EXHIBIT 10.23
Execution Copy
MEMORANDUM OF AGREEMENT
made as of the __th day of May, 1998
B E T W E E N:
CLARK REFINING AND MARKETING, INC.,
a corporation incorporated
under the laws of Delaware
(hereinafter referred to as the "Corporation),
OF THE FIRST PART
- and -
WILLIAM RUSNACK
(hereinafter referred to as the "Executive"),
OF THE SECOND PART.
WHEREAS the Corporation is a wholly-owned subsidiary of Clark USA, Inc.
(hereinafter referred to as "Clark USA");
AND WHEREAS the Board of Directors of the Corporation (the "Board") and the
Board of Directors of Clark USA (the "Clark Board") have determined that it
would be in the best interests of Clark USA and the Corporation to induce the
Executive to accept employment with Clark USA, the Corporation and the
Subsidiaries, by entering into this Agreement relating to the terms of the
Executive's continuing employment, and by indicating that in the event of a
Change in Control, the Executive would have certain automatic and guaranteed
rights;
AND WHEREAS both the Corporation and the Executive wish formally to agree
as to the terms and conditions which will govern the Executive's employment, and
the terms and conditions which will govern the termination or modification of
the employment of the Executive following a Change in Control;
NOW THEREFORE, in consideration of the premises hereof and of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties agree as follows:
ARTICLE I
Recitals
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I.1 The parties agree, and represent and warrant to each other, that the
above recitals are true and accurate
ARTICLE II
Interpretation
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II.1 Unless elsewhere herein otherwise expressly provided or unless the
context otherwise requires, words imparting the singular include the plural and
vice versa and words importing the masculine gender include the feminine and
neuter genders.
II.2 The headings of the Articles, sections, subsections, paragraphs, and
clauses herein are inserted for convenience of reference only and shall not
affect the meaning or construction hereof.
II.3 This Agreement shall be construed in accordance with the laws of the
State of New York, without regard to the conflict of law provisions of any
state. Disputes arising from the operation of this Agreement shall be resolved
by arbitration; provided, however, that disputes arising under Section VI.2 of
this Agreement shall not be resolved by arbitration. In the event that any
dispute which shall be resolved by arbitration, is not able to be resolved by
mutual agreement of the parties within sixty calendar (60) days of the giving of
such notice, the Executive and the Company hereby agree to promptly submit such
a dispute to binding arbitration in New York, New York in accordance with New
York law and the rules and procedures of the American Arbitration Association.
Disputes arising under Section VI.2 of this Agreement shall be litigated in New
York, New York and any action with respect to the arbiter or the arbitration
process (including, but not limited to, the enforcement of the arbiter's
decision) shall be brought in New York, New York. Any judgment from a court in
New York may, thereafter, be filed in any other court having jurisdiction.
II.4 If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party hereto. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
II.5 In this Agreement, unless the context otherwise requires, the
following terms shall have the following meanings, respectively:
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(a) "Affiliate" means (i) any corporation, partnership, joint venture or
other entity during any period in which it beneficially owns at least
thirty percent of the voting power of all classes of stock of the
Corporation entitled to vote; and (ii) any corporation, partnership,
joint venture or other entity during any period in which at least a
fifty percent voting or profits interest is beneficially owned by the
Corporation or by any entity that is an Affiliate by reason of clause
(i) next above.
(b) "Basic Compensation" means the sum of:
(i) the annual salary of the Executive based upon the greater of (A)
the salary paid by or on behalf of Clark USA and the Corporation
for the calendar year ended immediately preceding the Date of
Termination and (B) the salary which would have been payable by
or on behalf of Clark USA and the Corporation to the Executive
(based upon the salary rate in effect immediately preceding the
Date of Termination) for the 12 months immediately following the
Date of Termination; and
(ii) the Executive's target bonus.
(c) "beneficial ownership" shall be determined in accordance with Rule
13d-3 issued under the U.S. Securities Exchange Act of 1934.
(d) "Blackstone" shall mean collectively, The Blackstone Group, Blackstone
Capital Partners III Merchant Banking Fund L.P., and their Affiliates
(other than the Corporation and its Subsidiaries).
(e) "Board" means the board of directors of the Corporation.
(f) "Cause" means:
(i) wilful and continued failure by the Executive to substantially
perform the Executive's duties with the Corporation (other than
any such failure resulting from his incapacity due to physical
or mental illness) after a demand for substantial performance
has been delivered in writing to the Executive by the Chairman
of the Corporation or the person performing the function of the
Chairman of the Corporation, which identifies the manner in
which such officer or person believes that the Executive has not
substantially performed his duties;
(ii) wilful engaging by the Executive in misconduct which is
materially injurious to Clark USA, the Corporation, and their
Subsidiaries, monetarily or otherwise; or
(iii) the conviction of the Executive of any felony;
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provided that no act, or failure to act, on the Executive's part shall be
considered "wilful" unless such act or failure to act by the Executive was
in bad faith and was without reasonable belief by the Executive that such
act or failure to act was in the best interests of Clark USA, the
Corporation, or the Affiliates.
Termination of Executive for Cause shall be made by delivery to Executive
of a copy of a resolution duly adopted by the affirmative vote of not less
than a majority of the directors of Clark USA at a meeting of the Clark
Board called and held for the purpose (after 30 days prior written notice
to Executive and reasonable opportunity for Executive to be heard before
the Board prior to such vote), finding that in the reasonable judgment of
the Clark Board, Executive was guilty of conduct set forth in any of
clauses (i) through (iii) above and specifying the particulars thereof.
(g) "Change in Control" means any transaction the result of which is that
any Person (an "Acquiring Person") other than Blackstone, or a Person,
a majority of whose voting equity is owned by Blackstone, becomes the
beneficial owner, directly or indirectly, of shares of stock of the
Corporation or Clark USA entitling such Acquiring Person to exercise
50% or more of the total voting power of all classes of stock of the
Corporation or Clark USA, as the case may be, entitled to vote in
elections of directors.
(h) "Clark USA" means Clark USA, Inc. and includes any corporation,
partnership, joint venture or other entity that succeeds to the
interests of Clark USA, Inc.
(i) "Corporation" means Clark Refining and Marketing, Inc. and includes
any corporation, partnership, joint venture or other entity that
succeeds to the interests of Clark Refining and Marketing, Inc.
(j) "Date of Termination" means the first date on which the Executive is
employed by neither Clark USA, the Corporation, nor any Subsidiary.
(k) "Disability" means the physical or mental illness of the Executive
resulting in the Executive's absence from his full time duties with
the Corporation for more than six consecutive months.
(l) "Good Reason" means the occurrence of any of the following events
without the Executive's written consent:
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's positions (including
substantial status and offices), authority, duties or
responsibilities, or any other action by the Corporation, in
each case which results in a substantial diminution in such
position, authority, duties or responsibilities, in the salary
amount, or in the amount of the potential bonus opportunity,
previously provided to the Executive;
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(ii) the removal of Executive from the position of Chief Executive
Officer of Clark USA or changing Executive's reporting
obligations in his capacity as Chief Executive Officer of Clark
USA so that he no longer reports to the Clark Board;
(iii) the removal of Executive from the Clark Board or Clark USA's
failure to use its best efforts to elect Executive to the Clark
Board or to vote its shares in favor of electing Executive to
the Board; or
(iv) the Corporation requiring the Executive to be based at any
office or location other than in the Greater St. Louis Area; or
(v) any other action by the Executive's employer purporting to the
result in a Date of Termination other than for Cause, Disability
or death.
(m) "Greater St. Louis Area" means any location within 30 miles (traveling
by automobile) of 8182 Maryland Avenue, St. Louis, Missouri.
(n) "Group" means any person or company acting jointly or in concert with
any other person or company and for such purposes "acting jointly or
in concert" shall be interpreted in accordance with subsection 91(a)
of the Securities Act (Ontario).
(o) The term "Person", when capitalized, shall mean any person, and shall
also include two or more persons acting as a partnership, limiting
partnership, syndicate, or other group for the purpose or with the
effect of changing or influencing the control of Clark USA. The
provisions of this paragraph (o) shall be interpreted based on the
interpretations of the comparable provisions of Section 13 and 14 of
the U.S. Securities Exchange Act of 1934 and the rules thereunder.
(p) "Subsidiary" means any corporation, partnership, joint venture or
other entity during any period in which at least a fifty percent
voting or profits interest is beneficially owned by the Clark USA.
(q) "Voting Power of Clark USA" shall mean the total voting power of the
outstanding capital stock of Clark USA.
ARTICLE III
Agreement Term
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III.1 Subject to the automatic extension discussed below in this Article
III.1, the "Agreement Term" shall be the period beginning on the Agreement Date,
and ending on the fourth anniversary of the Agreement Date. On the fourth
anniversary of the Agreement Date and on each anniversary date thereafter
(including the period during which this Agreement is extended), the Agreement
Term shall automatically be extended by one additional year unless, not less
than 30 days prior to any such anniversary, either the Corporation or the
Executive shall
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have given written notice to the Executive or the Corporation, as applicable,
that the Agreement Term will not be extended.
III.2 If a Change in Control occurs during the Agreement Term, and at
the time the Change in Control, less than two years remains in the Agreement
Term, the Agreement Term shall be automatically extended to the second
anniversary of the Change in Control.
ARTICLE IV
Employment
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IV.1 During the Agreement Term, the Corporation agrees to continue the
Executive in its employ, in accordance with the terms and provisions of this
Agreement, in accordance with the following:
(a) The Executive shall be employed by both the Corporation and Clark USA
as their Presidents and Chief Executive Officers, and shall not be assigned
tasks that would be substantially inconsistent with those positions. In his
capacity as the President and Chief Executive Officer of the Corporation,
Executive shall report to the Board and in his capacity as the President and
Chief Executive Officer of Clark USA, Executive shall report to the Clark Board.
Executive shall have the customary powers, responsibilities and authorities of
chief executive officers of corporations of the size, type and nature of the
Corporation and of Clark USA, as they exist from time to time, and as are
assigned by the Board and the Clark Board. Clark USA shall use its best efforts
to have Executive elected to the Clark Board and shall vote its shares in favor
of electing Executive to the Board.
(b) The Executive shall receive, while employed, for each 12-consecutive
month period beginning on the Effective Date and each anniversary thereof, in
substantially equal monthly or more frequent installments, an annual base salary
of not less than $415,000 (the "Salary"). Any increases in Salary shall be in
the discretion of the Clark Board and, as so increased, shall constitute
"Salary" hereunder and shall not be subject to decrease thereafter.
(c) The Executive shall be eligible to receive a bonus based upon the
Corporation's achievement of 1998 target operating EBIT and productivity
improvements, as provided pursuant to Clark's 1998 Bonus Plan. In no event shall
the bonus for the 1998 calendar year be less than 50% of the Salary. The
Corporation shall adopt a bonus plan for years after 1998 (the "Bonus Plan").
Under the Bonus Plan, the Executive's target bonus shall be 100% of Salary.
(d) The Executive is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar items in promoting the
Corporation's business. Subject to the reimbursement procedures applicable to
the Corporation's senior management employees as in effect from time to time,
the Corporation will reimburse the Executive for all reasonable expenses so
incurred.
(e) The Executive shall be provided with the welfare benefits and other
fringe benefits to the same extent and on the same terms as those benefits are
provided by the Corporation from
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time to time to the Corporation's other senior management employees. In
addition, the Corporation shall pay: (i) Executive's reasonable initiation fees,
assessments and dues to the golf club of Executive's choice, and (ii) reasonable
tax and financial planning services for Executive with the tax and financial
planner of Executive's choice.
(f) The Executive and the Corporation shall enter into a Non-Qualified
Option Agreement (the "NQO Agreement"), with terms substantially similar to the
those provided in the term sheet attached hereto as Exhibit A. The NQO Agreement
shall provide Executive with options to purchase 600,000 shares of Clark USA
common stock (the "Common Stock"), of which, options for 300,000 shares shall
vest ratably over the four years following the option grant date (25%/year), and
options for the remainder shall vest on the ninth anniversary of the grant date,
but shall accelerate upon the achievement of the share prices set forth below
for Common Stock: (i) following an initial public offering, as an average
closing price for any 180 day consecutive period, or (ii) in a Change in
Control:
Per Share Price % Vested
--------------- --------
below $12.00 0%
$12.00 - $14.99 10%
$15.00 - $17.99 20%
$18.00 - $19.99 30%
$20.00 - $24.99 50%
$25.00 - $29.99 75%
above $29.99 100%
Notwithstanding any provision of this IV.1(f), the terms of the options shall be
governed by the NQO Agreement.
(g) In addition, as Executive shall relocate to Missouri to accept the
positions provided herein, Executive shall participate in the Corporation's
relocation policy at level 4.
ARTICLE V
Obligations Upon Termination
----------------------------
V.1 If the Executive's Date of Termination occurs as a result of: (i) the
Executive's employment being terminated by the Executive's employer (other than
for Cause, Disability, or death) during the Agreement Term, (ii) the Executive's
employment being terminated by the Executive for Good Reason during the
Agreement Term, or (iii) the Corporation giving notice to the Executive, as
provided in Section III.1, that this Agreement shall not automatically renew
upon the next anniversary of the Agreement Date:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions):
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(i) if not theretofore paid, the amount of the Executive's unpaid Basic
Compensation for the then current fiscal year of the Corporation for
the period to and including the Date of Termination, plus any other
compensation and benefit amounts that are accrued and unpaid as of the
Date of Termination (including any accrued but unpaid bonus to which
Executive may be entitled pursuant to the terms of a bonus plan); and
(ii) as partial compensation for the Executive's loss of employment, an
amount equal to three (3) times the Basic Compensation.
(b) The Corporation, at its expense, shall provide the Executive with the
reasonable job relocation counseling services of a firm chosen from time to
time by the Executive, for a period not to exceed 18 months after the Date
of Termination.
(c) The Corporation shall maintain in full force and effect, for the
Executive's continued benefit, until the earlier of:
(i) one year after the Date of Termination; and
(ii) the Executive's commencement of full time employment with a new
employer;
all life insurance, medical, dental, health and accident and disability
plans, programs or arrangements in which the Executive was entitled to
participate immediately prior to the Date of Termination at a cost to the
Executive no greater than the Executive paid while employed, provided that
the Executive's continued participation is possible under the general terms
and provisions of such plans and programs. In the event that the
Executive's participation is barred, the Corporation shall arrange to
provide the Executive, at the Corporation's expense, with benefits
substantially similar to those which the Executive is entitled to receive
under such plans, programs or arrangements or pay cash in an amount after
tax sufficient to enable the Executive to purchase substantially similar
coverage for a one year period on an individual basis at a cost to the
Executive no greater than the Executive paid while employed. In the case
of the Executive's commencement of full time employment with a new employer
within the one year period, the Corporation agrees to make up any
differential in benefits between what the Executive would have received
from the Corporation in the one year period and what the Executive receives
from his new employer, so that the Executive is ensured of receiving the
same benefits which he would have been entitled to receive from the
Corporation had his employment with the Corporation continued for the one
year period at a cost to the Executive no greater than the Executive paid
while employed.
(d) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit, compensation, equity
and incentive plans, programs or arrangements, maintained by Clark USA and
the Corporation, shall be determined under the terms of the respective
plans as in effect from time to time, with such entitlement based on the
fact that the Executive's employment with Clark USA, the Corporation and
the Affiliates ceased on the Executive's Date of Termination.
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Except an may be otherwise specifically provided in an amendment of this
subsection V.1 adopted in accordance with subsection VI.8, payments under this
subsection V.1 shall be in lieu of all benefits that may be otherwise payable to
or on behalf of the Executive pursuant to the terms of any severance pay
arrangement of Clark USA, the Corporation or any Affiliate or any other, similar
arrangement of Clark USA, the Corporation or any Affiliate providing benefits
upon involuntary termination of employment.
V.2 If, at any time during the Agreement Term, the Executive's Date
of Termination occurs as a result the Executive's employment being terminated by
the Executive's voluntary resignation (other than for Good Reason), or is
terminated by the employer for Cause, or if the Executive's Date of Termination
occurs as a result the Executive's employment being terminated by the
Executive's death or Disability:
(a) The Corporation shall pay to or to the order of the Executive in cash or
certified cheque within ten days after the Date of Termination, the
aggregate of the following amounts (less any statutory deductions), if not
theretofore paid, the amount of the Executive's unpaid Basic Compensation
for the then current fiscal year of the Corporation for the period to and
including the Date of Termination; and shall provide any other compensation
and benefit amounts that are accrued and unpaid as of the Date of
Termination; provided, however, that the Executive's entitlement to the
bonus amounts for the year shall be determined in accordance with the
provisions of the applicable bonus program.
(b) Except as otherwise expressly provided in this Agreement, the Executive's
entitlement to benefits under the employee benefit, compensation, equity
and incentive plans programs or arrangements, maintained by Clark USA and
the Corporation, shall be determined under the terms of the respective
plans, programs or arrangements as in effect from time to time, with such
entitlement based on the fact that the Executive's employment with Clark
USA and the Corporation ceased on the Executive's Date of Termination.
V.3 The Corporation shall pay to the Executive all reasonable legal
and professional fees and expenses incurred by the Executive in seeking to
obtain or enforce any right or benefit provided by this Agreement, if the
Executive is successful in obtaining such right or benefit, as determined by an
arbiter in accordance with section II.3.
V.4 (a) In the event it shall be determined that any payment, benefit
or distribution (or combination thereof) by the Corporation, or by any other
member of the same affiliated group with the Corporation (as determined under
Code Section 280G(d)(5)) for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement,
or otherwise) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code"), or any interest or penalties are incurred by the Executive with
respect to such excise tax (other than interest or penalties incurred as a
result of the failure of the Executive to file any tax return, or pay any tax
(except any such failure to pay tax in accordance with the terms hereof),
required by applicable law or to be filed or paid by the Executive) (such tax
together with any such interest and penalties, hereinafter collectively referred
to as the "Excise Tax"), the
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Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of taxes
(including payroll taxes and any interest or penalties imposed with respect to
such taxes, other than interest or penalties imposed as a result of the failure
of the Executive to file any tax return or pay any tax (except any such failure
to pay tax in accordance with the terms hereof), required by applicable law to
be filed or paid by the Executive), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto, other than
interest or penalties imposed as a result of the failure of the Executive to
file any tax return or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law to be filed or
paid by the Executive) and the Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of subsection V.4(c), all determinations
required to be made under this subsection V.4, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
Deloitte & Touche LLP or, if Deloitte & Touche LLP is unable or unwilling to
serve, then such nationally recognized accounting firm as the Corporation shall
select (Deloitte & Touche LLP or such other accounting firm being the
"Accounting Firm" ), which shall provide detailed supporting calculations both
to the Corporation and the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Corporation. All fees and expenses of the
Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment,
as determined pursuant to this Section V.4, shall be paid by the Corporation to
the Executive within five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall so indicate to the Executive in writing. Any
determination by the Accounting Firm shall be binding upon the Corporation and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Corporation should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Corporation
exhausts its remedies pursuant to subsection V.4(c) and the Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive.
(c) The Executive shall notify the Corporation in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Corporation of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprize the Corporation
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which it gives such notice to the
Corporation (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Corporation notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
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(1) give the Corporation any information requested by the Corporation
relating to such claim;
(2) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Corporation;
(3) cooperate with the Corporation in good faith in order to effectively
contest such claim; and
(4) permit the Corporation to participate in any proceedings relating to
such claim;
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto, other than interest or penalties
imposed as a result of the failure of the Executive to file any tax return or
pay any tax (except any such failure to pay tax in accordance with the terms
hereof), required by applicable law to be filed or paid by the Executive)
imposed as a result of such representation and payment of costs and expenses,
Without limitation on the foregoing provisions of this subsection V.4(c), the
Corporation shall control all proceedings taken in connection with such content
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Corporation shall
determine; provided, however, that of the Corporation directs the Executive to
pay such claim and sue for a refund, the Corporation shall advance the amount of
such payment to the Executive, on an interest-free basis, and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any excise Tax or
income tax (including interest or penalties with respect thereto, other than
interest or penalties imposed as a result of the failure of the Executive to
file any tax return or pay any tax (except any such failure to pay tax in
accordance with the terms hereof), required by applicable law to be filed or
paid by the Executive) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and provided, further, that if
the Executive is required to extend the statute of limitations to enable the
Corporation to contest such claim, the Executive may limit this extension solely
to such contested amount. The Corporation's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Corporation pursuant to subsection V.4(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Corporation's complying with the requirements of subsection V.4(c)) promptly
pay to the Corporation the amount of such refund
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(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to subsection V.4(c)), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Corporation does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
ARTICLE VI
General
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VI.1 If the Executive's Date of Termination occurs for any reason, the
Executive shall not be subject to any duty or obligation to seek alternate
employment or other sources of income or benefits, or to mitigate his damages,
or to any similar duty or obligation, and, except as specifically provided with
respect to benefits in paragraph V.l(d), all payment and other obligations of
the Corporation under this Agreement shall not be subject to any rights of set-
off, duty to mitigate or other reduction, and shall be paid and performed in
full notwithstanding any alternate employment or other sources of income or
benefits obtained or received or receivable by the Executive.
VI.2 (a) The Executive agrees that he shall maintain the confidentiality of
any confidential or proprietary information concerning Clark USA, the
Corporation or any Subsidiary until the date, if any, upon which: (i) the
relevant information becomes available to the public or is made available to the
Executive from a source which is not bound by an obligation of confidentiality
to Clark USA, the Corporation or the relevant Subsidiary; or (ii) the Executive
is required to disclose such information by any court or governmental or
regulatory authority of competent jurisdiction (in which case the Executive
shall notify the Corporation and, after such notification, shall be entitled to
disclose or make use of such information only to the extent he is so required);
provided, however, that Executive may divulge material confidential or
proprietary information when he reasonably believes in good faith that such
disclosure is for the benefit of Clark USA, the Corporation and/or their
Subsidiaries.
(b) During the period of his employment hereunder and, if Executive
terminates his employment with the Corporation without Good Reason, for one year
thereafter, Executive agrees that, without the prior written consent of the
Corporation, he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any business which has material overlap in the refining or marketing
business with Clark USA, the Corporation or any of their Subsidiaries (the
"Restricted Group") in PADD II or PADD III. In addition, during the period of
his employment hereunder and for two years thereafter, he shall not, on his own
behalf or on behalf of any person, firm or company, directly or indirectly,
solicit or offer employment to any person who has been employed by the
Restricted Group at any time during the 12 months immediately preceding such
solicitation.
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(c) Nothing in this Section VI.2 shall be construed so as to preclude
Executive from investing in any publicly or privately held company, provided
Executive's beneficial ownership of any class of such company's securities does
not exceed 1% of the outstanding securities of such class.
(d) Executive and the Corporation agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of this covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. Executive agrees that any material breach of the covenants
contained in this Section VI.2 would irreparably injure the Corporation.
Accordingly, Executive agrees that the Corporation may, in addition to pursuing
any other remedies it may have in law or in equity in the event of a material
breach, cease making any payments otherwise required by this Agreement and
obtain an injunction against Executive from any court having jurisdiction over
the matter restraining any further violation of this Agreement by Executive.
VI.3 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand, facsimile
or mailed by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
Clark Refining and Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Chairman of the Board of the Corporation
Facsimile number:
with a copy to:
Clark Refining and Marketing Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: Secretary of Clark USA, Inc.
Facsimile number:
(b) in the case of the Executive, to the last address of the Executive in the
records of the Corporation,
or to such other address as the parties may from time to time specify by notice
given in accordance herewith. Any notice so given shall be conclusively deemed
to have been given or made on the day of delivery, if delivered, or if mailed by
registered mail, upon the date shown on
13
the postal return receipt as the date upon which the envelope containing such
notice was actually received by the addressee.
VI.4 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors, administrators and other legal personal
representatives and upon the Corporation and its successors and assigns, but
neither this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by Executive (except by will or
by operation of the laws of intestate succession) or by the Corporation, except
that the Corporation may assign this Agreement to any successor (whether by
merger, purchase or otherwise) to all or substantially all of the stock, assets
or businesses of the Corporation, if such successor expressly agrees to assume
the obligations of the Corporation hereunder.
VI.5 Executive shall be entitled to select (and change, to the extent
permitted under any applicable law) a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following Executive's death, and
may change such election, in either case by giving the Corporation written
notice thereof. In the event of Executive's death or a judicial determination
of his incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
VI.6 As a condition of receipt of the benefits described in paragraphs
V.l(a) through V.1(e), the Executive will be required to enter into a full and
complete release of the Corporation from any and all claims which the Executive
may then have for whatever reason or cause in connection with the Executive's
employment and the termination of it (including, without limitation, any rights
under an employment agreement which may then be in effect), other than those
obligations specifically set out in this Agreement, the NQO Agreement, any
subscription or stockholders' agreement, and other than obligations of Clark
USA, the Corporation and the Subsidiaries to the extent that the documents
providing for such obligations specifically provide that the obligations are in
addition to obligations under this Agreement and indemnification provisions in
Clark USA's or the Corporation's by-laws. In agreeing to the terms set out in
this Agreement, the Executive specifically agrees to execute a formal release
document to that effect and will deliver upon request appropriate resignations
from all offices and positions with Clark USA, the Corporation and any
Subsidiaries and Affiliates II, as, and when requested by the Board upon the
termination of employment within the circumstances contemplated by this
Agreement.
VI.7 Each of the Corporation and the Executive agrees to execute all such
documents and to do all such acts and things, in any case at the Corporation's
expense, as the other party may reasonably request and as may be lawful and
within it's powers to do or to cause to be done in order to carry out and/or
implement the provisions of intent of this Agreement, including, without
limitation, seeking all such governmental, regulatory and other third party
approvals as may be necessary or desirable. Without limiting the generality of
the foregoing, the Corporation agrees to execute all such documents and to do
all such acts and things as the Executive may reasonably request and as may be
lawful and within the power of the Corporation to do or cause to be done in
order to minimize any tax consequences to the Executive or his legal personal
representatives in respect of the payment or performance by the Corporation of
the obligations of the Corporation upon termination arising under Article V or
in respect of other payments or
14
actions required to be made or taken by or on behalf of the Corporation in the
event of termination of the Executive's employment hereunder; provided that the
Corporation shall in no material way be prejudiced thereby.
VI.8 This Agreement may be amended only by an instrument in writing
signed by both parties.
VI.9 The Corporation shall pay the reasonable fees and disbursements of
Executive's legal counsel in connection with the negotiation and execution of
this Agreement and the other documents contemplated hereby.
VI.10 Neither party may waive or shall be deemed to have waived any
right it has under this Agreement (including under this subsection VI.9) except
to the extent that such waiver is in writing.
VI.10 IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto.
CLARK REFINING AND MARKETING, INC.
By: M J Clark
-----------------------------------
Executive Vice President and
Chief Financial Officer
With respect to Section IV.1(a) only,
CLARK USA, INC.
By: M J Clark
-----------------------------------
-----------------------------------
SIGNED, SEALED AND DELIVERED )
in the presence of )
Holly B. Cohen )
Notary Public, State of New York )
No. 01C06003607 )
Qualified in Bronx County )
Commission Expires on W. C. Rusnack
March 9, 2000 ----------------------------------
- ------------------------------ WILLIAM RUSNACK
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Exhibit A
CLARK CEO OPTION ARRANGEMENTS
Stock Options Clark will grant Executive nonqualified options to
purchase an aggregate of 600,000 shares of Clark's
common stock.
- -- Option Term The option term will be 10 years, subject to
earlier termination as provided below in Effect of
Termination of Employment.
- -- Option Exercise Price The Options will be granted at an exercise price
equal to the Deal Price, $9.90 per share.
- -- Vesting of Options One-half of the Options (the "Time Options") will
become exercisable with respect to 25% of the
shares subject to such Options on each of the
first four anniversaries of their grant date and
the remainder of the Options (the "Performance
Options") shall vest on the ninth anniversary of
their grant date, but shall accelerate upon the
achievement of the share prices set forth below
for Common Stock: (i) following an initial public
offering, as an average closing price for any 180
day consecutive period, or (ii) in a Change in
Control;
Per Share Price % Vested
--------------- --------
below $12.00 0%
$12.00 - $14.99 10%
$15.00 - $17.99 20%
$18.00 - $19.99 30%
$20.00 - $24.99 50%
$25.00 - $29.99 75%
above $29.99 100%
However, Options will not continue to vest
following termination of employment. Time Options
will become fully exercisable upon: (i) death,
(ii) disability, (iii) a termination of
Executive's employment by the Company other than
for Cause, (iv) a termination of Executive's
employment by Executive for Good Reason, or (v) a
Change in Control.
- -- Effect of Termination Following a termination of employment, the
2
of Employment Options will expire as follows:
Fired for Cause: Immediately upon termination of
employment.
Death/Disability: Nonvested options terminate
immediately and vested options terminate upon the
later of (a) the first anniversary of Optionee's
date of termination, or (b) the earlier of (i) the
fourth anniversary of the grant date, or (ii) the
third anniversary of Executive's date of
termination.
Fired without Cause/Quit for Good Reason:
Nonvested options terminate immediately and vested
options expire upon the later of (a) 90 days
following Executive's termination of employment,
or (b) the earlier of (i) the fourth anniversary
of the grant date, or (ii) the third anniversary
of Executive's date of termination.
Any other termination of employment: Nonvested
options terminate immediately and vested options
terminate 90 days following Executive's
termination of employment.
- -- Dilution of Options Option holders will be subject to the same
dilution as the common stockholders. However,
prior to an IPO, upon any new issuance or sale of
Clark shares to existing stockholders (other than
pursuant to the exercise of an option), the
Executive will be permitted to purchase up to the
Applicable Number of such shares being issued or
sold at the same price per share as the purchaser.
"Applicable Number" will mean the product of (i)
the total number of Clark shares being issued or
sold, and (ii) a fraction, the numerator of which
is the number of Clark shares held by Executive
immediately prior to such issuance or sale, on a
fully diluted basis, and the denominator of which
is the number of Clark shares outstanding
immediately prior to such issuance or sale, on a
fully diluted basis.
- -- Reallocation Options that are forfeited may be reallocated to
3
other employees as determined by the Board in
consultation with the CEO.
- -- Adjustments The Board (or a committee thereof, if appropriate)
shall adjust the Options, if necessary, to reflect
any reorganization, recapitalization,
consolidation, merger, reclassification, stock
split, stock dividend, or extraordinary dividend.
The Board's (or the committee's) good faith
determination of the manner and requisite
adjustment of the Options shall be binding and
conclusive.
Registration Rights Public Immediately following the first public offering
Offering that includes Blackstone shares, Clark will file,
at its own expense, an S-8 to register the shares
subject to options, which shares will be subject
to applicable "lock-up agreements". In addition,
with respect to Option Shares, Clark shall provide
piggyback registration rights.
Tag-A-Long Rights If Blackstone sells 25% or more of its shares in
one or more private transactions (excluding sales
to Blackstone and its affiliates), Blackstone will
provide each holder of Option Shares the right to
sell an "Applicable Amount" of Option Shares on
the same price and terms applicable to Blackstone.
"Applicable Amount" will mean, for any holder, the
product of (i) the total number of Clark shares
held by such holder, and (ii) a fraction, the
numerator of which is the number of Clark shares
to be sold by Blackstone, and the denominator of
which is the number of Clark shares held by
Blackstone immediately prior to such sale.
Drag-A-Long Rights If Blackstone sells 25% or more of its shares in
one or more private transactions, Blackstone will
have the right to require Executive to sell in
such sale a pro rata portion of the Option Shares
and the Options (net of exercise price) at the
same price and on the same terms as Blackstone is
selling.
Puts and Calls Puts and calls will be as set forth in Appendix A.
There will be no puts or calls following the
establishment of a public market for the shares.
4
DEFINITIONS
- -- Fair Market Value ("FMV") The FMV of the shares will be the per share
price, as determined by the Board in good faith.
- -- Change in Control Change in Control shall mean any transaction the
result of which is that any Person (an
"Acquiring Person") other than Blackstone, or a
Person, a majority of whose voting equity is
owned by Blackstone, becomes the beneficial
owner, directly or indirectly, of shares of
stock of the Corporation or Clark USA entitling
such Acquiring Person to exercise 50% or more of
the total voting power of all classes of stock
of the Corporation or Clark USA, as the case may
be, entitled to vote in elections of directors.
- -- Cause Cause shall have the same meaning as in
Executive's Employment Agreement.
- -- Good Reason Good Reason shall have the same meaning as in
Executive's Employment Agreement.
Appendix A
PUTS AND CALLS/1/
===============================================================================================
Fired for Death or Fired w/o "Cause" Any other
"Cause" Disability or quit for "Good termination of
Reason" employment
- ------------------------------------------------------------------------------------------------
Options Options Nonvested options Nonvested options Nonvested options
terminate. terminate terminate shall terminate upon
immediately and immediately and the termination of
vested options vested options employment. Vested
terminate upon the expire upon the options shall terminate
later of (a) the first later of (a) 90 days 90 days following
anniversary of following termination of
Optionee's date of Executive's employment.
termination, or (b) termination of
the earlier of (i) employment, or (b) Call on vested options
the fourth the earlier of (i) the at excess of (i) FMV
anniversary of the fourth anniversary of shares subject to
grant date, or (ii) of the grant date, or vested option, over
the third (ii) the third (ii) aggregate exercise
anniversary of anniversary of price of vested option.
Executive's date of Executive's date of
termination. termination.
Put and call on Call on vested
vested options at options at excess of
excess of (i) FMV (i) FMV of shares
of shares subject to subject to vested
vested options, over option, over (ii)
(ii) aggregate aggregate exercise
exercise price of price of vested
vested option. option.
===============================================================================================
Option Shares: Following any termination of employment, Clark may call the
shares purchased pursuant to an option (the "Option Shares") at FMV. Following
death or disability, Executive may put the Option Shares to the Company at FMV.
Timing of Calls/Puts: Calls and puts, if applicable, on options or Option
Shares, may occur at any time during the 75 day period beginning on the 90th day
prior to the termination of Executive's vested option following such termination
of employment, except that calls on Option Shares following a termination of
Executive's employment by Clark for Cause may occur at any time during the 75
day period beginning on the date of Executive's termination of employment.
Either party shall give the other at least 5 business days written notice of its
intention to exercise a call or a put.
1. Puts and calls only apply prior to the establishment of a public market for
the shares.