EMPLOYMENT AGREEMENT
Exhibit 10.1
EMPLOYMENT AGREEMENT, dated as of August 22, 2011 (this “Employment Agreement”), by
and between CVR GP, LLC, a Delaware limited liability company (the “Company”), and XXXXXX
X. XXXXXXX (the “Executive”).
The Company serves as the general partner of CVR Partners, LP (the “Partnership”), and
desires to employ Executive on the terms described in this Employment Agreement.
The parties hereto agree as follows:
Section 1. Employment.
1.1. Term. The Company agrees to employ the Executive, and the Executive agrees to be
employed by the Company, in each case pursuant to this Employment Agreement. This Employment
Agreement will commence effective August 22, 2011 (the “Commencement Date”) and continue
for an initial term ending on the third (3rd) anniversary of the Commencement Date (the
“Initial Term”). Following the Initial Term, this Employment Agreement will automatically
renew for successive periods of one (1) year (each, a “Renewal Term”), unless either party
hereto gives written notice of nonrenewal to the other party at least thirty (30) days prior to the
expiration of the Initial Term or any Renewal Term. Notwithstanding the foregoing, this Employment
Agreement may be terminated at any time during the Initial Term or any Renewal Term by the
termination or resignation of the Executive’s employment in accordance with Section 3 hereof. The
“Term” of this Employment Agreement is the period of time commencing with the Commencement
Date and continuing until the earlier of the (i) expiration of the Initial Term or any Renewal Term
following notice of nonrenewal in accordance with this Section 1.1, and (ii) termination or
resignation of the Executive’s employment in accordance with Section 3 hereof.
1.2. Duties. During the Term, the Executive shall serve as Executive Vice President
of Business Development of the Company and such other or additional positions as an officer or
director of the Company, and of such direct or indirect affiliates of the Company
(“Affiliates”), as the Executive and the board of directors of the Company (the
“Board”) or its designee shall mutually agree from time to time. In such positions, the
Executive shall perform such duties, functions and responsibilities during the Term commensurate
with the Executive’s positions as reasonably directed by the Board.
1.3. Exclusivity. During the Term, the Executive shall devote substantially all of
Executive’s working time and attention to the business and affairs of the Partnership, the Company
and their respective Affiliates, shall faithfully serve the Partnership, the Company and their
respective Affiliates, and shall in all material respects conform to and comply with the lawful and
reasonable directions and instructions given to Executive by the Board, or its designee, consistent
with Section 1.2 hereof. During the Term, the Executive shall use Executive’s best efforts during
Executive’s working time to promote and serve the interests of the Partnership, the Company and
their respective Affiliates and shall not engage in any other business activity, whether or not
such activity shall be engaged in for pecuniary profit. The
provisions of this Section 1.3 shall not be construed to prevent the Executive from (i)
investing Executive’s personal, private assets as a passive investor in such form or manner as will
not require any active services on the part of the Executive in the management or operation of the
affairs of the companies, partnerships, or other business entities in which any such passive
investments are made; (ii) serving as a member of the board of directors of Nexus Resources, LLC
(provided, such service does not conflict with the Executive’s duties and obligations to the
Partnership and the Company); or (iii) winding down and ceasing the operations of Sendero Asset
Management, LLC (a company owned and operated by the Executive), provided that Executive shall be
allowed no more than a total of five business days (whether such business days are in or out of the
Company offices) to complete such winding down and cessation.
Section 2. Compensation.
2.1. Salary. As compensation for the performance of the Executive’s services
hereunder, during the Term, the Company shall pay to the Executive a salary at an annual rate of
$275,000 which annual salary shall be prorated for any partial year at the beginning or end of the
Term and shall accrue and be payable in accordance with the Company’s standard payroll policies, as
such salary may be adjusted upward by the Compensation Committee of the Board, in its discretion
(as adjusted, the “Base Salary”).
2.2. Annual Bonus. For each completed fiscal year occurring during the Term, the
Executive shall be eligible to receive an annual cash bonus (the “Annual Bonus”).
Commencing with fiscal year 2011, the target Annual Bonus shall be 100% of the Executive’s Base
Salary as in effect at the beginning of the Term in fiscal year 2011 (which shall be prorated for
fiscal year 2011) and at the beginning of each such fiscal year thereafter during the Term, the
actual Annual Bonus to be based upon such individual and/or Partnership performance criteria
established for each such fiscal year by the Compensation Committee of the Board of Directors of
CVR GP, LLC (“CVR GP Compensation Committee”) , in its discretion; provided, however, if CVR
Energy, Inc. establishes a plan that is intended to provide for the payment of bonuses that
constitute “performance-based compensation” (“PIP”) within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”), the Annual Bonus shall be determined by the
CVR GP Compensation Committee in accordance with the PIP. The Annual Bonus, if any, payable to
Executive for a fiscal year will be paid by the Company to the Executive on the last scheduled
payroll payment date during such fiscal year; provided, however, that if the Annual Bonus is
payable pursuant to a PIP, the Annual Bonus shall be paid at such time as is provided in the PIP.
2.3. Signing Bonus. Upon the Commencement Date, the Executive will receive a one-time
signing bonus equal to $25,000 less all applicable withholding taxes, and will be payable in
accordance with the Company’s standard payroll policies.
2.4. Employee Benefits. During the Term, the Executive and Executive’s dependents
shall be eligible to participate in such health, insurance, retirement, and other employee benefit
plans and programs of the Company as in effect from time to time on the same basis as other senior
executives of the Company in accordance with the terms of such plans.
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2.5. Paid Time Off. During the Term, the Executive shall be entitled to twenty-five
(25) days of paid time off (“PTO”) each year.
2.6. Business Expenses. The Company shall pay or reimburse the Executive for all
commercially reasonable business out-of-pocket expenses that the Executive incurs during the Term
in performing Executive’s duties under this Employment Agreement upon presentation of documentation
and in accordance with the expense reimbursement policy of the Company in effect from time to time.
Notwithstanding anything herein to the contrary or otherwise, except to the extent any expense or
reimbursement described in this Employment Agreement does not constitute a “deferral of
compensation” within the meaning of Section 409A of the Code and the Treasury regulations and other
guidance issued thereunder, any expense or reimbursement described in this Employment Agreement
shall meet the following requirements: (i) the amount of expenses eligible for reimbursement
provided to the Executive during any calendar year will not affect the amount of expenses eligible
for reimbursement to the Executive in any other calendar year; (ii) the reimbursements for expenses
for which the Executive is entitled to be reimbursed shall be made on or before the last day of the
calendar year following the calendar year in which the applicable expense is incurred; (iii) the
right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged
for any other benefit; and (iv) the reimbursements shall be made pursuant to objectively
determinable and nondiscretionary Company policies and procedures regarding such reimbursement of
expenses.
Section 3. Employment Termination.
3.1. Termination of Employment. The Company may terminate the Executive’s employment
for any reason during the Term, and the Executive may voluntarily resign Executive’s employment for
any reason during the Term, in each case (other than a termination by the Company for Cause) at any
time upon not less than thirty (30) days’ notice to the other party. Upon the termination or
resignation of the Executive’s employment with the Company for any reason (whether during the Term
or thereafter), the Executive shall be entitled to any Base Salary earned but unpaid through the
date of termination or resignation, any earned but unpaid Annual Bonus for completed fiscal years,
any unused accrued PTO and any unreimbursed expenses in accordance with Section 2.6 hereof
(collectively, the “Accrued Amounts”).
3.2. Certain Terminations.
(a) Termination by the Company Other Than For Cause or Disability; Resignation by the
Executive for Good Reason. If during the Term (i) the Executive’s employment is terminated by
the Company other than for Cause or Disability or (ii) the Executive resigns for Good Reason, then
in addition to the Accrued Amounts the Executive shall be entitled to the following payments and
benefits: (x) the continuation of Executive’s Base Salary at the rate in effect immediately prior
to the date of termination or resignation (or, in the case of a resignation for Good Reason, at the
rate in effect immediately prior to the occurrence of the event constituting Good Reason, if
greater) for a period of twelve (12) months (or, if earlier, until and including the month in which
the Executive attains age 70) (the “Severance Period”) and (y) a Pro-Rata Bonus and (z) to
the extent permitted pursuant to the applicable plans, the continuation on the same terms as an
active employee (including, where applicable, coverage for
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the Executive and the Executive’s dependents) of medical, dental, vision and life insurance
benefits (“Welfare Benefits”) the Executive would otherwise be eligible to receive as an
active employee of the Company for twelve (12) months or, if earlier, until such time as the
Executive becomes eligible for Welfare Benefits from a subsequent employer (the “Welfare
Benefit Continuation Period”) (collectively, the “Severance Payments”). If the
Executive is not permitted to continue participation in the Company’s Welfare Benefit plans
pursuant to the terms of such plans or pursuant to a determination by the Company’s insurance
providers or such continued participation in any plan would result in the imposition of an excise
tax to the Company pursuant to Section 4980D of the Code, the Company shall use reasonable efforts
to obtain individual insurance policies providing the Welfare Benefits to the Executive during the
Welfare Benefit Continuation Period, but shall only be required to pay for such policies an amount
equal to the amount the Company would have paid had the Executive continued participation in the
Company’s Welfare Benefits plans; provided, that, if such coverage cannot be
obtained, the Company shall pay to the Executive monthly during the Welfare Benefit Continuation
Period an amount equal to the amount the Company would have paid had the Executive continued
participation in the Company’s Welfare Benefits plans. The Company’s obligations to make the
Severance Payments shall be conditioned upon: (i) the Executive’s continued compliance with
Executive’s obligations under Section 4 of this Employment Agreement and (ii) the Executive’s
execution, delivery and non-revocation of a valid and enforceable release of claims arising in
connection with the Executive’s employment and termination or resignation of employment with the
Company (the “Release”) in a form reasonably acceptable to the Company and the Executive
that becomes effective not later than forty-five (45) days after the date of such termination or
resignation of employment. In the event that the Executive breaches any of the covenants set forth
in Section 4 of this Employment Agreement, the Executive will immediately return to the Company any
portion of the Severance Payments that have been paid to the Executive pursuant to this Section
3.2(a). Subject to the foregoing and Section 3.2(e), the Severance Payments will commence to be
paid to the Executive on the forty-fifth (45th) day following the Executive’s
termination of employment, except that the Pro-Rata Bonus shall be paid at the time when annual
bonuses are paid generally to the Company’s senior executives for the year in which the Executive’s
termination of employment occurs.
(b) Change in Control Termination. If (A) (i) the Executive’s employment is
terminated by the Company other than for Cause or Disability, or (ii) the Executive resigns for
Good Reason, and such termination or resignation described in (i) or (ii) of this Clause (A) occurs
within the one (1) year period following a Change in Control, or (B) the Executive’s termination or
resignation is a Change in Control Related Termination, then, in addition to the Severance Payments
described in Section 3.2(a), the Executive shall also be entitled to a payment each month during
the Severance Period equal to one-twelfth (1/12th) of the target Annual Bonus for the
year in which the Executive’s termination or resignation occurs (determined without regard to any
reduction in Base Salary or target Annual Bonus percentage subsequent to the Change in Control or
in connection with the Change in Control Related Termination) and such amounts received pursuant to
this Section 3.2(b) shall be deemed to be included in the term Severance Payments for purposes of
this Employment Agreement.
(c) Retirement. Upon Retirement, the Executive, whether or not Section 3.2(a) also
applies but without duplication of benefits, shall be entitled to (i) a Pro-
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Rata Bonus, and (ii) to the extent permitted pursuant to the applicable plans, the
continuation on the same terms as an active employee of Welfare Benefits the Executive would
otherwise be eligible to receive as an active employee of the Company for twenty-four (24) months
following the date of the Executive’s Retirement or, if earlier, until such time as the Executive
becomes eligible for Welfare Benefits from a subsequent employer and, thereafter, shall be eligible
to continue participation in the Company’s Welfare Benefits plans, provided that such continued
participation shall be entirely at the Executive’s expense and shall cease when the Executive
becomes eligible for Welfare Benefits from a subsequent employer. Notwithstanding the foregoing,
(x) if the Executive is not permitted to continue participation in the Company’s Welfare Benefit
plans pursuant to the terms of such plans or pursuant to a determination by the Company’s insurance
providers or such continued participation in any plan would result in the plan being discriminatory
within the meaning of Section 4980D of the Code, the Company shall use reasonable efforts to obtain
individual insurance policies providing the Welfare Benefits to the Executive for such twenty-four
(24) months, but shall only be required to pay for such policies an amount equal to the amount the
Company would have paid had the Executive continued participation in the Company’s Welfare Benefit
plans; provided, that, if such coverage cannot be obtained, the Company shall pay
to the Executive monthly for such twenty-four (24) months an amount equal to the amount the Company
would have paid had the Executive continued participation in the Company’s Welfare Benefits plans
and (y) any Welfare Benefits coverage provided pursuant to this Section 3.2(c), whether through the
Company’s Welfare Benefit plans or through individual insurance policies, shall be supplemental to
any benefits for which the Executive becomes eligible under Medicare, whether or not the Executive
actually obtains such Medicare coverage. The Pro-Rata Bonus shall be paid at the time when annual
bonuses are paid generally to the Company’s senior executives for the year in which the Executive’s
Retirement occurs.
(d) Definitions. For purposes of this Section 3.2, the following terms shall have the
following meanings:
(1) A resignation for “Good Reason” shall mean a resignation by the Executive within
thirty (30) days following the date on which the Company has engaged in any of the following: (i)
the assignment of duties or responsibilities to the Executive that reflect a material diminution of
the Executive’s position with the Company; (ii) a relocation of the Executive’s principal place of
employment outside of the greater Houston metropolitan area; or (iii) a reduction in the
Executive’s Base Salary, other than across-the-board reductions applicable to similarly situated
employees of the Company; provided, however, that the Executive must provide the
Company with notice promptly following the occurrence of any of the foregoing and at least thirty
(30) days to cure.
(2) “Cause” shall mean that the Executive has engaged in any of the following: (i)
willful misconduct or breach of fiduciary duty; (ii) intentional failure or refusal to perform
reasonably assigned duties after written notice of such willful failure or refusal and the failure
or refusal is not corrected within ten (10) business days; (iii) the indictment for, conviction of
or entering a plea of guilty or nolo contendere to a crime constituting a felony (other than a
traffic violation or other offense or violation outside of the course of employment which does not
adversely affect the Partnership, the Company or their respective Affiliates or their reputation or
the ability of the Executive to perform Executive’s
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employment-related duties or to represent the Partnership, the Company or their respective
Affiliates); provided, however, that (A) if the Executive is terminated for Cause
by reason of Executive’s indictment pursuant to this clause (iii) and the indictment is
subsequently dismissed or withdrawn or the Executive is found to be not guilty in a court of law in
connection with such indictment, then the Executive’s termination shall be treated for purposes of
this Employment Agreement as a termination by the Company other than for Cause, and the Executive
will be entitled to receive (without duplication of benefits and to the extent permitted by law and
the terms of the then-applicable Welfare Benefits plans) the payments and benefits set forth in
Section 3.2(a) and, to the extent either or both are applicable, Section 3.2(b) and Section 3.2(c),
following such dismissal, withdrawal or finding, payable in the manner and subject to the
conditions set forth in such Sections and (B) if such indictment relates to environmental matters
and does not allege that the Executive was directly involved in or directly supervised the
action(s) forming the basis of the indictment, Cause shall not be deemed to exist under this
Employment Agreement by reason of such indictment until the Executive is convicted or enters a plea
of guilty or nolo contendere in connection with such indictment; or (iv) material breach of the
Executive’s covenants in Section 4 of this Employment Agreement or any material written policy of
the Partnership, the Company or any of their respective Affiliates after written notice of such
breach and failure by the Executive to correct such breach within ten (10) business days, provided
that no notice of, nor opportunity to correct, such breach shall be required hereunder if such
breach cannot be cured by the Executive.
(3) “Change in Control” shall have the meaning set forth on Appendix A.
(4) “Change in Control Related Termination” shall mean a termination of the
Executive’s employment by the Company other than for Cause or Executive’s resignation for Good
Reason, in each case at any time prior to the date of a Change in Control and (A) the Executive
reasonably demonstrates that such termination or the basis for resignation for Good Reason occurred
in anticipation of a transaction that, if consummated, would constitute a Change in Control, (B)
such termination or the basis for resignation for Good Reason occurred after the Partnership
entered into a definitive agreement, the consummation of which would constitute a Change in Control
or (C) the Executive reasonably demonstrates that such termination or the basis for resignation for
Good Reason was implemented at the request of a third party who has indicated an intention or has
taken steps reasonably calculated to effect a Change in Control.
(5) “Disability” shall mean the Executive’s inability, due to physical or mental ill
health, to perform the essential functions of the Executive’s job, with or without a reasonable
accommodation, for 180 days during any 365 day period irrespective of whether such days are
consecutive.
(6) “Pro-Rata Bonus” shall mean, the product of (A) a fraction, the numerator of which
is the number of days the Executive is employed by the Company during the year in which the
Executive’s employment terminates pursuant to Section 3.2(a) or (c) prior to and including the date
of the Executive’s termination and the denominator of which is 365 and (B)(i) if the Annual Bonus
is payable pursuant to a PIP, an amount for that year equal to the Annual Bonus the Executive would
have been entitled to receive had his
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employment not terminated, based on the actual performance of the Partnership or the
Executive, as applicable, for the full year, or (ii) if the Annual Bonus is not payable pursuant to
a PIP, the target Annual Bonus for that year.
(7) “Retirement” shall mean the Executive’s termination or resignation of employment
for any reason (other than by the Company for Cause or by reason of the Executive’s death)
following the date the Executive attains age 62.
(e) Section 409A. To the extent applicable, this Employment Agreement shall be
interpreted, construed and operated in accordance with Section 409A of the Code and the Treasury
regulations and other guidance issued thereunder. If on the date of the Executive’s separation from
service (as defined in Treasury Regulation §1.409A-1(h)) with the Company the Executive is a
specified employee (as defined in Code Section 409A and Treasury Regulation §1.409A-1(i)), no
payment constituting the “deferral of compensation” within the meaning of Treasury Regulation
§1.409A-1(b) and after application of the exemptions provided in Treasury Regulation
§§1.409A-1(b)(4) and 1.409A-1(b)(9)(iii) shall be made to the Executive at any time prior to the
earlier of (a) the expiration of the six (6) month period following the Executive’s separation from
service or (b) the Executive’s death, and any such amounts deferred during such applicable period
shall instead be paid in a lump sum to Executive (or, if applicable, Executive’s estate) on the
first payroll payment date following expiration of such six (6) month period or, if applicable, the
Executive’s death. For purposes of conforming this Employment Agreement to Section 409A of the
Code, the parties agree that any reference to termination of employment, severance from employment,
resignation from employment or similar terms shall mean and be interpreted as a “separation from
service” as defined in Treasury Regulation §1.409A-1(h). For purposes of applying Section 409A of
the Code to this Employment Agreement (including, without limitation, for purposes of Treasury
Regulation Section 1.409A-2(b)(2)(iii)), each payment that the Executive may be entitled to receive
under this Employment Agreement shall be treated as a separate and distinct payment and shall not
collectively be treated as a single payment.
3.3. Exclusive Remedy. The foregoing payments upon termination or resignation of the
Executive’s employment shall constitute the exclusive severance payments due the Executive upon a
termination or resignation of Executive’s employment under this Employment Agreement.
3.4. Resignation from All Positions. Upon the termination or resignation of the
Executive’s employment with the Company for any reason, the Executive shall be deemed to have
resigned, as of the date of such termination or resignation, from and with respect to all positions
the Executive then holds as an officer, director, employee and member of the Board of Directors
(and any committee thereof) of the Company and any of its Affiliates.
3.5. Cooperation. For one (1) year following the termination or resignation of the
Executive’s employment with the Company for any reason, the Executive agrees to reasonably
cooperate with the Company upon reasonable request of the Board and to be reasonably available to
the Company with respect to matters arising out of the Executive’s services to the Company and its
Affiliates, provided, however, such period of cooperation shall be for three (3) years, following
any such termination or resignation of Executive’s employment
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for any reason, with respect to tax matters involving the Company or any of its Affiliates.
The Company shall reimburse the Executive for expenses reasonably incurred in connection with such
matters as agreed by the Executive and the Board and the Company shall compensate the Executive for
such cooperation at an hourly rate based on the Executive’s most recent base salary rate assuming
two thousand (2,000) working hours per year; provided, that if the Executive is required to
spend more than forty (40) hours in any month on Company matters pursuant to this Section 3.5, the
Executive and the Board shall mutually agree to an appropriate rate of compensation for the
Executive’s time over such forty (40) hour threshold.
Section 4. Unauthorized Disclosure; Non-Competition; Non-Solicitation;
Proprietary Rights.
4.1. Unauthorized Disclosure. The Executive agrees and understands that in the
Executive’s position with the Company and any Affiliates, the Executive has been and will be
exposed to and has and will receive information relating to the confidential affairs of the
Partnership, the Company and their respective Affiliates, including, without limitation, technical
information, intellectual property, business and marketing plans, strategies, customer information,
software, other information concerning the products, promotions, development, financing, expansion
plans, business policies and practices of the Partnership, the Company and their respective
Affiliates and other forms of information considered by the Partnership, the Company and their
respective Affiliates to be confidential and in the nature of trade secrets (including, without
limitation, ideas, research and development, know-how, formulas, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and business and
marketing plans and proposals) (collectively, the “Confidential Information”);
provided, however, that Confidential Information shall not include information which (i) is
or becomes generally available to the public not in violation of this Employment Agreement or any
written policy of the Partnership, the Company or their respective Affiliates; or (ii) was in the
Executive’s possession or knowledge on a non-confidential basis prior to such disclosure. The
Executive agrees that at all times during the Executive’s employment with the Company and
thereafter, the Executive shall not disclose such Confidential Information, either directly or
indirectly, to any individual, corporation, partnership, limited liability company, association,
trust or other entity or organization, including a government or political subdivision or an agency
or instrumentality thereof (each, for purposes of this Section 4, a “Person”) without the
prior written consent of the Company and shall not use or attempt to use any such information in
any manner other than in connection with Executive’s employment with the Company, unless required
by law to disclose such information, in which case the Executive shall provide the Company with
written notice of such requirement as far in advance of such anticipated disclosure as possible.
Executive’s confidentiality covenant has no temporal, geographical or territorial restriction.
Upon termination or resignation of the Executive’s employment with the Company, the Executive shall
promptly supply to the Company all property, keys, notes, memoranda, writings, lists, files,
reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines,
technical data and any other tangible product or document which has been produced by, received by
or otherwise submitted to the Executive during or prior to the Executive’s employment with the
Company, and any copies thereof in Executive’s (or capable of being reduced to Executive’s)
possession.
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4.2. Non-Competition. By and in consideration of the Company’s entering into this
Employment Agreement and the payments to be made and benefits to be provided by the Company
hereunder, and in further consideration of the Executive’s exposure to the Confidential Information
of the Partnership, the Company and their respective Affiliates, the Executive agrees that the
Executive shall not, during the Term and for a period of twelve (12) months thereafter (the
“Restriction Period”), directly or indirectly, own, manage, operate, join, control, be
employed by, or participate in the ownership, management, operation or control of, or be connected
in any manner with, including, without limitation, holding any position as a stockholder, director,
officer, consultant, independent contractor, employee, partner, or investor in, any Restricted
Enterprise (as defined below); provided, that in no event shall ownership of one percent
(1%) or less of the outstanding securities of any class of any issuer whose securities are
registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
standing alone, be prohibited by this Section 4.2, so long as the Executive does not have, or
exercise, any rights to manage or operate the business of such issuer other than rights as a
stockholder thereof. For purposes of this paragraph, “Restricted Enterprise” shall mean
any Person that is actively engaged in any business which is either (i) in competition with the
business of the Partnership, the Company or any of their respective Affiliates conducted during the
preceding twelve (12) months (or following the Term, the twelve (12) months preceding the last day
of the Term), or (ii) proposed to be conducted by the Partnership, the Company or any of their
respective Affiliates in the Partnership’s, the Company’s or their respective Affiliate’s business
plan as in effect at that time (or following the Term, the business plan as in effect as of the
last day of the Term); provided, that (x) with respect to any Person that is actively
engaged in the refinery business, a Restricted Enterprise shall only include such a Person that
operates or markets in any geographic area in which the Partnership, the Company or any of their
respective Affiliates operates or markets with respect to its refinery business and (y) with
respect to any Person that is actively engaged in the fertilizer business, a Restricted Enterprise
shall only include such a Person that operates or markets in any geographic area in which the
Partnership, the Company or any of their respective Affiliates operates or markets with respect to
its fertilizer business. During the Restriction Period, upon request of the Company, the Executive
shall notify the Company of the Executive’s then-current employment status. For the avoidance of
doubt, a Restricted Enterprise shall not include any Person or division thereof that is engaged in
the business of supplying (but not refining) crude oil or natural gas.
4.3. Non-Solicitation of Employees. During the Restriction Period, the Executive
shall not directly or indirectly contact, induce or solicit (or assist any Person to contact,
induce or solicit) for employment any person who is, or within twelve (12) months prior to the date
of such solicitation was, an employee of the Partnership, the Company or any of their respective
Affiliates.
4.4. Non-Solicitation of Customers/Suppliers. During the Restriction Period, the
Executive shall not (i) contact, induce or solicit (or assist any Person to contact, induce or
solicit) any Person which has a business relationship with the Partnership, the Company or any of
their respective Affiliates in order to terminate, curtail or otherwise interfere with such
business relationship or (ii) solicit, other than on behalf of the Partnership, the Company or
their respective Affiliates, any Person that the Executive knows or should have known (x) is a
current customer of the Partnership, the Company or any of their respective Affiliates in any
geographic area in which the Partnership, the Company or any of their
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respective Affiliates operates or markets or (y) is a Person in any geographic area in which
the Partnership, the Company or any of their respective Affiliates operates or markets with respect
to which the Partnership, the Company or any of their respective Affiliates has, within the twelve
(12) months prior to the date of such solicitation, devoted more than de minimis resources in an
effort to cause such Person to become a customer of the Partnership, the Company or any of their
respective Affiliates in that geographic area. For the avoidance of doubt, the foregoing does not
preclude the Executive from soliciting, outside of the geographic areas in which the Partnership,
the Company or any of their respective Affiliates operates or markets, any Person that is a
customer or potential customer of the Partnership, the Company or any of their respective
Affiliates in the geographic areas in which it operates or markets.
4.5. Extension of Restriction Period. The Restriction Period shall be extended for a
period of time equal to any period during which the Executive is in breach of any of Sections 4.2,
4.3 or 4.4 hereof.
4.6. Proprietary Rights. The Executive shall disclose promptly to the Company any and
all inventions, discoveries, and improvements (whether or not patentable or registrable under
copyright or similar statutes), and all patentable or copyrightable works, initiated, conceived,
discovered, reduced to practice, or made by Executive, either alone or in conjunction with others,
during the Executive’s employment with the Company and related to the business or activities of the
Partnership, the Company or their respective Affiliates (the “Developments”). Except to
the extent any rights in any Developments constitute a work made for hire under the U.S. Copyright
Act, 17 U.S.C. § 101 et seq. that are owned ab initio by the Partnership, the Company and/or their
respective Affiliates, the Executive assigns all of Executive’s right, title and interest in all
Developments (including all intellectual property rights therein) to the Company or its nominee
without further compensation, including all rights or benefits therefor, including without
limitation the right to xxx and recover for past and future infringement. The Executive
acknowledges that any rights in any developments constituting a work made for hire under the U.S.
Copyright Act, 17 U.S.C § 101 et seq. are owned upon creation by the Partnership, the Company
and/or their respective Affiliates as the Executive’s employer. Whenever requested to do so by the
Company, the Executive shall execute any and all applications, assignments or other instruments
which the Company shall deem necessary to apply for and obtain trademarks, patents or copyrights of
the United States or any foreign country or otherwise protect the interests of the Partnership, the
Company and their respective Affiliates therein. These obligations shall continue beyond the end
of the Executive’s employment with the Company with respect to inventions, discoveries,
improvements or copyrightable works initiated, conceived or made by the Executive while employed by
the Company, and shall be binding upon the Executive’s employers, assigns, executors,
administrators and other legal representatives. In connection with Executive’s execution of this
Employment Agreement, the Executive has informed the Company in writing of any interest in any
inventions or intellectual property rights that Executive holds as of the date hereof. If the
Company is unable for any reason, after reasonable effort, to obtain the Executive’s signature on
any document needed in connection with the actions described in this Section 4.6, the Executive
hereby irrevocably designates and appoints the Partnership, the Company, their respective
Affiliates, and their respective duly authorized officers and agents as the Executive’s agent and
attorney in fact to act for and in the Executive’s behalf to execute, verify and file any such
10
documents and to do all other lawfully permitted acts to further the purposes of this Section
with the same legal force and effect as if executed by the Executive.
4.7. Confidentiality of Agreement. Other than with respect to information required to
be disclosed by applicable law, the parties hereto agree not to disclose the terms of this
Employment Agreement to any Person; provided the Executive may disclose this Employment Agreement
and/or any of its terms to the Executive’s immediate family, financial advisors and attorneys.
Notwithstanding anything in this Section 4.7 to the contrary, the parties hereto (and each of their
respective employees, representatives, or other agents) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Employment Agreement, and all materials of any kind (including opinions or
other tax analyses) related to such tax treatment and tax structure; provided that this sentence
shall not permit any Person to disclose the name of, or other information that would identify, any
party to such transactions or to disclose confidential commercial information regarding such
transactions.
4.8. Remedies. The Executive agrees that any breach of the terms of this Section 4
would result in irreparable injury and damage to the Partnership, the Company and their respective
Affiliates for which the Partnership, the Company and their respective Affiliates would have no
adequate remedy at law; the Executive therefore also agrees that in the event of said breach or any
threat of breach, the Partnership, the Company and their respective Affiliates shall be entitled to
an immediate injunction and restraining order to prevent such breach and/or threatened breach
and/or continued breach by the Executive and/or any and all Persons acting for and/or with the
Executive, without having to prove damages, in addition to any other remedies to which the
Partnership, the Company and their respective Affiliates may be entitled at law or in equity,
including, without limitation, the obligation of the Executive to return any Severance Payments
made by the Company to the Company. The terms of this paragraph shall not prevent the Partnership,
the Company or their respective Affiliates from pursuing any other available remedies for any
breach or threatened breach hereof, including, without limitation, the recovery of damages from the
Executive. The Executive and the Company further agree that the provisions of the covenants
contained in this Section 4 are reasonable and necessary to protect the businesses of the
Partnership, the Company and their respective Affiliates because of the Executive’s access to
Confidential Information and Executive’s material participation in the operation of such
businesses.
Section 5. Representation.
The Executive represents and warrants that (i) Executive is not subject to any contract,
arrangement, policy or understanding, or to any statute, governmental rule or regulation, that in
any way limits Executive’s ability to enter into and fully perform Executive’s obligations under
this Employment Agreement and (ii) Executive is not otherwise unable to enter into and fully
perform Executive’s obligations under this Employment Agreement.
11
Section 6. Withholding.
All amounts paid to the Executive under this Employment Agreement during or following the Term
shall be subject to withholding and other employment taxes imposed by applicable law.
Section 7. Effect of Section 280G of the Code.
7.1. Payment Reduction. Notwithstanding anything contained in this Employment
Agreement to the contrary, (i) to the extent that any payment or distribution of any type to or for
the Executive by the Company, any affiliate of the Company, any Person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the Company’s assets
(within the meaning of Section 280G of the Code and the regulations thereunder), or any affiliate
of such Person, whether paid or payable or distributed or distributable pursuant to the terms of
this Employment Agreement or otherwise (the “Payments”) constitute “parachute payments”
(within the meaning of Section 280G of the Code), and if (ii) such aggregate would, if reduced by
all federal, state and local taxes applicable thereto, including the excise tax imposed under
Section 4999 of the Code (the “Excise Tax”), be less than the amount the Executive would
receive, after all taxes, if the Executive received aggregate Payments equal (as valued under
Section 280G of the Code) to only three times the Executive’s “base amount” (within the meaning of
Section 280G of the Code), less $1.00, then (iii) such Payments shall be reduced (but not below
zero) if and to the extent necessary so that no Payments to be made or benefit to be provided to
the Executive shall be subject to the Excise Tax; provided, however, that the
Company shall use its reasonable best efforts to obtain shareholder approval of the Payments
provided for in this Employment Agreement in a manner intended to satisfy requirements of the
“shareholder approval” exception to Section 280G of the Code and the regulations promulgated
thereunder, such that payment may be made to the Executive of such Payments without the application
of an Excise Tax. If the Payments are so reduced, the Company shall reduce or eliminate the
Payments (x) by first reducing or eliminating the portion of the Payments which are not payable in
cash (other than that portion of the Payments subject to clause (z) hereof), (y) then by reducing
or eliminating cash payments (other than that portion of the Payments subject to clause (z) hereof)
and (z) then by reducing or eliminating the portion of the Payments (whether payable in cash or not
payable in cash) to which Treasury Regulation § 1.280G-1 Q/A 24(c) (or successor thereto) applies,
in each case in reverse order beginning with payments or benefits which are to be paid the farthest
in time.
7.2. Determination of Amount of Reduction (if any). The determination of whether the
Payments shall be reduced as provided in Section 7.1 hereof and the amount of such reduction shall
be made at the Company’s expense by an accounting firm selected by the Company from among the four
(4) largest accounting firms in the United States (the “Accounting Firm”). The Accounting
Firm shall provide its determination (the “Determination”), together with detailed
supporting calculations and documentation, to the Company and the Executive within ten (10) days
after the Executive’s final day of employment, which Determination, absent manifest error, shall be
binding, final and conclusive upon the Company and the Executive. If the Accounting Firm determines
that no Excise Tax is payable by the Executive with respect to the Payments, it shall furnish the
Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed
with respect to any
12
such payments. If the Accounting Firm determines that Excise Tax is payable by the Executive
with respect to the Payments, it shall furnish the Executive with an opinion reasonably acceptable
to the Executive that no Excise Tax will be imposed with respect to any payments after the
reductions contemplated by Section 7.1 hereof.
Section 8. Miscellaneous.
8.1. Amendments and Waivers. This Employment Agreement and any of the provisions
hereof may be amended, waived (either generally or in a particular instance and either
retroactively or prospectively), modified or supplemented, in whole or in part, only by written
agreement signed by the parties hereto; provided, that, the observance of any provision of
this Employment Agreement may be waived in writing by the party that will lose the benefit of such
provision as a result of such waiver. The waiver by any party hereto of a breach of any provision
of this Employment Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach, except as otherwise explicitly
provided for in such waiver. Except as otherwise expressly provided herein, no failure on the part
of any party to exercise, and no delay in exercising, any right, power or remedy hereunder, or
otherwise available in respect hereof at law or in equity, shall operate as a waiver thereof, nor
shall any single or partial exercise of such right, power or remedy by such party preclude any
other or further exercise thereof or the exercise of any other right, power or remedy.
8.2. Indemnification. To the extent provided in the Company’s Certificate of
Formation or Limited Liability Company Agreement, as in effect from time to time, and subject to
any separate agreement (if any) between the Company and the Executive or between the Partnership
and the Executive regarding indemnification, the Company shall indemnify the Executive for losses
or damages incurred by the Executive as a result of causes of action arising from the Executive’s
performance of duties for the benefit of the Partnership or the Company, whether or not the claim
is asserted during the Term.
8.3. Assignment. This Employment Agreement, and the Executive’s rights and
obligations hereunder, may not be assigned by the Executive, and any purported assignment by the
Executive in violation hereof shall be null and void.
8.4. Payments Following Executive’s Death. Any Accrued Amounts payable to the
Executive pursuant to this Employment Agreement that remain unpaid at the Executive’s death shall
be paid to the Executive’s estate.
8.5. Notices. Unless otherwise provided herein, all notices, requests, demands,
claims and other communications provided for under the terms of this Employment Agreement shall be
in writing. Any notice, request, demand, claim or other communication hereunder shall be sent by
(i) personal delivery (including receipted courier service) or overnight delivery service, (ii)
facsimile during normal business hours, with confirmation of receipt, to the number indicated,
(iii) reputable commercial overnight delivery service courier or (iv) registered or certified mail,
return receipt requested, postage prepaid and addressed to the intended recipient as set forth
below:
13
| If to the Company: | CVR GP, LLC 00 X. Xxxxxxxxx Xxxxxx, Xxxxx 000 Xxxxxx Xxxx, XX 00000 Attention: General Counsel Facsimile: (000) 000-0000 |
|||
| with a copy to: | Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP Xxx Xxx Xxxx Xxxxx Xxx Xxxx, XX 00000 Attention: Xxxxxx X. Xxxxxxx, Esq. Facsimile: (000) 000-0000 |
|||
| If to the Executive: | Xxxxxx X. Xxxxxxx 000 Xxxxxxxx, Xxxxx 000 Xxxxxxxxx, Xxxxx 00000 Facsimile: (000) 000-0000 |
All such notices, requests, consents and other communications shall be deemed to have been
given when received. Any party may change its facsimile number or its address to which notices,
requests, demands, claims and other communications hereunder are to be delivered by giving the
other parties hereto notice in the manner then set forth.
8.6. Governing Law. This Employment Agreement shall be construed and enforced in
accordance with, and the rights and obligations of the parties hereto shall be governed by, the
laws of the State of Texas, without giving effect to the conflicts of law principles thereof. Each
of the parties hereto irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of Texas (collectively, the “Selected Courts”) for any action or
proceeding relating to this Employment Agreement, agrees not to commence any action or proceeding
relating thereto except in the Selected Courts, and waives any forum or venue objections to the
Selected Courts.
8.7. Severability. Whenever possible, each provision or portion of any provision of
this Employment Agreement, including those contained in Section 4 hereof, will be interpreted in
such manner as to be effective and valid under applicable law but the invalidity or
unenforceability of any provision or portion of any provision of this Employment Agreement in any
jurisdiction shall not affect the validity or enforceability of the remainder of this Employment
Agreement in that jurisdiction or the validity or enforceability of this Employment Agreement,
including that provision or portion of any provision, in any other jurisdiction. In addition,
should a court or arbitrator determine that any provision or portion of any provision of this
Employment Agreement, including those contained in Section 4 hereof, is not reasonable or valid,
either in period of time, geographical area, or otherwise, the parties hereto agree that such
provision should be interpreted and enforced to the maximum extent which such court or arbitrator
deems reasonable or valid.
8.8. Entire Agreement. From and after the Commencement Date, this Employment
Agreement constitutes the entire agreement between the parties hereto, and supersedes all prior
representations, agreements and understandings (including any prior course
14
of dealings), both written and oral, relating to any employment of the Executive by the
Company or any of its Affiliates.
8.9. Counterparts. This Employment Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
8.10. Binding Effect. This Employment Agreement shall inure to the benefit of, and be
binding on, the successors and assigns of each of the parties, including, without limitation, the
Executive’s heirs and the personal representatives of the Executive’s estate and any successor to
all or substantially all of the business and/or assets of the Company.
8.11. General Interpretive Principles. The name assigned this Employment Agreement
and headings of the sections, paragraphs, subparagraphs, clauses and subclauses of this Employment
Agreement are for convenience of reference only and shall not in any way affect the meaning or
interpretation of any of the provisions hereof. Words of inclusion shall not be construed as terms
of limitation herein, so that references to “include”, “includes” and “including” shall not be
limiting and shall be regarded as references to non-exclusive and non-characterizing illustrations.
8.12. Mitigation. Notwithstanding any other provision of this Employment Agreement,
(a) the Executive will have no obligation to mitigate damages for any breach or termination of this
Employment Agreement by the Company, whether by seeking employment or otherwise and (b) except for
Welfare Benefits provided pursuant to Section 3.2(a) or Section 3.2(b), the amount of any payment
or benefit due the Executive after the date of such breach or termination will not be reduced or
offset by any payment or benefit that the Executive may receive from any other source.
8.13. Company Actions. Any actions, approvals, decisions, or determinations to be
made by the Company under this Employment Agreement shall be made by the Company’s Board, except as
otherwise expressly provided herein. For purposes of any references herein to the Board’s
designee, any such reference shall be deemed to include such officers, or committees of the Board,
as the Board may expressly designate from time to time for such purpose.
[signature page follows]
15
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first
written above.
| CVR GP, LLC | ||||||||
/s/ Xxxxxx X. Xxxxxxx
|
By: | /s/ Xxxxx X. Xxxxxx
|
||||||
| Title: Chief Executive Officer and President | ||||||||
APPENDIX A
“Change in Control” means the occurrence of any of the following:
(a) CVR Energy, Inc. (“CVR”) and its wholly owned subsidiaries ceasing to own,
beneficially and of record, outstanding equity interests in the Company representing more than 50%
of each of the aggregate ordinary voting power (or, if the Company shall be a partnership, of the
general partner interests) and the aggregate equity value represented by the issued and outstanding
equity interests in the Company;
(b) The failure by the Company to be the sole general partner of and to own, beneficially and
of record, 100% of the general partner interests in the Partnership;
(c) An acquisition (other than directly from CVR) of any voting securities of CVR (the
“Voting Securities”) by any “Person” (as the term “person” is used for purposes of Section
13(d) or 14(d) of the Exchange Act), immediately after which such Person has “Beneficial Ownership”
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than thirty percent
(30%) of (i) the then-outstanding Shares or (ii) the combined voting power of CVR’s
then-outstanding Voting Securities; provided, however, that in determining whether a Change in
Control has occurred pursuant to this paragraph (c), the acquisition of Shares or Voting Securities
in a Non-Control Acquisition (as hereinafter defined) shall not constitute a Change in Control. A
“Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by (A) CVR or (B) any corporation or other Person the
majority of the voting power, voting equity securities or equity interest of which is owned,
directly or indirectly, by CVR (for purposes of this definition, a “Related Entity”), (ii)
CVR or any Related Entity, or (iii) any Person in connection with a Non-Control Transaction (as
hereinafter defined); or
(d) The consummation of:
(i) A merger, consolidation or reorganization (x) with or into CVR or (y) in which securities
of CVR are issued (a “Merger”), unless such Merger is a “Non-Control Transaction.” A
“Non-Control Transaction” shall mean a Merger in which:
(A) the shareholders of CVR immediately before such Merger own directly or indirectly
immediately following such Merger at least a majority of the combined voting power of the
outstanding voting securities of (1) the corporation resulting from such Merger (the “Surviving
Corporation”), if fifty percent (50%) or more of the combined voting power of the then
outstanding voting securities of the Surviving Corporation is not Beneficially Owned, directly or
indirectly, by another Person (a “Parent Corporation”) or (2) if there is one or more than
one Parent Corporation, the ultimate Parent Corporation;
(B) the individuals who were members of the Board immediately prior to the execution of the
agreement providing for such Merger constitute at least a majority of the members of the board of
directors of (1) the Surviving Corporation, if there is no Parent
Corporation, or (2) if there is one or more than one Parent Corporation, the ultimate Parent
Corporation; and
(C) no Person other than (1) CVR or another corporation that is a party to the agreement of
Merger, (2) any Related Entity, (3) any employee benefit plan (or any trust forming a part thereof)
that, immediately prior to the Merger, was maintained by CVR or any Related Entity, or (4) any
Person who, immediately prior to the Merger, had Beneficial Ownership of thirty percent (30%) or
more of the then outstanding Shares or Voting Securities, has Beneficial Ownership, directly or
indirectly, of thirty percent (30%) or more of the combined voting power of the outstanding voting
securities or common stock of (x) the Surviving Corporation, if there is no Parent Corporation, or
(y) if there is one or more than one Parent Corporation, the ultimate Parent Corporation.
(ii) A complete liquidation or dissolution of CVR; or
(iii) The sale or other disposition of all or substantially all of the assets of CVR and its
Subsidiaries taken as a whole to any Person (other than (x) a transfer to a Related Entity or (y)
the distribution to CVR’s shareholders of the stock of a Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because
any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted
amount of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares
or Voting Securities by CVR which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons;
provided that if a Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Shares or Voting Securities by CVR and, after such share acquisition
by CVR, the Subject Person becomes the Beneficial Owner of any additional Shares or Voting
Securities and such Beneficial Ownership increases the percentage of the then outstanding Shares or
Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.
For purposes of this definition: (i) “Shares” means the common stock, par value $.01 per
share, of CVR and any other securities into which such shares are changed or for which such shares
are exchanged.
