockholder resigns from his employment with the Company after
committing any act which, with notice or lapse of time or both, would constitute
an event of Cause under the foregoing definition.
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4. CONFIDENTIAL INFORMATION. During and following the Employment
Period, the Management Stockholder agrees that (except as required by law or in
any action or proceeding) he shall keep secret and retain in strictest
confidence, and shall not disclose to others, all confidential information
relating to the Company or learned by the Management Stockholder, directly or
indirectly, from the Company or as a result of his duties with respect to the
Company, and shall not disclose them to anyone, except with the Company's prior
written consent except for information (i) which is or becomes generally
available to the public other than as a result of a disclosure by any person in
violation of any confidentiality agreement, (ii) available to the Management
Stockholder on a non-confidential basis from a source outside of the Company,
which source to the knowledge of the Management Stockholder is not and was not
prohibited from disclosing such information to the Management Stockholder by a
contractual, legal or fiduciary obligation, (iii) rightfully known to the
Management Stockholder outside of the scope of his employment by the Company
without any limitation on use or disclosure prior to receipt thereof from the
Company or (iv) generally made available to third parties without restrictions
on disclosure.
5. EMPLOYEES OF THE COMPANY. During the Employment Period and for
one year thereafter, the Management Stockholder shall not, directly or
indirectly, hire, solicit or encourage to leave the employment of the Company,
any director, officer or employee of the Company, or hire any such person who
has left the employment of the Company within one year of the expiration of the
Employment Period.
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6. CONSULTANTS OF THE COMPANY, ETC. During the Employment Period
and for one year thereafter, the Management Stockholder shall not, directly or
indirectly, hire, solicit or encourage to cease to work with the Company any
consultant then under contract with the Company or any then supplier or customer
of the Company, except that such a consultant may be hired and supplier or
customer dealt with in connection with a business which does not engage in any
activities which are competitive with the Company.
7. RIGHTS AND REMEDIES UPON BREACH. If the Management Stockholder
breaches, in any material respect, any of the provisions of Section 3 (Non-
Competition), Section 4 (Confidential Information), Section 5 (Employees of the
Company) or Section 6 (Consultants of the Company Etc.) of this Agreement
(collectively, the "RESTRICTIVE COVENANTS") and, if such failure is susceptible
of being cured as reasonably determined by the Board in good faith, the
Management Stockholder fails to cure such breach within 10 days of receiving
written notice (stating with specificity the nature of such breach) from the
Company, then the Company shall have the following rights and remedies, each of
which shall be independent of the other and severally enforceable, and all of
which rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or in equity:
(a) SPECIFIC PERFORMANCE. The right and remedy to have the
Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it
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being acknowledged and agreed that any such breach will cause irreparable injury
to the Company and that money damages will not provide adequate remedy to the
Company;
(b) BENEFITS. The right and remedy to require the Management
Stockholder to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits (collectively,
"BENEFITS") derived or received by the Management Stockholder during the period
of his breach of any of the Restrictive Covenants, as the result of any
transactions constituting a breach of any of the Restrictive Covenants, and the
Management Stockholder shall account for and pay over such Benefits to the
Company;
(c) CANCELLATION OF SEVERANCE. The right to terminate all or
part of the Management Stockholder's rights to Severance under Section 1;
(d) CANCELLATION OF OPTIONS. The right to terminate the
Management Stockholder's rights (if any) under the Company's Stock Option Plan
with respect to any options, whether or not then vested; and
(e) CALL OPTION. The right to purchase Common Stock held by the
Management Stockholder or his permitted transferees thereof as provided in
Section 3.1.4 of the Stockholders Agreement.
8. SEVERABILITY OF COVENANTS. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or enforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
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9. BLUE PENCILLING. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision, such court shall have the
power to reduce the duration or scope of such provision, as the case may be,
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
10. ENFORCEABILITY IN JURISDICTIONS. The Company and the Management
Stockholder intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
such Covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company and the Management
Stockholder that such determination not bar or in any way affect the Company's
right to the relief provided above in the courts of any other jurisdiction
within the geographical scope of such Restrictive Covenants, as to breaches of
such Restrictive Covenants in such other respective jurisdictions, such
Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
11. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement signed by the parties
hereto.
12. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
by courier or registered or certified mail (postage prepaid, return receipt
requested) or by
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facsimile to the respective parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to the Management Stockholder, to him at his address set
forth on the stock records of the Company:
with a copy to:
Ronald F. Daitz, Esq.
Weil, Gotshal & Manges LLP
757 Fifth Avenue
New York, New York 10153
Telecopy: (212) 310-8007
(b) If to the Company, to it at:
Core-Mark International, Inc.
395 Oyster Point Boulevard
Suite 415
South San Francisco, CA 94080
Telecopy: (415) 589-4010
Attention: Gary L. Walsh
with copies to:
Jupiter Partners L.P.
30 Rockefeller Plaza
Suite 4525
New York, New York 10019
Attention: John A. Sprague
Telecopy: (212) 332-2828
and
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Richard S. Borisoff
Telecopy: (212) 757-3990
13. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
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14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF
THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. ENTIRE AGREEMENT. This Agreement, including the documents
referred to herein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings
with respect thereto, other than those expressly set forth or referred to
herein.
IN WITNESS WHEREOF, the Company and the Management Stockholder have
executed this Agreement as of the date first above written.
CORE-MARK INTERNATIONAL, INC.
By: /s/ Gary L. Walsh
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Name:
Title:
/s/ Gary L. Walsh
--------------------------------
Gary L. Walsh