Exhibit 10.38
ALON ASSETS, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT (this "Agreement"), effective as of July 31, 2000, is made
and entered into by and between Alon Assets, Inc., a Delaware corporation (the
"Corporation"), and Xxxx X. Xxxxxx (the "Participant").
WITNESSETH:
WHEREAS, the Corporation has implemented the Alon USA Operating Inc. 2000
Stock Option Plan (the "Plan"), which was adopted by the Corporation's Board of
Directors (the "Board"), and which provides for the grant of stock options to
certain selected officers, directors, employees, consultants and independent
contractors of the Corporation or its subsidiaries with respect to shares of
common stock, $.01 par value, of the Corporation (the "Common Stock");
WHEREAS, the Plan provides that certain options granted pursuant to the
Plan are intended to qualify as "incentive stock options" pursuant to Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), while certain
other options granted under the Plan will constitute non-qualified options;
WHEREAS, the committee appointed by the Board to administer the Plan (the
"Committee") has selected the Participant to participate in the Plan and has
awarded the incentive stock option described in this Agreement (the "Option") to
the Participant;
WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee, director, consultant or independent
contractor of the Corporation or its subsidiaries and to promote the success of
the business of the Corporation and its subsidiaries, the parties hereby agree
as follows:
1. Grant of Option. The Corporation hereby grants to the Participant, upon
the terms and subject to the conditions, limitations and restrictions set forth
in the Plan and in this Agreement, the Option to acquire 8,077.6 shares of
Common Stock, at an exercise price per share of $100, effective as of the date
of this Agreement (the "Award Date"). The Participant hereby accepts the Option
from the Corporation.
2. Vesting; Section 422 Treatment. The Option shall vest thirty (30) days
prior to the tenth anniversary date of the date of this Option Agreement (the
"Final Vesting Date") unless the vesting has been accelerated in accordance with
the provisions of Exhibit A hereto ("Accelerated Vested Shares"). The
Corporation will provide Participant written notice of the vesting of
Accelerated Vested Shares (a "Vesting Notice"). Participant will have ninety
(90) days after the date of the Vesting Notice in which to exercise the
Accelerated Vested Share options described in that notice, except to the extent
that exercisability is delayed as provided in Exhibit A; if not exercised within
that time period, the right to exercise options with respect to such shares will
lapse and no longer be exercisable.
The Participant is aware that the Option will be treated as an incentive
stock option (an "ISO") subject to Section 422 of the Code only if the Common
Stock obtained upon exercise of the Option is held for a period of one year
following exercise of the Option and two years following the date the Option is
granted. In addition, to the extent that the portion of the Option that first
becomes exercisable during a calendar year has an aggregate fair market value
that exceeds $100,000, ISO treatment under section 422 of the Code is available
only with respect to the first $100,000. The value of an Option for this purpose
is determined at the time the Option is granted. The Participant is aware that
if these conditions are not met, a portion of the Option will be considered to
be a nonqualified stock option and exercise will result in the recognition by
the Participant of ordinary income equal in amount to the difference between the
exercise price of the Option and the fair market value of the Common Stock
received as of the date of exercise.
3. Exercise; Bonus Payment of Exercise Price. In order to exercise
any vested portion of the Option the Participant shall provide written notice to
the Corporation at its principal executive office. At the time of exercise, the
Participant shall pay to the Corporation the exercise price per share set forth
in Section 1 times the number of vested shares as to which the Option is being
exercised. If the Option is exercised in full, the Participant shall surrender
this Agreement to the Corporation for cancellation. If the Option is exercised
in part, the Participant shall surrender this Agreement to the Corporation so
that the Corporation may make appropriate notation hereon or cancel this
Agreement and issue a new agreement representing the unexercised portion of the
Option.
In order to provide funding for the exercise of the Option, the
Corporation agrees that immediately upon exercise of any portion of the Option
that constitutes an ISO, the Corporation will make a bonus payment to the
Participant in an amount sufficient, on an after-tax basis, to pay the full
exercise price of such Option (the "Bonus Payment"), subject to the terms and
conditions of this Section 3. If any portion of the Bonus Payment is subject to
any federal, state and local income tax, including PICA, the Corporation shall
pay or cause to be paid to the Participant at the same time an additional amount
(the "Gross-up Payment") such that the net amount retained by the Participant,
after deduction of any federal, state and local income tax, and any FICA tax
upon the Bonus Payment and the Gross-up Payment provided for in this subsection,
shall be equal to the Bonus Payment.
Upon the exercise by the Participant of any portion of the Option deemed
to be non-qualified, the Corporation will make a Bonus Payment to the
Participant in an amount sufficient on an after-tax-basis, to pay (i) the full
exercise price for such portion of the Option, (ii) an additional Bonus Payment
equal to one-half the taxes payable on the amount includible in income by the
Participant as a result of his exercise of the non-qualified portion of the
Option and (iii) a Gross-up Payment, such that the net amount retained by the
Participant, after deduction of any federal, state and local income tax, and any
FICA tax upon such Bonus Payments and the Gross-up Payment shall be equal to the
sum of the Bonus Payments. In addition, the Corporation shall at the same time
lend to
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the Participant (an "Option Exercise Loan"), without the payment of any
interest, the other one-half of the taxes payable with respect to the amount
includible in income as a result of such exercise. The Option Exercise Loan
shall be secured by a pledge of the Common Stock received upon exercise of the
Option (the "Pledged Shares") and shall contain customary terms and conditions
assuring the repayment of the Option Exercise Loan from any proceeds of the sale
of the Pledged Shares.
4. Who May Exercise. The Option is exercisable during the lifetime of the
Participant only by the Participant. To the extent exercisable after the
Participant's death, the Option may be exercised only by the Participant's
representatives, executors, successors or beneficiaries.
5. Expiration of Option. The Option will expire, and will not be
exercisable with respect to any vested portion as to which the Option has not
been exercised, on the first to occur of: (a) the tenth anniversary of the Award
Date; (b) 90 days after any termination of the Participant's employment with the
Corporation for any reason other than death; or (c) or 180 days after the
Participant's death; provided, however, that the Option shall expire immediately
upon Participant's termination for "Cause" or his resignation for other than
"Good Reason," as such terms are defined in his employment agreement. The Option
will expire, and will not be exercisable, with respect to any unvested portion,
immediately upon the termination of the Participant's employment with the
Corporation for any reason, including death. Options that vest on the
Participant's termination of employment pursuant to his employment agreement
shall not be considered "unvested" for this purpose.
6. Tax Withholding. Any provision of this Agreement to the contrary
notwithstanding, the Corporation may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any of the shares of Common Stock
subject hereto.
7. Dilution.
(a) In the event that the outstanding shares of Common Stock (other
than shares held by dissenting stockholders) are changed into or exchanged for a
different number or kind of shares of stock of the Corporation or of another
corporation (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise), or in the event
a stock split or stock dividend has occurred, the Corporation or its successor
will substitute for each share of Common Stock then subject to the Option the
consideration provided pursuant to Section 17 of the Plan.
(b) Options to purchase up to 16,154.4 shares of Common Stock have
been issued to a group of senior executives of the Corporation that includes
Participant ("Executive Options"). To the extent that Executive Options vest and
are exercised, Participant will be issued an additional option under this
Agreement, which will be immediately exercisable, to purchase a number of
additional shares of Common Stock on the terms and conditions set forth in this
Agreement equal to the following amount: (Number of Executive Options Vested /
..97) - (Number of Executive Options Vested), rounded up to the nearest 1/10 of
one share.
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8. Transfer of Option or Shares. The Participant may not, directly or
indirectly, sell, transfer, pledge, encumber or hypothecate ("Transfer") any
unvested portion of the Option or the rights and privileges pertaining thereto.
In addition, the Participant may not, directly or indirectly, Transfer any
vested portion of the Option or any shares of Common Stock acquired upon
exercise of the Option other than (i) with the prior written consent of the
Corporation, (ii) by will or the laws of descent and distribution, (iii) with
respect to shares of Common Stock issued upon exercise of the Option, pursuant
to an effective registration statement filed under applicable federal and state
securities laws or an exemption from the registration requirements thereunder.
Any permitted transferee to whom the Participant Transfers the Option must agree
to be bound by this Agreement. Neither the Option nor the underlying shares of
Common Stock are liable for or subject to, in whole or in part, the debts,
contracts, liabilities or torts of the Participant, nor are they subject to
garnishment, attachment, execution, levy or other legal or equitable process.
9. Certain Legal Restrictions. The Corporation is not obligated to sell or
issue any shares of Common Stock upon the exercise of the Option or otherwise
unless the issuance and delivery of such shares complies with all relevant
provisions of law and other legal requirements including, without limitation,
any applicable federal or state securities laws and the requirements of any
stock exchange upon which shares of the Common Stock may then be listed. As a
condition to the exercise of the Option or the sale by the Corporation of any
additional shares of Common Stock to the Participant, the Corporation may
require the Participant to make such representations and warranties as may be
necessary to assure the availability of an exemption from the registration
requirements of applicable federal or state securities laws. The Corporation
will not be liable for refusing to sell or issue any shares if the Corporation
cannot obtain authority from the appropriate regulatory bodies deemed by the
Corporation to be necessary to lawfully sell or issue such shares. In addition,
the Corporation has no obligation to the Participant, express or implied, to
list, register or otherwise qualify any of the Participant's shares of Common
Stock. The certificate evidencing shares of Common Stock issued to the
Participant may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR
PLEDGED EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
10. Plan Incorporated. The Participant accepts the Option and this
Agreement subject to all the provisions of the Plan, which are incorporated into
this Agreement, including the provisions that authorize the Committee to
administer and interpret the Plan and which provide that the Committee's
decisions, determinations and interpretations with respect to the Plan are final
and conclusive on all persons affected thereby. Except as otherwise set forth in
this Agreement, terms defined in the Plan have the same meanings herein.
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11. Miscellaneous.
(a) The Option is intended to be an incentive stock option under
Section 422 of the Code; provided, however, that neither the Corporation, its
directors, officers, employees or the Committee, nor any subsidiary which is in
existence or hereafter comes into existence, will be liable to the Participant
or any other person or entity if it is determined for any reason by the Internal
Revenue Service or any court having jurisdiction that the Option does not
qualify for tax treatment as an incentive stock option under Section 422 of the
Code.
(b) The rights and obligations arising under this Agreement are not
intended to and do not affect the employment relationship that otherwise exists
between the Corporation and the Participant, whether such employment
relationship is at will or defined by an employment contract. Nothing contained
in this Agreement affects any right of the Corporation to terminate the
Participant at any time, with or without cause, nor creates any rights to
employment on the part of the Participant. This Agreement is not intended to and
does not amend any existing employment contract between the Corporation and the
Participant; to the extent there is a conflict between this Agreement and such
an employment contract, the employment contract shall govern and take priority.
(c) Neither the Participant nor any person claiming under or through
the Participant will have any of the rights or privileges of a stockholder of
the Corporation in respect of any of the shares issuable upon the exercise of
the Option unless and until certificates representing such shares have been
issued and delivered to the Participant or such Participant's agent.
(d) All notices that are required or may be given pursuant to the
terms of this Agreement must be in writing and will be sufficient in all
respects if given in writing and delivered personally or by a recognized courier
service or by registered or certified mail, postage prepaid, to the Corporation
at its principal executive offices or to the Participant at the address set
forth below his signature hereto (or to the attention of such other person or to
such other address as either party provides to the other party by notice in
accordance with this Section). Any such notice or other communication will be
deemed to have been given on the day it is personally delivered or delivered by
a recognized courier service as aforesaid or, if mailed, on the fifth day after
it is mailed.
(e) Subject to the limitations in this Agreement on the
transferability by the Participant of the Option and any shares of Common Stock,
this Agreement is binding upon and inures to the benefit of the representatives,
executors, successors or beneficiaries of the parties hereto.
(f) If any provision of this Agreement is determined to be invalid,
illegal or unenforceable, in whole or in part, then the parties will be relieved
of all obligations arising under such provision to the extent it is invalid,
illegal or unenforceable, and such provision will be reformed to the extent
necessary to make it legal and enforceable while preserving its intent or, if
that is not possible, by substituting therefor another provision that is legal
and enforceable and achieves the same objectives.
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(g) All section titles and captions in this Agreement are for
convenience only, are not part of this Agreement and in no way define, limit,
extend or describe the scope or intent of any provisions of this Agreement.
(h) The parties shall execute all documents, provide all information
and take all such actions as may be reasonably necessary or appropriate to
achieve the purposes of this Agreement and to accomplish the transactions
contemplated hereby.
(i) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings relating to the subject matter hereof. This
Agreement cannot be modified or amended except in writing signed by the party
against whom enforcement is sought. No waiver by a party of any of the
provisions of this Agreement will constitute a waiver of any other provision of
this Agreement, nor will any such waiver constitute a continuing waiver.
(j) This Agreement may be executed in multiple counterparts, all of
which together constitute one agreement binding on the parties hereto,
notwithstanding that the parties are not signatories to the same counterpart.
(k) In addition to all other rights or remedies available at law or
in equity, the Corporation is entitled to injunctive and other equitable relief
to prevent or enjoin any violation of the provisions of this Agreement by the
Participant.
(1) THIS AGREEMENT IS GOVERNED BY AND IS TO BE CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE AND THE UNITED
STATES, AS APPLICABLE, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS
THAT MIGHT RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(m) At any time and from time to time the Committee may execute an
instrument modifying, extending or renewing the Option, provided that no such
modification, extension or renewal shall impair the Option in any respect
without the consent of the Participant.
(n) The Participant's spouse joins this Agreement for the purpose of
agreeing to and accepting the terms of this Agreement and to bind any community
property interest he or she has or may have in the Option, any vested or
unvested portion of the Option, any shares of Common Stock acquired upon
exercise of the Option and any other shares of Common Stock held by the
Participant.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ALON ASSETS, INC.
By: /s/ Xxxxx Xxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxx
------------------------
Title: Chairman
-----------------------
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PARTICIPANT:
/s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Address: 000 X. Xxxxx
----------------------
Xxxxxxxxxxx, XX
------------------------------
76034
------------------------------
PARTICIPANT'S SPOUSE:
/s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
------------------------
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EXHIBIT A
VESTING SCHEDULE
Vesting of the Option will be accelerated from the stated Final Vesting Date in
accordance with the following terms:
Covered Entities. The Corporation's objectives which will determine the
accelerated vesting of the Option will be based upon the consolidated results of
the Corporation and each of its affiliates that are operating the Southwest
Business Unit and marketing assets of the Southeast Business Unit acquired from
FINA Oil and Chemical Company (the "Alon USA Group").
Financial Performance. The Option as to 303.3 shares of Common Stock will vest
on an accelerated basis with respect to each fiscal year of the Corporation (the
"Annual Vesting Amount") (prorated for the number of whole months in any partial
fiscal year) commencing with August 1, 2000 and ending July 31, 2006 (a total of
1819.8 shares) to the extent that the Actual Cash Flow of the Alon USA Group for
such fiscal year exceeds the Annual Target Amount for that fiscal year:
Minimum Target
Amount (millions) Annual Target Amount Annual Plan
Year Ending (Actual debt service (millions) (85% of Amount
December 31, required) Annual Plan) (millions)
----------------- -------------------- -------------------- -----------
2000 $2.8 $ 5.78 $ 6.8
2001 6.7 14.36 16.9
2002 7.8 15.56 18.3
2003 9.3 17.08 20.1
2004 9.3 18.62 21.9
2005 9.3 20.23 23.8
2006 (for 7 mos.) 9.3 12.50 14.7
Acceleration of vesting will be effective as of the last day of each year. To
the extent that any Annual Vesting Amount is not accelerated because the Annual
Target Amount has not been met for that year (a "Missed Year"), vesting of that
amount may be accelerated in the next succeeding year if, as of the end of the
next succeeding year, the total amount of Actual Cash Flow of the Corporation
for the Missed Year plus the next succeeding year exceeds the sum of the Annual
Plan Amounts for the Missed Year and the next succeeding year, provided that if
the Actual Cash Flow for any year is less than the Minimum Target Amount, then
the Annual Vesting Amount for that year will lapse and will not be available for
future vesting pursuant to this Agreement. Any Annual Vesting amount for a
Missed Year that does not vest in the next succeeding year as provided above
will lapse and will not be available for future vesting pursuant to this
Agreement unless the Board of Directors of the Corporation, in its sole
discretion, makes other provision
A-l
For purposes of this Agreement, "Actual Cash Flow" means an amount equal to the
Alon USA Group's consolidated net income for the fiscal year, increased by the
amount of amortization, depreciation and other non-cash charges included in
determining consolidated net income, and reduced by the greater of (i) the
actual capital expenditures of the Alon USA Group for the fiscal year or (ii)
the Planned Capital Expenditures for that year as set forth in the following
table:
Planned Capital Expenditures
Year Ending December 31 (in millions)
----------------------- -------------------------------
2000 $ 1.0 (last 5 months of year)
2001 12.0
2002 16.2
2003 16.5
2004 3.2
2005 5.2
2006 15.2
2007 5.2 (first 7 months of year)
Any amount of the anticipated $17.4 million payment to Fina with respect to the
acquisition of the Southeast Business Unit that is recorded as an expense will
also be added back to consolidated net income to determine the Actual Cash Flow.
Return of Start-Up Capital. The willingness of Alon Israel Oil Company, Ltd. and
other investors (the "Start-Up Investors") to provide the start-up capital of
the Alon USA Group is premised on the objective of returning the Corporation's
start-up capital that exceeds $10 million (the "Target Return Capital") to the
Start-Up Investors as rapidly as is possible given the Corporation's continuing
capital investment requirements and restrictions imposed by the Alon USA Group's
debt covenants. The Target Return Capital provided by the Start-Up Investors may
be provided as Common Stock, Preferred Stock or as loans subordinated to the
debt provided by the senior secured lender to the Corporation and its
Affiliates. The Target Return Capital consists of a total of [$_____] of capital
stock and [$_____] of subordinated debt.
In order to provide an incentive to the Participant to operate the Corporation
in a manner that is consistent with the objective of returning the Target Return
Capital to the Start-Up Investors, the Option as to 1213.6 shares of Common
Stock will vest (the "Target Return Capital Amount") on an accelerated basis on
the last day of the year in which occurs any of the following: (a) the date on
which the Target Return Capital is repaid in full (with pro-rata acceleration of
vesting to occur to the extent a portion of the Start-Up Capital is returned in
any year) or (b) with respect to the period beginning August 1, 2006, and ending
December 31, 2006, 252.8 shares; with respect to the calendar year 2007, 606.6
shares; and with respect to the period beginning January 1, 2008, and ending
August 1, 2008, 353.8 shares of the Target Return Capital will vest on an
accelerated basis to the extent that the Alon USA Group's Actual Cash Flow for
such year exceeds the following target amounts:
A-2
Year Ending Actual Cash Flow
December 31 Target
----------- ----------------
2006 $ 4,166,167
2007 $10,000,000
2008 $ 5,833,333
If the Actual Cash Flow Target is not met for 2006, the shares as to which
vesting does not occur in that year will be earned over to 2007 and may be
vested on an accelerated basis in that year if the total Actual Cash Flow for
2006 and 2007 combined exceeds the sum of the Actual Cash Flow Targets for 2006
and 2007 combined. If the Actual Cash Flow Target is not met for 2007, the
shares as to which vesting does not occur in that year will be carried over to
2008 and may be vested on an accelerated basis in that year if the total Actual
Cash Flow for 2007 and 2008 combined exceeds the sum of the Actual Cash Flow
Targets for 2007 and 2008 combined.
Notwithstanding the foregoing vesting provisions of Exhibit A, the Participant
shall not be entitled to exercise any vested portion of the Option during a
calendar year to the extent that the portion that first becomes exercisable in
such calendar year exceeds $100,000 in value, counting first any vested portion
of the Option carried forward from a preceding year pursuant to the following
sentence. To the extent that any vested portion of the Option is not exercisable
in a calendar year because of the $100,000 limitation, its exercisability shall
be carried forward to the next succeeding year in which it can be exercised
without exceeding the $100,000 limitation. In all events, however, any portion
of the Option that is vested or remains available for vesting shall become
exercisable thirty (30) days prior to the tenth anniversary of the date of this
Agreement, as provided in paragraph 2 of this Agreement.
Acceleration Upon Termination of Employment. If Participant's employment is
terminated without "Cause" or by the Participant for "Good Reason," as those
terms are defined in Participant's Employment Agreement, then any portion of the
Option that was previously vested but not exercisable will become immediately
exercisable on the date of Participant's termination of employment and the
vesting of any portion of the Option which as of the date of termination of
employment is available for vesting during the year of termination of employment
or in a subsequent year, will be accelerated to the date of termination of
employment according to the following schedule:
Date of Termination Percentage Vesting
--------------------- ------------------
Prior to 7/31/2002 25%
8/1/2002 to 7/31/2004 50%
8/1/2004 to 7/31/2006 75%
After 8/1/2006 90%
A-3
AMENDMENT TO
ALON ASSETS, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Amendment is made by and between Alon Assets, Inc. (the
"Corporation") and Xxxx X. Xxxxxx (the "Participant") as of the 30th day of
June, 2002, effective as of July 31, 2000 (except as otherwise expressly
provided), with reference to the following facts:
A. On July 31, 2000, the Corporation and the Participant entered into the
Alon Assets, Inc. Incentive Stock Option Agreement (the "Agreement") pursuant to
which the Participant was granted an option to purchase 8,077.6 shares of Common
Stock of the Corporation pursuant to the Corporation's 2000 Stock Option Plan
(the "Plan") on the terms and conditions set forth in the Agreement.
B. The Corporation intends to create a class of nonvoting common stock
designated as Class B Common Stock and has amended the Plan to provide for the
issuance of Class B Common Stock upon the exercise of options granted under the
Plan.
C. The Corporation and the Participant wish to amend the Agreement to
reflect the Participant's acknowledgment and agreement that Class B Common Stock
will be issued upon the exercise of the option evidenced by the Agreement and to
effect the other matters set forth below.
THEREFORE, the Agreement is amended as follows:
1. The term "Common Stock" as used throughout the Agreement is amended to
mean the Class B Common Stock, $.01 par value per share, of the Corporation,
effective upon the filing by the Corporation of the Certificate of Amendment to
its Certificate of Incorporation that creates the nonvoting Class B Common
Stock, $.01 par value per share, of the Corporation.
2. Section 3 of the Agreement ("Exercise; Bonus Payment of Exercise
Price") is amended by the addition of the following provision:
For purposes of determining the amount of any Gross-Up Payment to
the Participant under this Section, the Participant will be considered to
pay federal, state and local income taxes at a total combined income tax
rate of 35%.
3. Subsection (b) of Section 7 of the Agreement ("Dilution") is deleted
from the Agreement.
4. The paragraph in Exhibit A captioned "Financial Performance" is amended
in its entirety to read as follows:
Financial Performance. The Option as to 807.7 shares of Common Stock will
vest on an accelerated basis with respect to each fiscal year of the
Corporation (the "Annual Vesting Amount") (prorated for the number of
whole months in any partial fiscal year) commencing with August 1, 2000
and ending July 31, 2006 (a
total of 4,846.2 shares) to the extent that the Actual Cash Flow of the
Alon USA Group for such fiscal year exceeds the Annual Target Amount for
that fiscal year:
5. The paragraph in Exhibit A immediately following the table under the
caption "Financial Performance" is amended in its entirety to read as follows:
Acceleration of vesting will be effective as of the last day of each year.
To the extent that any Annual Vesting Amount is not accelerated because
the Annual Target Amount has not been met for that year (a "Missed Year"),
vesting of that amount may be accelerated in the next succeeding year if,
as of the end of the next succeeding year, the total amount of Actual Cash
Flow of the Corporation for the Missed Year plus the next succeeding year
exceeds the sum of the Annual Plan Amounts for the Missed Year and the
next succeeding year. Any Annual Vesting Amount for a Missed Year that
does not vest in the next succeeding year as provided above will vest and
become exercisable during the thirty (30) day period ending on the tenth
anniversary of the date of this Agreement.
6. The paragraph in Exhibit A captioned "Return of Start-Up Capital" and
the immediately following paragraph are amended in their entirety to read as
follows:
Return of Start-Up Capital. The willingness of Alon Israel Oil Company,
Ltd. and other investors (the "Start-Up Investors") to provide the
start-up capital of the Alon USA Group is premised on the objective of
returning the Alon USA Group's start-up capital that exceeds $10 million
(the "Target Return Capital") to the Start-Up Investors as rapidly as is
possible given the Corporation's continuing capital investment
requirements and restrictions imposed by the Alon USA Group's debt
covenants. The Target Return Capital provided by the Start-Up Investors
may be provided as Common Stock, Preferred Stock or as loans subordinated
to the debt provided by the senior secured lender to the Corporation and
its Affiliates. The Target Return Capital consists of a total of
$1,272,727 of capital stock and $11,454,545 of subordinated debt.
In order to provide an incentive to management to operate the Corporation
in a manner that is consistent with the objective of returning the Target
Return Capital to the Start-Up Investors, the Option as to 3,231.4 shares
of Common Stock will vest (the "Target Return Capital Amount") on an
accelerated basis on the last day of the year in which occurs any of the
following: (a) the date on which the Target Return Capital is repaid in
full (with pro-rata acceleration of vesting to occur to the extent a
portion of the Start-Up Capital is returned in any year) or (b) with
respect to the period beginning August 1, 2006, and ending December 31,
2006, 673.2 shares; with respect to the calendar year 2007, 1,615.7
shares; and with respect to the period beginning January 1, 2008, and
ending August 1, 2008, 942.5 shares will vest on an accelerated basis to
the extent that the Alon USA Group's Actual Cash Flow for such year
exceeds the following target amounts:
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
ALON ASSETS, INC.
/s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
PARTICIPANT
/s/ Xxxx Xxxxxx
--------------------------------
Xxxx Xxxxxx
PARTICIPANT'S SPOUSE
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
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