Delaware
(State or other jurisdiction of incorporation or organization) |
5500
(Primary Standard Industrial Classification Code Number) |
52-2319066
(I.R.S. Employer Identification Number) |
Andrew C. Freedman, Esq.
Mara H. Rogers, Esq. Fulbright & Jaworski L.L.P. 666 Fifth Avenue New York, New York 10103 Telephone (212) 318-3000 Fax (212) 318-3400 |
D. Rhett Brandon, Esq.
Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Telephone (212) 455-2000 Fax (212) 455-2502 |
Title of Each Class of | Amount | Proposed Maximum | Proposed Maximum | Amount of | ||||||||
Securities to be Registered | to be Registered | Offering Price Per Share | Aggregate Offering Price | Registration Fee | ||||||||
Common stock, $0.01 par value per share
|
11,500,000 shares | $16.00 | $184,000,000 | $19,688(1) | ||||||||
(1) | $24,610 was previously paid on February 8, 2006. |
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell the securities, nor is it a solicitation of an offer to buy the securities, in any state where an offer or sale of the securities is not permitted. |
Per Share | Total | |||||||
Initial Public Offering Price
|
$ | $ | ||||||
Underwriting Discount
|
$ | $ | ||||||
Proceeds to Delek US Holdings, Inc. (before expenses)
|
$ | $ |
Lehman Brothers | Citigroup |
HSBC |
Morgan Keegan & Company, Inc. |
William Blair & Company |
Israel Discount Bank of New York |
1
2
3
4
This summary highlights information contained elsewhere in
this prospectus but might not contain all of the information
that is important to you. Before investing in our common stock,
you should read the entire prospectus carefully, including the
Risk Factors section and our historical and pro
forma consolidated financial statements and the notes thereto
included elsewhere in this prospectus.
Unless otherwise indicated, the information contained in this
prospectus assumes that the underwriters option to
purchase additional shares is not exercised.
We conduct our business primarily through our operating
subsidiaries, each of which is a direct or indirect wholly-owned
subsidiary of Delek US Holdings, Inc. In this prospectus, unless
the context otherwise requires, the terms our
company, Delek, we, us
and our refer to Delek US Holdings, Inc. and its
consolidated subsidiaries and their predecessors. In addition,
unless otherwise specified, all references in this prospectus to
the number of stores that we own or operate or to the number of
dealer-operated retail locations are as of April 18, 2006.
You should refer to the Glossary of Selected Terms
beginning on page 125 for definitions of some of the terms
we use to describe our business and industry.
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Proven ability to integrate acquisitions
. We have
successfully integrated our refinery, four large retail fuel and
convenience store acquisitions and several smaller acquisitions
since our formation in 2001, and have improved their operating
performance.
Niche market refinery
. Our Tyler refinery is the only
supplier of a full range of finished petroleum products within a
radius of approximately 115 miles, which provides us with a
cost advantage over other companies that would need to import
fuel via pipeline and truck from outside the area.
Strong market presence in our existing retail markets
. We
believe that we rank first among convenience store operators in
terms of number of stores in each of the Nashville, Memphis and
Northern Alabama regions and third among convenience store
operators in the Richmond, Virginia region, which enables us to
realize economies of scale and cost-efficiencies and provides us
with a platform for continued growth through acquisitions.
Scalable information technology
. Our information
technology systems deliver timely and focused feedback on
margins and sales volumes, enabling our managers to react
quickly to market developments.
Management focus and expertise
. Our experienced
management encourages broad employee participation in
decision-making and focuses on controlling operating expenses
and loss prevention, which enables us to respond rapidly to
market trends and opportunities.
Table of Contents
competition;
changes in, or the failure to comply with, the extensive
government regulations applicable to our industry segments;
decreases in our refining margins or fuel gross profit as a
result of increases in the prices of crude oil, other feedstocks
and refined petroleum products;
our ability to execute our strategy of growth through
acquisitions and transactional risks in acquisitions;
general economic and business conditions, particularly levels of
spending relating to travel and tourism or conditions affecting
the southeastern United States;
dependence on one principal fuel supplier and one wholesaler for
a significant portion of our convenience store merchandise;
operating hazards, natural disasters, casualty losses and other
matters beyond our control;
increases in our debt levels and restrictive covenants in our
debt agreements;
potential conflicts of interest between our major stockholder
and other stockholders; and
our discretion in the use of net proceeds from this offering.
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Table of Contents
5
6
7
8
9
10
Common stock offered
10,000,000 shares
Common stock to be outstanding after the offering
49,389,869 shares(1)
Underwriters option(1)
We have granted the underwriters a
30-day
option to
purchase from us up to an aggregate of 1,500,000 additional
shares of our common stock if they sell more than
10,000,000 shares in the offering.
Use of proceeds
We estimate that the net proceeds to us from this offering will
be approximately $136.8 million. We expect to use a portion
of the net proceeds from this offering to repay
$42.5 million principal amount of our debt, plus accrued
interest, all of which is owed to our affiliates. We expect to
use the majority of the remaining net proceeds for future
acquisitions, capital improvements to our refinery and existing
retail fuel and convenience stores and construction of new
retail fuel and convenience stores, and the remainder of the net
proceeds for general corporate purposes.
Dividend policy
We will pay a quarterly cash dividend of $0.0375 per share of
our common stock in the fourth quarter of 2006. Thereafter, we
intend to pay quarterly cash dividends on our common stock at an
initial annual rate of $0.15 per share. The declaration and
payment of future dividends to holders of our common stock will
be at the discretion of our board of directors and will depend
upon many factors, including our results of operations,
financial condition, earnings, capital requirements,
restrictions in our debt agreements and legal requirements.
Proposed New York Stock Exchange (NYSE) symbol
DK
Risk factors
An investment in our common stock involves a high degree of
risk. You should carefully consider the risk factors set forth
under Risk Factors beginning on page 11 and the
other information contained in this prospectus prior to making
an investment decision regarding our common stock.
(1)
The number of shares of common stock to be outstanding after the
offering:
gives effect to a
393,898.69-for-one
split of our common stock effected on April 18, 2006;
excludes 1,969,493 shares of common stock issuable upon the
exercise of outstanding share purchase rights held by our
president and chief executive officer, having a weighted average
exercise price of $2.03 per share;
excludes 130,000 shares of common stock issuable upon the
exercise of stock options to be granted to a director pursuant
to an amended and restated consulting agreement under our 2006
long-term incentive plan upon completion of this offering;
excludes 1,378,000 shares of common stock issuable upon the
exercise of stock options to be granted to certain directors,
officers and employees under our 2006 long-term incentive plan
upon completion of this offering;
excludes 71,500 shares of common stock underlying
restricted stock units to be awarded to certain directors,
officers and employees under our 2006 long-term incentive plan
upon the filing of a registration statement on
Form
S-8
registering the shares of our common stock issuable under our
2006 long-term incentive plan, which
Form
S-8
we intend
to file within 30 days after the completion of this
offering;
excludes 1,473,892 shares of common stock reserved for
future grants or awards from time to time under our 2006
long-term incentive plan; and
assumes no exercise by the underwriters of their option to
purchase up to 1,500,000 additional shares of common stock from
us if they sell more than 10,000,000 shares in the offering.
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Year Ended December 31,
2003
2004(1)
2005(2)
(Dollars in thousands,
except share and per share data)
$600,157
$857,834
$1,100,961
930,556
65
352
600,157
857,899
2,031,869
500,181
730,780
1,731,625
62,704
80,060
133,088
12,874
15,122
23,495
8,784
12,374
16,092
(430
)
(898
)
(1,631
)
9,087
584,113
837,438
1,911,756
16,044
20,461
120,113
5,902
7,117
17,369
(30
)
(58
)
(2,144
)
120
1,210
3,021
3,466
(242
)
727
(1,527
)
591
5,750
8,996
20,776
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Year Ended December 31,
2003
2004(1)
2005(2)
(Dollars in thousands,
except share and per share data)
10,294
11,465
99,337
3,814
4,132
34,954
6,480
7,333
64,383
267
$6,480
$7,333
$64,116
$0.16
$0.19
$1.63
39,389,869
39,389,869
39,389,869
$26,333
$24,926
$148,668
(16,149
)
(27,343
)
(162,313
)
(2,242
)
5,616
54,107
$7,942
$3,199
$40,462
Year Ended December 31, 2005
Corporate,
Other and
Refining(2)
Retail
Eliminations(9)
Consolidated
(Dollars in thousands)
$930,556
$1,100,961
$352
$2,031,869
888
(888
)
776,373
956,140
(888
)
1,731,625
45,866
86,857
365
133,088
$109,205
$57,964
$(13
)
167,156
23,495
16,092
(1,631
)
9,087
$120,113
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Year Ended December 31,
2003
2004(1)
2005(2)
(Dollars in thousands, except pricing information)
$24,828
$32,835
$135,938
5,181
6,974
29,186
247
51,096
26,927
20,779
2,218
1,684
51,608
51,906
1,244
53,150
$12.29
$3.63
243
331
349
242
310
330
267,476
315,294
341,335
1,105
1,017
1,034
$0.154
$0.155
$0.165
$206,950
$261,232
$292,382
28.4%
29.5%
29.8%
4.2%
4.8%
5.9%
0.7%
0.4%
0.3%
13.1%
13.3%
13.2%
As of December 31, 2005
Actual
As Adjusted(15)
(Dollars in thousands)
$62,568
$154,518
268,755
226,255
119,870
256,620
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(1)
Effective April 30, 2004, we completed the acquisition of
100% of the outstanding stock of Williamson Oil Co., Inc., or
Williamson Oil. Because the results of operations of Williamson
Oil are included in our financial results from the date of
acquisition, a comparison of our
period-to
-period
financial results may not necessarily be meaningful.
(2)
Effective April 29, 2005, we completed the acquisition of
the Tyler refinery and related assets. We operated the refinery
for 247 days in 2005. Because the results of operations of
the Tyler refinery and related assets are included in our
financial results from the date of acquisition, a comparison of
our
period-to
-period
financial results may not necessarily be meaningful. See
Unaudited Pro Forma Condensed Consolidated Financial
Data, which shows what our results of operations might
have been in 2005 had we acquired the Tyler refinery and related
assets on January 1, 2005.
(3)
In order to mitigate the risks of changes in the market price of
crude oil and refined petroleum products, we entered into
forward contracts to fix the purchase price of crude and sales
price of specific refined petroleum products for a predetermined
number of units at a future date. The loss realized on these
contracts in 2005 was $9.1 million. These contracts were
entered into with an affiliate of Citigroup Global Markets Inc.,
one of the underwriters of this offering.
(4)
In 2005, we refinanced a significant portion of our existing
debt. As a result, financing costs associated with the
refinanced debt were written-off.
(5)
We have entered into interest rate swap and cap agreements in
connection with a portion of our floating rate debt. These
interest rate swap and cap agreements are marked to fair value
each fiscal quarter.
(6)
In 2005, our parent company guaranteed a portion of our new debt
and other instruments in connection with the acquisition of the
Tyler refinery. We have agreed to pay our parent a fee for these
guarantees.
(7)
Gives effect to a
393,898.69
-for-one
split of our common stock effected on April 18, 2006.
(8)
Statement of Accounting Standards No. 131,
Disclosures
About Segments of an Enterprise and Related Information
,
requires disclosure of a measure of segment profit or loss. In
connection with the purchase of the Tyler refinery and related
assets on April 29, 2005, management began viewing our
companys operating results in two reportable segments:
retail and refining. We measure the operating performance of
each segment based on segment contribution margin. We define
segment contribution margin as net sales less cost of goods sold
and operating expenses, excluding depreciation and amortization.
For the retail segment, cost of goods sold comprises the costs
of specific products sold. Operating expenses include costs such
as wages of employees at the stores, lease expense for the
stores, utility expense for the stores and other costs of
operating the stores, excluding depreciation and amortization.
For the refining segment, cost of goods sold includes all the
costs of crude oil, feedstocks and related transportation.
Operating expenses include the costs associated with the actual
operations of the refinery, excluding depreciation and
amortization.
Prior to the purchase of the Tyler refinery and related assets,
we had only the retail segment. Accordingly, segment data prior
to 2005 is not applicable.
(9)
Consists of fuel credit card services provided by one of our
subsidiaries and eliminations of intercompany transactions.
(10)
EBITDA represents earnings before income tax expense, interest
expense, the write-off of deferred financing costs, (gain) loss
on derivative instruments, guarantee fees, depreciation and
amortization. EBITDA is not a recognized measurement under GAAP.
Our management believes that the presentation of EBITDA is
useful to investors because it is frequently used by securities
analysts, investors and other interested parties in the
evaluation of companies in our industry.
In addition, our management believes that EBITDA is useful in
evaluating our operating performance compared to that of other
companies in our industry because the calculation of EBITDA
generally eliminates the effects of financings, income taxes and
risk management activities, items which may vary for different
companies for reasons unrelated to overall operating performance.
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EBITDA has limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for analysis of our
results as reported under GAAP. Some of these limitations are:
EBITDA does not reflect our cash expenditures or future
requirements for capital expenditures or contractual commitments;
EBITDA does not reflect the interest expense or the cash
requirements necessary to service interest or principal payments
on our debt;
EBITDA does not reflect changes in or cash requirements for our
working capital needs; and
Our calculation of EBITDA may differ from the EBITDA
calculations of other companies in our industry, limiting its
usefulness as a comparative measure.
Because of these limitations, EBITDA should not be considered a
measure of discretionary cash available to us to invest in the
growth of our business. We compensate for these limitations by
relying primarily on our GAAP results and using EBITDA only on a
supplemental basis.
The following table reconciles net income to EBITDA for the
periods presented:
Year Ended December 31,
2003
2004(1)
2005(2)
(Dollars in thousands)
$6,480
$7,333
$64,116
5,992
8,269
18,246
3,466
(242
)
727
(1,527
)
591
8,784
12,374
16,092
3,814
4,132
34,954
$24,828
$32,835
$135,938
(11)
Refining operating margin per barrel is calculated by dividing
the margin between net sales and cost of crude oil, feedstocks
and related transportation by the total barrels sold at our
refinery. Industry-wide refining results are driven and measured
by the margins between refined petroleum product prices and the
prices for crude oil, which are referred to as crack spreads:
the differential in price between a representative barrel of
benchmark refined petroleum products, such as gasoline or
heating oil, and a barrel of benchmark crude oil. The
US Gulf
Coast
5-3-2
crack
spread represents the differential between Platts
quotations for
3
/
5
of a barrel of US Gulf Coast Pipeline 87 Octane
Conventional Gasoline and
2
/
5
of a barrel of US Gulf Coast Pipeline No. 2 Heating
Oil (high sulfur diesel) on the one hand, and the first month
futures price of
5
/
5
of a barrel of light sweet crude oil on the New York
Mercantile Exchange, on the other hand. We compare our refining
operating margin to these crack spreads to assess our operating
performance relative to other participants in our industry.
(12)
Consists of third party credit, debit and fuel card processing
fees as a percentage of gross margin.
(13)
Merchandise and cash over/short as a percentage of net sales is
a measure of merchandise loss or theft, motor fuel theft and
cash shortages as a percentage of net sales.
(14)
Operating expense for our retail segment divided by merchandise
sales plus retail fuel gallons is a ratio we use to measure
store operating performance especially operating
expense control. Retail fuel gallons are used rather than net
retail fuel sales to eliminate the volatility of fuel prices in
the calculation and improve comparability.
(15)
As adjusted to reflect our sale of 10,000,000 shares of our
common stock at a price of $15.00 per share, the midpoint
of the range set forth on the cover page of this prospectus and
our use of proceeds, net of estimated underwriting discounts and
commissions and estimated offering expenses that are payable by
us.
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We operate an independent refinery and may not be able to withstand volatile market conditions, compete on the basis of price or obtain sufficient crude oil in times of shortage to the same extent as integrated, multinational oil companies. |
We are subject to loss of market share or pressure to reduce prices in order to compete effectively with a changing group of competitors in a fragmented retail industry. |
11
We operate in a highly regulated industry and increased costs of compliance with, or liability for violation of, existing or future laws, regulations and other requirements could significantly increase our costs of doing business, thereby adversely affecting our profitability. |
Our refining margins may decline as a result of increases in the prices of crude oil and other feedstocks. |
| changes in global and local economic conditions; | |
| United States and foreign demand for fuel products; | |
| worldwide political conditions, particularly in significant oil producing regions such as the Middle East, Western Coastal Africa, the former Soviet Union, and South America; | |
| the level of foreign and domestic production of crude oil and refined petroleum products and the level of crude oil, other feedstocks and refined petroleum products imported into the United States; |
12
| utilization rates of refineries in the United States; | |
| development and marketing of alternative and competing fuels; | |
| events that cause disruptions in our distribution channels; | |
| local factors, including market conditions, adverse weather conditions and the level of operations of other refineries and pipelines in our markets; and | |
| United States government regulations. | |
Our fuel gross profit may decline as a result of increases in the prices of crude oil, other feedstocks and refined petroleum products. |
If the market value of our inventory declines to an amount less than our LIFO basis, we would record a write-down of inventory and a non-cash charge to cost of sales, which would adversely affect our earnings. |
Anti- smoking measures, increases in tobacco taxes and wholesale cost increases of tobacco products could reduce our tobacco product sales. |
A terrorist attack on our refinery assets, or threats of war or actual war, may hinder or prevent us from conducting our business. |
13
Due to the concentration of our stores in the southeastern United States, an economic downturn in that region could cause our sales and the value of our assets to decline. |
We may not be able to successfully execute our strategy of growth through acquisitions. |
| we may not be able to identify suitable acquisition candidates or acquire additional assets on favorable terms; | |
| we compete with others to acquire any of these assets, which competition may increase and could result in decreased availability or increased prices for suitable acquisition candidates; | |
| we may experience difficulty in anticipating the timing and availability of acquisition candidates; | |
| since the convenience store industry is dominated by small, independent operators that own fewer than ten stores, we will likely need to complete numerous small acquisitions, rather than a few major acquisitions, to substantially increase our number of retail fuel and convenience stores; | |
| the need to complete numerous acquisitions will require significant amounts of our managements time; | |
| we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any of our potential acquisitions; and | |
| as a public company, we will be subject to internal controls and other accounting requirements with respect to any business we acquire, which may prevent some acquisitions we deem favorable or increase our acquisition costs. | |
14
Acquisitions involve risks that could cause our actual growth or operating results to differ adversely compared with our expectations. |
| during the acquisition process, we may fail or be unable to discover some of the liabilities of companies or businesses that we acquire; | |
| we may assume contracts or other obligations in connection with particular acquisitions on terms that are less favorable or desirable than the terms that we would expect to obtain if we negotiated the contracts or other obligations directly; | |
| we may fail to successfully integrate or manage acquired refinery, pipeline and terminal assets, our retail fuel and convenience stores, or other assets; | |
| acquired retail fuel and convenience stores or other assets may not perform as we expect or we may not be able to obtain the cost savings and financial improvements we anticipate; | |
| we may fail to grow our existing systems, financial controls, information systems, management resources and human resources in a manner that effectively supports our growth; and | |
| to the extent that we acquire assets in complementary new lines of business, we may become subject to additional regulatory requirements and additional risks that are characteristic or typical of these new lines of business. |
We are relatively new to the refining business and may enter new lines of business in which we are inexperienced. |
The results of operations reflected in the historical financial statements of our refinery included in this prospectus may not be representative of the results of operations that will be achieved for the refinery as an integrated unit of our company. |
15
We may incur significant costs and liabilities with respect to investigation and remediation of existing environmental conditions at our refinery. |
We may incur significant costs and liabilities in connection with new environmental regulations and prior non-compliance with air emission regulations. |
Our inability to successfully negotiate an extension of time to comply with our hardship waiver and compliance plan with the EPA may result in a temporary reduction in high sulfur diesel fuel production and sales at our Tyler refinery. |
A disruption in the supply or an increase in the price of light sweet crude oil would significantly affect the productivity and profitability of our refinery. |
16
The dangers inherent in our refining operations could cause disruptions and expose us to potentially significant costs and liabilities. |
We are particularly vulnerable to disruptions in our refining operations, because all of our refining operations are currently conducted at a single facility. |
We are subject to interruptions in supply and delivery as a result of our reliance on pipelines for transportation of crude oil and refined petroleum products. |
Our existing inbound pipeline capacity will be insufficient to support materially increased production from our refinery. |
Our refinery has only limited access to an outbound pipeline, which we do not own, for distribution of our refined petroleum products. |
An increase in competition in the market in which we sell our refined products could lower prices and adversely affect our sales and profitability. |
17
If the price of crude oil increases significantly, we may not be able to finance the purchase of enough crude oil to operate our refinery at full capacity. |
Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities. |
| increase our vulnerability to general adverse economic and industry conditions; | |
| require us to dedicate a substantial portion of our cash flow from operations to service our debt and lease obligations, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; | |
| limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; | |
| place us at a disadvantage relative to our competitors that have less indebtedness or better access to capital by, for example, limiting our ability to enter into new markets, renovate our stores or pursue acquisitions or other business opportunities; | |
| limit our ability to borrow additional funds in the future; and | |
| increase the interest cost of our borrowed funds. |
Our subsidiaries debt agreements contain operating and financial restrictions that might constrain our business and financing activities. |
| declare dividends and redeem or repurchase capital stock; | |
| prepay, redeem or repurchase debt; | |
| make loans and investments; | |
| incur additional indebtedness or amend our debt and other material agreements; | |
| make capital expenditures; | |
| engage in mergers, acquisitions and asset sales; and |
18
| enter into some intercompany arrangements and make some intercompany payments, which in some instances could restrict our ability to use the assets, cash flow or earnings of one segment to support the other segment. |
We rely on our parent company and an affiliate for guarantees and letters of credit. |
We may seek to grow by opening new retail fuel and convenience stores in new geographic areas. |
| select, and compete successfully in, new markets; | |
| obtain suitable sites at acceptable costs; | |
| realize an acceptable return on the cost of capital invested in new facilities; | |
| hire, train, and retain qualified personnel; | |
| integrate new retail fuel and convenience stores into our existing distribution, inventory control, and information systems; | |
| expand relationships with our suppliers or develop relationships with new suppliers; and | |
| secure adequate financing, to the extent required. |
19
Adverse weather conditions or other unforeseen developments in the Southeast could damage our facilities, reduce customer traffic and impair our ability to produce and deliver refined petroleum products or receive supplies for our retail fuel and convenience stores. |
Our operating results are seasonal and generally lower in the first and fourth quarters of the year for our refining segment and in the first quarter of the year for our retail segment. We depend on favorable weather conditions in the spring and summer months. |
We depend on one supplier for a significant portion of our retail fuel supply. |
We depend on one wholesaler for a significant portion of our convenience store merchandise. |
20
If our proprietary technology systems are ineffective in enabling our managers to efficiently manage our operations, our operating performance will decline. |
Our insurance policies do not cover all losses, costs or liabilities that we may experience, and insurance companies that currently insure companies in the energy industry may cease to do so or substantially increase premiums. |
A substantial portion of our refinery workforce is unionized, and we may face labor disruptions that would interfere with our operations. |
21
We are dependent on gasoline sales at our retail fuel and convenience stores which makes us susceptible to increases in the cost of gasoline and interruptions in fuel supply. |
We may incur losses as a result of our forward contract activities and derivative transactions. |
If we violate state laws regulating our sale of tobacco and alcohol products, or if these laws are changed, our results of operations will suffer. |
If we fail to meet our obligations under our long-term branded gasoline supply agreement with BP, we may incur penalties and/or the agreement may be terminated. |
22
If we are unable to continue using the BP, Exxon, Shell, or Chevron brand names or if there is negative publicity concerning any of these major oil companies, sales at certain of our stores may suffer. |
It may be difficult to serve process on or enforce a United States judgment against those of our directors who reside in Israel. |
If we are, or become, a U.S. real property holding corporation, special tax rules may apply to a sale, exchange or other disposition of common stock and non-U.S. holders may be less inclined to invest in our stock as they may be subject to U.S. federal income tax in certain situations. |
There is no existing market for our common stock, and a trading market that will provide you with adequate liquidity may not develop. The price of our common stock may fluctuate significantly, and you could lose all or part of your investment. |
23
| our quarterly or annual earnings or those of other companies in our industry; | |
| announcements by us or our competitors of significant contracts or acquisitions; | |
| changes in accounting standards, policies, guidance, interpretations or principles; | |
| general economic and stock market conditions; | |
| the failure of securities analysts to cover our common stock after this offering or changes in financial estimates by analysts; | |
| future sales of our common stock; and | |
| the other factors described in these Risk Factors. |
You will suffer immediate and substantial dilution. |
We are a controlled company within the meaning of the NYSE rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. |
| the requirement that a majority of our board of directors consist of independent directors; | |
| the requirement that we have a nominating/corporate governance committee consisting entirely of independent directors with a written charter addressing the committees purpose and responsibilities; and |
24
| the requirement that we have a compensation committee consisting entirely of independent directors with a written charter addressing the committees purpose and responsibilities. |
Our controlling stockholder, Delek Group Ltd., may have conflicts of interest with other stockholders in the future. |
Future sales of our common stock by our controlling stockholder, Delek Group Ltd., could depress the price of our common stock. |
We depend upon our subsidiaries for cash to meet our obligations and pay any dividends. |
We may be unable to pay dividends in the anticipated amounts and frequency set forth in this prospectus. |
25
We have not determined any specific use for a significant portion of the proceeds from this offering and we may use the proceeds in ways with which you may not agree. |
Provisions of Delaware law and our organizational documents may discourage takeovers and business combinations that our stockholders may consider in their best interests, which could negatively affect our stock price. |
We will be exposed to risks relating to evaluations of internal controls required by Section 404 of the Sarbanes-Oxley Act of 2002. |
26
27
| competition; | |
| changes in, or the failure to comply with, the extensive government regulations applicable to our industry segments; | |
| decreases in our refining margins or fuel gross profit as a result of increases in the prices of crude oil, other feedstocks and refined petroleum products; | |
| our ability to execute our strategy of growth through acquisitions and transactional risks in acquisitions; | |
| general economic and business conditions, particularly levels of spending relating to travel and tourism or conditions affecting the southeastern United States; | |
| dependence on one principal fuel supplier and one wholesaler for a significant portion of our convenience store merchandise; | |
| operating hazards, natural disasters, casualty losses and other matters beyond our control; | |
| increases in our debt levels; | |
| restrictive covenants in our debt agreements; | |
| seasonality; | |
| terrorist attacks; | |
| potential conflicts of interest between our major stockholder and other stockholders; | |
| our discretion in the use of net proceeds from this offering; and | |
| other factors discussed under the headings Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations and Business. |
28
29
| to fully repay the $25.0 million outstanding principal, plus accrued interest to the date of repayment, under the promissory note payable to Delek The Israel Fuel Corporation Ltd., one of our affiliates, which bears interest at a rate of 6.3% per year and has a maturity date of April 27, 2008; | |
| to fully repay the $17.5 million outstanding principal, plus accrued interest to the date of repayment, under the promissory note payable to Delek Group Ltd., our parent company, which bears interest at a rate of 7.0% per year and has a maturity date of April 27, 2010; | |
| for future acquisitions, capital improvements to our refinery and existing retail fuel and convenience stores and construction of new retail fuel and convenience stores (with respect to the majority of the remaining net proceeds); and | |
| the remainder of the net proceeds for general corporate purposes. | |
30
| on an actual basis; and | |
| as adjusted to reflect our sale of 10,000,000 shares of our common stock at a price of $15.00 per share, the midpoint of the range set forth on the cover page of this prospectus, and our use of proceeds, net of estimated underwriting discounts and commissions and estimated offering expenses that are payable by us. |
As of December 31, 2005 | |||||||||
As | |||||||||
Actual | Adjusted | ||||||||
(Dollars in thousands) | |||||||||
Cash and cash equivalents
|
$62,568 | $ | 154,518 | ||||||
Long-term debt:
|
|||||||||
Notes payable to related parties
|
$42,500 | $ | | ||||||
Senior secured credit facility term loan
|
164,175 | 164,175 | |||||||
Senior secured credit facility revolver
|
32,000 | 32,000 | |||||||
Israel Discount Bank note
|
20,000 | 20,000 | |||||||
Bank Leumi USA note
|
10,000 | 10,000 | |||||||
Other notes payable
|
80 | 80 | |||||||
Total long-term debt
|
268,755 | 226,255 | |||||||
Stockholders equity:
|
|||||||||
Preferred stock, $0.01 par value, 10,000,000 shares
authorized, 0 shares issued and outstanding, actual and as
adjusted
|
| | |||||||
Common stock, $0.01 par value, 110,000,000 shares
authorized, 39,389,869 shares issued and outstanding,
actual; 110,000,000 shares authorized,
49,389,869 shares issued and outstanding, as adjusted(1)
|
394 | 494 | |||||||
Additional paid-in capital
|
40,727 | 177,377 | |||||||
Retained earnings
|
78,749 | 78,749 | |||||||
Total stockholders equity
|
119,870 | 256,620 | |||||||
Total capitalization
|
$ | 388,625 | $ | 482,875 | |||||
(1) | The number of shares of common stock to be authorized, issued and outstanding after the offering: |
| gives effect to a 393,898.69-for-one split of our common stock effected on April 18, 2006; | |
| excludes 1,969,493 shares of common stock issuable upon the exercise of outstanding share purchase rights held by our president and chief executive officer, having a weighted average exercise price of $2.03 per share; | |
31
| excludes 130,000 shares of common stock issuable upon the exercise of stock options to be granted to a director pursuant to an amended and restated consulting agreement under our 2006 long-term incentive plan upon completion of this offering; | |
| excludes 1,378,000 shares of common stock issuable upon the exercise of stock options to be granted to certain directors, officers and employees under our 2006 long-term incentive plan upon completion of this offering; | |
| excludes 71,500 shares of common stock underlying restricted stock units to be awarded to certain directors, officers and employees under our 2006 long-term incentive plan upon the filing of a registration statement on Form S-8 registering the shares of our common stock issuable under our 2006 long-term incentive plan, which Form S-8 we intend to file within 30 days after the completion of this offering; | |
| excludes 1,473,892 shares of common stock reserved for future grants or awards from time to time under our 2006 long-term incentive plan; and | |
| assumes no exercise by the underwriters of their option to purchase up to 1,500,000 additional shares of common stock from us if they sell more than 10,000,000 shares in the offering. |
32
| subtracting our total liabilities from our total tangible assets; and | |
| then dividing the difference by the number of shares of common stock outstanding. |
Assumed initial public offering price per share of common
stock(1)
|
$ | 15.00 | |||||||
Net tangible book value per share as of December 31, 2005
|
$ | 1.08 | |||||||
Increase in net tangible book value per share attributable to
new investors in this offering
|
2.55 | ||||||||
Pro forma net tangible book value per share after this offering
|
3.63 | ||||||||
Dilution per share to new investors
|
$ | 11.37 | |||||||
Total | Average Price | |||||||||||||||||||
Shares | Consideration | Per Share | ||||||||||||||||||
Purchased | ||||||||||||||||||||
Amount | ||||||||||||||||||||
Number | % | (in thousands) | % | |||||||||||||||||
Existing stockholder(2)
|
39,389,869 | 79.8 | % | $41,121 | 21.5 | % | $1.04 | |||||||||||||
New investors
|
10,000,000 | 20.2 | % | 150,000 | 78.5 | 15.00 | ||||||||||||||
Total
|
49,389,869 | 100.0 | % | $ | 191,121 | 100.0 | % | |||||||||||||
(1) | Before deducting estimated underwriting discounts and commissions and estimated offering expenses that are payable by us. |
(2) | If the underwriters exercise their option to purchase additional shares in full, the percentage of shares of common stock held by our existing stockholder will decrease to 77.4% of the total number of shares of common stock to be outstanding immediately after this offering and the number of shares held by new investors will increase to 11,500,000, or 22.6% of the total number of shares of common stock to be outstanding immediately after this offering. |
33
34
Period from | |||||||||||||||||||||
Inception | |||||||||||||||||||||
(April 10, | |||||||||||||||||||||
2001) to | Year Ended December 31, | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2001 | 2002 | 2003 | 2004(1) | 2005(2) | |||||||||||||||||
(Dollars in thousands, except share and per share data) | |||||||||||||||||||||
Statement of Operations Data:
|
|||||||||||||||||||||
Net sales:
|
|||||||||||||||||||||
Retail
|
$ | 311,180 | $ | 549,632 | $ | 600,157 | $ | 857,834 | $ | 1,100,961 | |||||||||||
Refining
|
| | | | 930,556 | ||||||||||||||||
Other
|
| | | 65 | 352 | ||||||||||||||||
Total
|
311,180 | 549,632 | 600,157 | 857,899 | 2,031,869 | ||||||||||||||||
Expenses:
|
|||||||||||||||||||||
Cost of goods sold
|
257,271 | 460,337 | 500,181 | 730,780 | 1,731,625 | ||||||||||||||||
Operating expenses
|
35,958 | 62,050 | 62,704 | 80,060 | 133,088 | ||||||||||||||||
General and administrative expenses
|
6,945 | 12,227 | 12,874 | 15,122 | 23,495 | ||||||||||||||||
Depreciation and amortization
|
4,553 | 7,426 | 8,784 | 12,374 | 16,092 | ||||||||||||||||
Gain on disposal of assets
|
| | (430 | ) | (898 | ) | (1,631 | ) | |||||||||||||
Losses on forward contract hedging activities(3)
|
| | | | 9,087 | ||||||||||||||||
304,727 | 542,040 | 584,113 | 837,438 | 1,911,756 | |||||||||||||||||
Operating income
|
6,453 | 7,592 | 16,044 | 20,461 | 120,113 | ||||||||||||||||
Interest expense
|
4,365 | 5,747 | 5,902 | 7,117 | 17,369 | ||||||||||||||||
Interest income
|
| | (30 | ) | (58 | ) | (2,144 | ) | |||||||||||||
Interest expense related party
|
| | 120 | 1,210 | 3,021 | ||||||||||||||||
Write-off of deferred financing costs in connection with
refinance(4)
|
| | | | 3,466 | ||||||||||||||||
(Gain) loss on derivative instruments(5)
|
| 2,583 | (242 | ) | 727 | (1,527 | ) | ||||||||||||||
Guarantee fees to related parties(6)
|
| | | | 591 | ||||||||||||||||
4,365 | 8,330 | 5,750 | 8,996 | 20,776 | |||||||||||||||||
35
Period from | |||||||||||||||||||||
Inception | |||||||||||||||||||||
(April 10, | |||||||||||||||||||||
2001) to | Year Ended December 31, | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2001 | 2002 | 2003 | 2004(1) | 2005(2) | |||||||||||||||||
(Dollars in thousands, except share and per share data) | |||||||||||||||||||||
Income (loss) before income taxes and cumulative effect of
change in accounting policy
|
2,088 | (738 | ) | 10,294 | 11,465 | 99,337 | |||||||||||||||
Income tax expense (benefit)
|
794 | (264 | ) | 3,814 | 4,132 | 34,954 | |||||||||||||||
Income (loss) before cumulative effect of change in accounting
policy
|
1,294 | (474 | ) | 6,480 | 7,333 | 64,383 | |||||||||||||||
Cumulative effect of change in accounting policy
|
| | | | 267 | ||||||||||||||||
Net income (loss)
|
$1,294 | $(474 | ) | $6,480 | $7,333 | $64,116 | |||||||||||||||
Basic and diluted earnings (loss) per share(7):
|
|||||||||||||||||||||
Income before cumulative effect of change in accounting policy
|
$0.03 | $(0.01 | ) | $0.16 | $0.19 | $1.64 | |||||||||||||||
Cumulative effect of change in accounting policy
|
| | | | 0.01 | ||||||||||||||||
Net income (loss)
|
$0.03 | $(0.01 | ) | $0.16 | $0.19 | $1.63 | |||||||||||||||
Weighted average shares, basic and diluted(7)
|
39,389,869 | 39,389,869 | 39,389,869 | 39,389,869 | 39,389,869 | ||||||||||||||||
Cash Flow Data:
|
|||||||||||||||||||||
Cash flows provided by operating activities
|
$16,614 | $17,528 | $26,333 | $24,926 | $148,668 | ||||||||||||||||
Cash flows used in investing activities
|
(208,574 | ) | (12,066 | ) | (16,149 | ) | (27,343 | ) | (162,313 | ) | |||||||||||
Cash flows provided by (used in) financing activities
|
201,928 | (4,465 | ) | (2,242 | ) | 5,616 | 54,107 | ||||||||||||||
Net increase in cash and cash equivalents
|
$9,968 | $997 | $7,942 | $3,199 | $40,462 | ||||||||||||||||
Year Ended December 31, 2005 | |||||||||||||||||
Corporate, | |||||||||||||||||
Other and | |||||||||||||||||
Refining(2) | Retail | Eliminations(9) | Consolidated | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Net sales (excluding intercompany sales)
|
$930,556 | $1,100,961 | $352 | $2,031,869 | |||||||||||||
Intercompany sales
|
888 | | (888 | ) | | ||||||||||||
Cost of goods sold
|
776,373 | 956,140 | (888 | ) | 1,731,625 | ||||||||||||
Operating expenses
|
45,866 | 86,857 | 365 | 133,088 | |||||||||||||
Segment contribution margin
|
$109,205 | $57,964 | $(13 | ) | 167,156 | ||||||||||||
General and administrative expenses
|
23,495 | ||||||||||||||||
Depreciation and amortization
|
16,092 | ||||||||||||||||
Gain on disposal of assets
|
(1,631 | ) | |||||||||||||||
Losses on forward contract activities(3)
|
9,087 | ||||||||||||||||
Operating income
|
$120,113 | ||||||||||||||||
36
Period from | |||||||||||||||||||||
Inception | |||||||||||||||||||||
(April 10, | |||||||||||||||||||||
2001) to | Year Ended December 31, | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2001 | 2002 | 2003 | 2004(1) | 2005(2) | |||||||||||||||||
(Dollars in thousands, except pricing information) | |||||||||||||||||||||
Other Data:
|
|||||||||||||||||||||
EBITDA(10)
|
$11,006 | $15,018 | $24,828 | $32,835 | $135,938 | ||||||||||||||||
Capital expenditures
|
2,648 | 9,773 | 5,181 | 6,974 | 29,186 | ||||||||||||||||
Key Operating Statistics:
|
|||||||||||||||||||||
REFINING SEGMENT:
|
|||||||||||||||||||||
Days operated in period(2)
|
247 | ||||||||||||||||||||
Total sales volume (average barrels per day)
|
51,096 | ||||||||||||||||||||
Products manufactured (average barrels per day):
|
|||||||||||||||||||||
Gasoline
|
26,927 | ||||||||||||||||||||
Diesel/ Jet
|
20,779 | ||||||||||||||||||||
Petrochemicals, LPG, NGLs
|
2,218 | ||||||||||||||||||||
Other
|
1,684 | ||||||||||||||||||||
Total production
|
51,608 | ||||||||||||||||||||
Throughput (average barrels per day):
|
|||||||||||||||||||||
Crude oil
|
51,906 | ||||||||||||||||||||
Other feedstocks
|
1,244 | ||||||||||||||||||||
Total throughput
|
53,150 | ||||||||||||||||||||
Per barrel of sales:
|
|||||||||||||||||||||
Refining operating margin(11)
|
$12.29 | ||||||||||||||||||||
Direct operating expenses
|
$3.63 | ||||||||||||||||||||
RETAIL SEGMENT:
|
|||||||||||||||||||||
Number of stores (end of period)
|
234 | 236 | 243 | 331 | 349 | ||||||||||||||||
Average number of stores
|
234 | 236 | 242 | 310 | 330 | ||||||||||||||||
Retail fuel sales (thousands of gallons)
|
155,552 | 267,396 | 267,476 | 315,294 | 341,335 | ||||||||||||||||
Average retail gallons per average number of stores (in
thousands)
|
665 | 1,133 | 1,105 | 1,017 | 1,034 | ||||||||||||||||
Retail fuel margin ($ per gallon)
|
$0.147 | $0.130 | $0.154 | $0.155 | $0.165 | ||||||||||||||||
Merchandise sales
|
$118,388 | $204,536 | $206,950 | $261,232 | $292,382 | ||||||||||||||||
Merchandise margin %
|
26.2% | 26.7% | 28.4% | 29.5% | 29.8% |
37
As of December 31,
2001
2002
2003
2004(1)
2005(2)
(Dollars in thousands)
$9,968
$10,965
$18,907
$22,106
$62,568
39,065
40,016
46,745
64,023
251,821
126,617
130,892
136,538
189,293
270,595
226,152
234,086
256,754
330,102
606,160
181,935
39,324
48,540
72,214
175,814
161,107
161,713
168,752
203,333
268,755
1,802
152,821
159,793
202,134
310,476
42,415
41,941
48,421
55,754
119,870
226,152
234,086
256,754
330,102
606,160
(1) | Effective April 30, 2004, we completed the acquisition of 100% of the outstanding stock of Williamson Oil. Because the results of operations of Williamson Oil are included in our financial results from the date of acquisition, a comparison of our period-to -period financial results may not necessarily be meaningful. |
(2) | Effective April 29, 2005, we completed the acquisition of the Tyler refinery and related assets. We operated the refinery for 247 days in 2005. Because the results of operations of the Tyler refinery and related assets are included in our financial results from the date of acquisition, a comparison of our period-to -period financial results may not necessarily be meaningful. See Unaudited Pro Forma Condensed Consolidated Financial Data, which shows what our results of operations might have been in 2005 had we acquired the Tyler refinery and related assets on January 1, 2005. |
(3) | In order to mitigate the risks of changes in the market price of crude oil and refined petroleum products, we entered into forward contracts to fix the purchase price of crude and sales price of specific refined petroleum products for a predetermined number of units at a future date. The loss realized on these contracts in 2005 was $9.1 million. These contracts were entered into with an affiliate of Citigroup Global Markets Inc., one of the underwriters of this offering. |
(4) | In 2005, we refinanced a significant portion of our existing debt. As a result, financing costs associated with the refinanced debt were written-off. |
(5) | We have entered into interest rate swap and cap agreements in connection with a portion of our floating rate debt. These interest rate swap and cap agreements are marked to fair value each fiscal quarter. |
(6) | In 2005, our parent company guaranteed a portion of our new debt and other instruments in connection with the acquisition of the Tyler refinery. We have agreed to pay our parent a fee for these guarantees. |
(7) | Gives effect to a 393,898.69-for-one split of our common stock effected on April 18, 2006. |
(8) | Statement of Accounting Standards No. 131, Disclosures About Segments of an Enterprise and Related Information, requires disclosure of a measure of segment profit or loss. In connection with the purchase of the Tyler refinery and related assets on April 29, 2005, management began viewing our companys operating results in two reportable segments: retail and refining. We measure the operating performance of each segment based on segment contribution margin. We define segment contribution margin as net sales less cost of goods sold and operating expenses, excluding depreciation and amortization. |
For the retail segment, cost of goods sold comprises the costs of specific products sold. Operating expenses include costs such as wages of employees at the stores, lease expense for the stores, utility expense for the stores and other costs of operating the stores, excluding depreciation and amortization. | |
For the refining segment, cost of goods sold includes all the costs of crude oil, feedstocks and related transportation. Operating expenses include the costs associated with the actual operations of the refinery, excluding depreciation and amortization. |
38
Prior to the purchase of the Tyler refinery and related assets, we had only the retail segment. Accordingly, segment data prior to 2005 is not applicable. | |
(9) | Consists of fuel credit card services provided by one of our subsidiaries and eliminations of intercompany indebtedness. |
(10) | EBITDA represents earnings before income tax expense, interest expense, the write-off of deferred financing costs, (gain) loss on derivative instruments, guarantee fees, depreciation and amortization. EBITDA is not a recognized measurement under GAAP. Our management believes that the presentation of EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. |
In addition, our management believes that EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financings, income taxes and risk management activities, items which may vary for different companies for reasons unrelated to overall operating performance. | |
EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: |
| EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; | |
| EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt; | |
| EBITDA does not reflect changes in or cash requirements for our working capital needs; and | |
| Our calculation of EBITDA may differ from the EBITDA calculations of other companies in our industry, limiting its usefulness as a comparative measure. |
Because of these limitations, EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only on a supplemental basis. |
Period from | ||||||||||||||||||||
Inception | ||||||||||||||||||||
(April 10, | ||||||||||||||||||||
2001) to | Year Ended December 31, | |||||||||||||||||||
December 31, | ||||||||||||||||||||
2001 | 2002 | 2003 | 2004(1) | 2005(2) | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net income (loss)
|
$ | 1,294 | $ | (474 | ) | $ | 6,480 | $ | 7,333 | $64,116 | ||||||||||
Interest expense
|
4,365 | 5,747 | 5,992 | 8,269 | 18,246 | |||||||||||||||
Write-off of deferred financing costs in connection with
refinance(4)
|
| | | | 3,466 | |||||||||||||||
(Gain) loss on derivative instruments(5)
|
| 2,583 | (242 | ) | 727 | (1,527 | ) | |||||||||||||
Guarantee fees to related parties(6)
|
| | | | 591 | |||||||||||||||
Depreciation and amortization
|
4,553 | 7,426 | 8,784 | 12,374 | 16,092 | |||||||||||||||
Income tax expense (benefit)
|
794 | (264 | ) | 3,814 | 4,132 | 34,954 | ||||||||||||||
EBITDA
|
$ | 11,006 | $ | 15,018 | $ | 24,828 | $ | 32,835 | $ | 135,938 | ||||||||||
(11) | Refining operating margin per barrel is calculated by dividing the margin between net sales and cost of crude oil, feedstocks and related transportation by the total barrels sold at our refinery. Industry-wide |
39
refining results are driven and measured by the margins between refined petroleum product prices and the prices for crude oil, which are referred to as crack spreads: the differential in price between a representative barrel of benchmark refined petroleum products, such as gasoline or heating oil, and a barrel of benchmark crude oil. The US Gulf Coast 5-3-2 crack spread represents the differential between the Platts quotations for 3 / 5 of a barrel of US Gulf Coast Pipeline 87 Octane Conventional Gasoline and 2 / 5 of a barrel of US Gulf Coast Pipeline No. 2 Heating Oil (high sulfur diesel) on the one hand, and the first month futures price of 5 / 5 of a barrel of light sweet crude oil on the New York Mercantile Exchange, on the other hand. We compare our refining operating margin to these crack spreads to assess our operating performance relative to other participants in our industry. |
40
41
Historical
Delek US Holdings,
Inc. for the
Tyler Refinery from
Year Ended
January 1, 2005 to
Pro Forma
Pro Forma
December 31, 2005
April 28, 2005
Adjustments
Consolidated
(Dollars in thousands, except share and per share data)
$2,031,869
$280,292
$2,312,161
1,731,625
270,120
(52
)(a)
1,978,872
(22,821
)(b)
133,088
22,821
(b)
156,182
273
(c)
23,495
695
(273
)(c)
23,917
16,092
729
(109
)(d)
16,712
(1,631
)
(1,631
)
9,087
9,087
1,911,756
271,544
(161
)
2,183,139
120,113
8,748
161
129,022
20,390
(664
)
1,782
(e)
22,028
520
(f)
(2,144
)
(2,144
)
3,466
3,466
(1,527
)
(1,527
)
591
250
(g)
841
20,776
(664
)
2,552
22,664
99,337
9,412
(2,391
)
106,358
34,954
3,577
(859
)(h)
37,672
$64,383
$5,835
$(1,532
)
$68,686
$1.64
$1.74
39,389,869
39,389,869
(a) | The adjustment includes amounts to eliminate historical sellers pension expense of the Tyler refinery arising from the sellers defined benefit plan, which were accounted for as direct operating costs of the Tyler refinery and included in cost of goods sold. We do not sponsor a defined benefit plan. | |
(b) | The adjustment reflects the reclassification of certain Tyler refinery cost of goods sold to operating expenses to conform with our presentation. |
42
(c) | The adjustment reflects the reclassification of certain Tyler refinery general and administrative expenses to operating expenses to conform with our presentation. | |
(d) | The adjustment reflects amounts to eliminate historical depreciation of $0.7 million and the inclusion of our depreciation of $0.6 million using our basis as a result of the purchase price allocation in accordance with SFAS 141, Business Combinations . | |
(e) | The adjustment reflects interest expense related to the debt used to finance the acquisition of the Tyler refinery with (1) third parties in the aggregate principal amount of $50.0 million at a combined interest rate of 5.60% and (2) with a related party in the aggregate principal amount of $35.0 million at a fixed interest rate of 7.00%. The annual impact on income of a 1 / 8 % variance in the combined interest rate of 5.60% would be $63. | |
(f) | The adjustment reflects amortization of deferred financing costs capitalized in connection with the execution of certain loans used to finance the Tyler refinery acquisition. | |
(g) | The adjustment reflects fees related to a parent guaranty agreement in the aggregate principal amount of $50.0 million at an interest rate of 1.50%. | |
(h) | The adjustment reflects the tax effect of the pro forma adjustments utilizing our estimated effective income tax rate. | |
(i) | Gives effect to a 396,898.69-for-one split of our common stock effected on April 18, 2006. | |
43
| Refining segment. Our refining segment operates a high conversion, moderate complexity independent refinery in Tyler, Texas, with a design crude distillation capacity of 60,000 bpd, along with an associated crude oil pipeline and light products loading facilities. | |
| Retail segment. Our retail segment markets gasoline, diesel, other refined petroleum products and convenience merchandise through a network of 349 company-operated retail fuel and convenience stores located in Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, Tennessee and Virginia. We also have a wholesale fuel distribution operation. |
44
45
46
47
| a modified prospective method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date; or | |
| a modified retrospective method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption. |
48
49
50
Year Ended December 31, | ||||||||||||||
2003 | 2004(1) | 2005(2) | ||||||||||||
(Dollars in thousands, except share and per share | ||||||||||||||
data) | ||||||||||||||
Statement of Operations Data:
|
||||||||||||||
Net sales:
|
||||||||||||||
Retail
|
$600,157 | $857,834 | $1,100,961 | |||||||||||
Refining
|
| | 930,556 | |||||||||||
Other
|
| 65 | 352 | |||||||||||
Total
|
600,157 | 857,899 | 2,031,869 | |||||||||||
Expenses:
|
||||||||||||||
Cost of goods sold
|
500,181 | 730,780 | 1,731,625 | |||||||||||
Operating expenses
|
62,704 | 80,060 | 133,088 | |||||||||||
General and administrative expenses
|
12,874 | 15,122 | 23,495 | |||||||||||
Depreciation and amortization
|
8,784 | 12,374 | 16,092 | |||||||||||
Gain on disposal of assets
|
(430 | ) | (898 | ) | (1,631 | ) | ||||||||
Losses on forward contract activities(3)
|
| | 9,087 | |||||||||||
584,113 | 837,438 | 1,911,756 | ||||||||||||
Operating income
|
16,044 | 20,461 | 120,113 | |||||||||||
Interest expense
|
5,902 | 7,117 | 17,369 | |||||||||||
Interest income
|
(30 | ) | (58 | ) | (2,144 | ) | ||||||||
Interest expense related party
|
120 | 1,210 | 3,021 | |||||||||||
Write-off of deferred financing costs in connection with
refinance(4)
|
| | 3,466 | |||||||||||
(Gain) loss on derivative instruments(5)
|
(242 | ) | 727 | (1,527 | ) | |||||||||
Guarantee fees to related parties(6)
|
| | 591 | |||||||||||
5,750 | 8,996 | 20,776 | ||||||||||||
Income before income taxes and cumulative effect of change in
accounting policy
|
10,294 | 11,465 | 99,337 | |||||||||||
Income tax expense
|
3,814 | 4,132 | 34,954 | |||||||||||
Income before cumulative effect of change in accounting policy
|
6,480 | 7,333 | 64,383 | |||||||||||
Cumulative effect of change in accounting policy
|
| | 267 | |||||||||||
Net income
|
$ | 6,480 | $ | 7,333 | $ | 64,116 | ||||||||
Basic and diluted earnings per share(7):
|
||||||||||||||
Income before cumulative effect of change in accounting policy
|
$0.16 | $0.19 | $1.64 | |||||||||||
Cumulative effect of change in accounting policy
|
| | 0.01 | |||||||||||
Net income
|
$0.16 | $0.19 | $1.63 | |||||||||||
Weighted average shares, basic and diluted(7)
|
39,389,869 | 39,389,869 | 39,389,869 |
51
Year Ended December 31, | ||||||||||||
2003 | 2004(1) | 2005(2) | ||||||||||
(Dollars in thousands, except share and per share | ||||||||||||
data) | ||||||||||||
Cash Flow Data:
|
||||||||||||
Cash flows provided by operating activities
|
$ | 26,333 | $ | 24,926 | $ | 148,668 | ||||||
Cash flows used in investing activities
|
(16,149 | ) | (27,343 | ) | (162,313 | ) | ||||||
Cash flows (used in) provided by financing activities
|
(2,242 | ) | 5,616 | 54,107 | ||||||||
Net increase in cash and cash equivalents
|
$ | 7,942 | $ | 3,199 | $ | 40,462 | ||||||
As of December 31, | ||||||||||||
2003 | 2004(1) | 2005(2) | ||||||||||
Balance Sheet Data:
|
||||||||||||
Cash and cash equivalents
|
$ | 18,907 | $ | 22,106 | $ | 62,568 | ||||||
Total current assets
|
46,745 | 64,023 | 251,821 | |||||||||
Property, plant and equipment, net
|
136,538 | 189,293 | 270,595 | |||||||||
Total assets
|
256,754 | 330,102 | 606,160 | |||||||||
Total current liabilities
|
48,540 | 72,214 | 175,814 | |||||||||
Total debt, including current maturities
|
168,752 | 203,333 | 268,755 | |||||||||
Total noncurrent liabilities
|
159,793 | 202,134 | 310,476 | |||||||||
Total stockholders equity
|
48,421 | 55,754 | 119,870 | |||||||||
Total liabilities and stockholders equity
|
256,754 | 330,102 | 606,160 |
Year Ended December 31, 2005 | |||||||||||||||||
Corporate, | |||||||||||||||||
Other and | |||||||||||||||||
Refining(2) | Retail | Eliminations(9) | Consolidated | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Net sales (excluding intercompany sales)
|
$930,556 | $1,100,961 | $352 | $2,031,869 | |||||||||||||
Intercompany sales
|
888 | | (888 | ) | | ||||||||||||
Cost of goods sold
|
776,373 | 956,140 | (888 | ) | 1,731,625 | ||||||||||||
Operating expenses
|
45,866 | 86,857 | 365 | 133,088 | |||||||||||||
Segment contribution margin
|
$109,205 | $57,964 | $(13 | ) | 167,156 | ||||||||||||
General and administrative expenses
|
23,495 | ||||||||||||||||
Depreciation and amortization
|
16,092 | ||||||||||||||||
Gain on disposal of assets
|
(1,631 | ) | |||||||||||||||
Losses on forward contract activities(3)
|
9,087 | ||||||||||||||||
Operating income
|
$120,113 | ||||||||||||||||
52
RETAIL SEGMENT:
|
||||||||||||
Number of stores (end of period)
|
243 | 331 | 349 | |||||||||
Average number of stores
|
242 | 310 | 330 | |||||||||
Retail fuel sales (thousands of gallons)
|
267,476 | 315,294 | 341,335 | |||||||||
Average retail gallons per average number of stores (in
thousands)
|
1,105 | 1,017 | 1,034 | |||||||||
Retail fuel margin ($ per gallon)
|
$0.154 | $0.155 | $0.165 | |||||||||
Merchandise sales
|
$ | 206,950 | $ | 261,232 | $ | 292,382 | ||||||
Merchandise margin %
|
28.4% | 29.5% | 29.8% | |||||||||
Credit expense (% of gross margin)(12)
|
4.2% | 4.8% | 5.9% | |||||||||
Merchandise and cash over/short (% of net sales)(13)
|
0.7% | 0.4% | 0.3% | |||||||||
Operating expense/merchandise sales plus total gallons(14)
|
13.1% | 13.3% | 13.2% |
53
2003 | 2004 | 2005 | |||||||||||
1st Quarter
|
(12.6 | )% | 4.7 | % | (2.7 | )% | |||||||
2nd Quarter
|
(11.3 | )% | (2.7 | )% | 2.5 | % | |||||||
3rd Quarter
|
(11.2 | )% | 5.2 | % | (2.9 | )% | |||||||
4th Quarter
|
6.8 | % | (7.2 | )% | 8.1 | % | |||||||
Full Year
|
(7.4 | )% | (0.7 | )% | 0.9 | % |
2003 | 2004 | 2005 | |||||||||||
1st Quarter
|
4.6 | % | 13.2 | % | 1.3 | % | |||||||
2nd Quarter
|
12.3 | % | 4.5 | % | 7.5 | % | |||||||
3rd Quarter
|
17.0 | % | 4.5 | % | 7.1 | % | |||||||
4th Quarter
|
19.7 | % | 4.9 | % | 10.9 | % | |||||||
Full Year
|
12.2 | % | 5.9 | % | 4.7 | % |
2003 | 2004 | 2005 | |||||||||||
1st Quarter
|
(6.4 | )% | 5.5 | % | 0.4 | % | |||||||
2nd Quarter
|
(9.0 | )% | 4.7 | % | 1.6 | % | |||||||
3rd Quarter
|
(0.1 | )% | 2.5 | % | 7.7 | % | |||||||
4th Quarter
|
2.9 | % | 4.8 | % | 4.9 | % | |||||||
Full Year
|
(3.4 | )% | 4.0 | % | 1.4 | % |
54
(1) | Effective April 30, 2004, we completed the acquisition of 100% of the outstanding stock of Williamson Oil. Because the results of operations of Williamson Oil are included in our financial results from the date of acquisition, a comparison of our period-to -period financial results may not necessarily be meaningful. | |
(2) | Effective April 29, 2005, we completed the acquisition of the Tyler refinery and related assets. We operated the refinery for 247 days in the fiscal period ended December 31, 2005. Because the results of operations of the Tyler refinery and related assets are included in our financial results from the date of acquisition, a comparison of our period-to -period financial results may not necessarily be meaningful. See Unaudited Pro Forma Condensed Consolidated Financial Data, which shows what our results of operations might have been in 2005 had we acquired the Tyler refinery and related assets on January 1, 2005. | |
(3) | In order to mitigate the risks of changes in the market price of crude oil and refined petroleum products, we entered into forward contracts with major financial institutions to fix the purchase price of crude and sales price of specific refined petroleum products for a predetermined number of units at a future date. The loss realized on these contracts in 2005 was $9.1 million. These contracts were entered into with an affiliate of Citigroup Global Markets Inc., one of the underwriters of this offering. | |
(4) | In 2005, we refinanced a significant portion of our existing debt. As a result, financing costs associated with the previous debt were written-off. | |
(5) | In order to economically hedge a portion of our floating rate debt, we enter into interest rate swap and cap agreements. These interest rate swap and cap agreements are marked to fair value each fiscal quarter. | |
(6) | In 2005, our parent company guaranteed a portion of our new debt and other instruments in connection with the acquisition of the Tyler refinery. We have agreed to pay our parent a fee for these guarantees. | |
(7) | Gives effect to a 393,898.69-for-one split of our common stock effected on April 18, 2006. | |
(8) | Statement of Accounting Standards No. 131, Disclosures About Segments of an Enterprise and Related Information, requires disclosure of a measure of segment profit or loss. In connection with the purchase of the Tyler refinery and related assets on April 29, 2005, management began viewing our companys operating results in two reportable segments: retail and refining. We measure the operating performance of each segment within the two reportable segments based on segment contribution margin. We define segment contribution margin as net sales less cost of goods sold and operating expenses, excluding depreciation and amortization. |
For the retail segment, cost of goods sold includes the costs of specific products sold. Operating expenses include costs such as wages of employees at the stores, lease expense for the stores, utility expense for the stores and other costs of operating the stores, excluding depreciation and amortization. | ||
For the refining segment, cost of goods sold includes all the costs of crude oil, feedstocks and related transportation. Operating expenses include the costs associated with the actual operations of the refinery, excluding depreciation and amortization. | ||
Prior to the purchase of the Tyler refinery and related assets, we had only the retail segment, thus segment data prior to 2005 is not applicable. |
(9) | Consists of fuel credit card services provided by one of our subsidiaries and eliminations of intercompany indebtedness. |
(10) | Refining operating margin per barrel is calculated by dividing the margin between net sales and cost of crude oil, feedstocks and related transportation by the total barrels sold at our refinery. Industry-wide refining results are driven and measured by the margins between refined petroleum product prices and the prices for crude oil, which are referred to as crack spreads. We compare our refining operating margin to these crack spreads to assess our operating performance relative to other participants in our industry. |
(11) | The differential in price between a representative barrel of benchmark refined petroleum products, such as gasoline or heating oil, and a barrel of benchmark crude oil is known as a crack spread. The US Gulf Coast 5-3-2 crack spread represents the differential between Platts quotations for 3 / 5 of a barrel of US |
55
Gulf Coast Pipeline 87 Octane Conventional Gasoline and 2 / 5 of a barrel of US Gulf Coast Pipeline No. 2 Heating Oil (high sulfur diesel) on the one hand, and the first month futures price of 5 / 5 of a barrel of light sweet crude oil on the New York Mercantile Exchange, on the other hand. |
(12) | Consists of third party credit, debit and fuel card processing fees as a percentage of gross margin. |
(13) | Merchandise and cash over/short as a percentage of net sales is a measure of merchandise loss or theft, motor fuel theft and cash shortages as a percentage of net sales. |
(14) | Operating expense for our retail segment divided by merchandise sales plus retail fuel gallons is a ratio we use to measure store operating performance especially operating expense control. Retail fuel gallons are used rather than net retail fuel sales to eliminate the volatility of fuel prices in the calculation and improve comparability. |
(15) | Comparable store results for each quarter indicate the changes in the performance of stores operated throughout both that quarter and the entire comparable quarter of the preceding year. The method of calculating comparable store results, which are also referred to as same-store results by others in our industry, may vary from company to company. As a result, our calculation of comparable store results is not necessarily the same as similarly titled measures reported by other companies. |
Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004 |
Net Sales |
Fuel Sales and Gallons. Retail fuel sales were 341.3 million gallons for 2005, compared to 315.3 million gallons for 2004. This increase was primarily due to the inclusion of a full year of sales from the acquisition of Williamson Oil stores compared to only eight months in 2004, which led to an increase of 21.6 million gallons. This increase was partially offset by approximately 1.2 million gallons lost in the divestiture of stores and the estimated 2.6 million gallon impact of Hurricane Katrina. Comparable store gallons increased 0.9%. Total fuel sales, including wholesale gallons, were $808.6 million for 2005, compared to $596.6 million in 2004, an increase of $212.0 million or 35.5%. The increase was primarily due to an increase of $0.36 per gallon in the average retail price per gallon ($2.14 per gallon compared to $1.78 per gallon) and $58.3 million in fuel sales resulting from the inclusion of a full year of fuel sales from the acquisition of Williamson Oil stores compared to only eight months in 2004. | |
Merchandise Sales. Merchandise sales were $292.4 million for 2005, compared to $261.2 million over the same period in 2004, an increase of $31.2 million or 11.9%. The increase in merchandise sales |
56
was primarily due to $20.8 million in merchandise sales resulting from the inclusion of a full year of merchandise sales from the acquisition of Williamson Oil stores compared to only eight months in 2004. Comparable store (company stores operated for the entire 12 months in both 2004 and 2005) merchandise sales increased by 1.4% primarily due to increases in the cigarette and dairy categories which were driven by competitive pricing and merchandising strategies. |
Cost of Goods Sold |
Operating Expenses |
General and Administrative Expenses |
Depreciation and Amortization |
57
Gain on Disposal of Assets |
Loss on Forward Contract Activities |
Interest Expense, Interest Income, Interest Expense-Related Party, Write-off of Deferred Financing Costs, (Gain) Loss on Derivative Instruments and Guarantee Fees |
Income Tax Expense |
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 |
Net Sales |
58
Fuel Sales and Gallons. Retail fuel sales were 315.3 million gallons for 2004, compared to 267.5 million gallons for 2003, an increase of 47.8 million gallons. This increase was primarily due to 44.9 million in gallons sold as a result of the acquisition of the Williamson Oil stores. Comparable store gallons decreased 0.7%. Total fuel sales, including wholesale gallons, were $596.6 million for 2004, compared to $393.2 million for 2003, an increase of $203.4 million or 51.7%. The increase was primarily due to an increase of $0.31 per gallon in the average retail price per gallon ($1.78 per gallon compared to $1.47 per gallon) and $118.3 million in sales resulting from the acquisition of the Williamson Oil stores. | |
Merchandise Sales. Merchandise sales were $261.2 million for 2004, compared to $207.0 million for 2003, an increase of $54.2 million or 26.2%. The primary reason for the increase in merchandise sales was $41.9 million from the Williamson Oil acquisition and an increase of $3.4 million in lottery commissions due to the introduction of the Tennessee lottery in early 2004. Comparable store merchandise sales increased 4.0%. | |
Cost of Goods Sold |
Operating Expenses |
General and Administrative Expenses |
Depreciation and Amortization |
Gain on Disposal of Assets |
59
Interest Expense, Interest Income, Interest Expense-Related Party, Write-off of Deferred Financing Costs, (Gain) Loss on Derivative Instruments and Guarantee Fees |
Income Tax Expense |
Cash Flows |
Year Ended December 31, | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(Dollars in thousands) | ||||||||||||
Cash flows provided by operating activities
|
$ | 26,333 | $ | 24,926 | $ | 148,668 | ||||||
Cash flows used in investing activities
|
(16,149 | ) | (27,343 | ) | (162,313 | ) | ||||||
Cash flows (used in) provided by financing activities
|
(2,242 | ) | 5,616 | 54,107 | ||||||||
Net increase in cash and cash equivalents
|
$ | 7,942 | $ | 3,199 | $ | 40,462 | ||||||
Cash Flows Provided By Operating Activities |
Cash Flows Used In Investing Activities |
60
Cash Flows (Used In) Provided By Financing Activities |
Cash Position, Working Capital and Indebtedness |
61
December 31, 2005 | ||||
(Dollars in | ||||
thousands) | ||||
Notes payable to related parties
|
$42,500 | |||
Senior secured credit facility term loan
|
164,175 | |||
Senior secured credit facility revolver
|
32,000 | |||
Israel Discount Bank note
|
20,000 | |||
Bank Leumi note
|
10,000 | |||
Other notes payable
|
80 | |||
268,755 | ||||
Less:
|
||||
Current portion of long-term debt
|
1,696 | |||
$ | 267,059 | |||
62
63
Capital Spending |
2006 | 2007 | ||||||||
(Dollars in thousands) | |||||||||
Retail:
|
|||||||||
Sustaining maintenance
|
$5,000 | $5,175 | |||||||
Growth/profit improvement
|
4,500 | 4,658 | |||||||
Retrofit/rebrand/remodel
|
2,750 | 5,025 | |||||||
Raze and rebuild
|
7,313 | 7,700 | |||||||
New construction
|
12,000 | 16,500 | |||||||
Total retail
|
31,563 | 39,058 | |||||||
Refining: | |||||||||
Sustaining maintenance
|
12,716 | 6,470 | |||||||
Environmental (see explanation below)
|
28,445 | 10,235 | |||||||
Turnarounds
|
| | |||||||
Discretionary projects
|
4,641 | 2,400 | |||||||
Total refinery
|
45,802 | 19,105 | |||||||
Total capital spending
|
$ | 77,365 | $ | 58,163 | |||||
2006 | 2007 | 2008 | 2009 | 2010 | Total | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Low-sulfur gasoline
|
$2,500 | $9,485 | $ | | $ | | $ | | $ | 11,985 | ||||||||||||||
Low-sulfur diesel
|
14,668 | | | | | 14,668 | ||||||||||||||||||
Electrical substation
|
2,964 | | | | | 2,964 | ||||||||||||||||||
Sulfur recovery unit
|
6,650 | | | | | 6,650 | ||||||||||||||||||
Other environmental
|
1,663 | 750 | 750 | 750 | 750 | 4,663 | ||||||||||||||||||
Totals
|
$ | 28,445 | $ | 10,235 | $ | 750 | $ | 750 | $ | 750 | $ | 40,930 | ||||||||||||
64
<1 Year | 1-3 Years | 3-5 Years | >5 Years | Total | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Long-term debt obligations
|
$1,696 | $58,334 | $ | 52,800 | $ | 1155,925 | $ | 268,755 | ||||||||||||
Interest(1)
|
18,754 | 33,303 | 27,198 | 6,638 | 85,893 | |||||||||||||||
Operating lease obligations(2)
|
9,672 | 17,871 | 17,044 | 105,737 | 150,324 | |||||||||||||||
Total
|
$ | 30,122 | $ | 109,508 | $ | 97,042 | $ | 268,300 | $ | 504,972 | ||||||||||
(1) | Includes expected payments on credit facilities in place at December 31, 2005. Variable interest is set at December 31, 2005 rates. |
(2) | Amounts reflect future estimated lease payments, including renewal options for leases we have determined are reasonably assured, under operating leases having remaining noncancelable terms in excess of one year as of December 31, 2005. |
65
66
Strong Demand for Refined Petroleum Products |
67
Limited U.S. Refining Capacity |
High Utilization Rates |
68
Significant Dependence on Imports |
Varying Product Specifications Complicate Distribution |
69
Vulnerability of Energy Infrastructure |
What is a convenience store |
| Building size may vary significantly typically between 1,000 and 5,000 square feet; | |
| Off-street parking and/or convenient pedestrian access; | |
| Extended hours of operation with many open 24 hours a day, seven days a week; | |
| Stock of at least 500 SKUs (stock-keeping units); | |
| Product mix includes grocery-type items and items from the following groups: beverages, snacks (including confectionery) and tobacco; and | |
| Approximately 80% sell gasoline. |
Industry Overview |
70
Highly Fragmented Industry |
In-Store Sales |
71
Fuel Sales |
72
Technology |
73
Recent Trends |
Food Service |
Increasing Competition |
New Store Builds |
74
75
Approximate Purchase | ||||||
Date | Acquired Company/Assets | Acquired From | Price | |||
May 2001
|
MAPCO Express, Inc., with 198 retail fuel and convenience stores | Williams Express, Inc. | $162.5 million | |||
June 2001
|
36 retail fuel and convenience stores in Virginia | East Coast Oil Corporation | $40.1 million | |||
February 2003
|
Seven retail fuel and convenience stores | Pilot Travel Centers | $11.9 million | |||
April 2004
|
Williamson Oil Co., Inc., with 89 retail fuel and convenience stores in Alabama, a wholesale fuel and merchandise distribution operation | Williamson Oil Co., Inc. | $19.8 million, plus assumed debt of $28.6 million | |||
April 2005
|
Refinery, pipeline and other refining, product terminal and crude oil pipeline assets located in and around Tyler, Texas, including physical inventories of crude oil, intermediates and light products | La Gloria Oil and Gas Company | $68.1 million, including $25.9 million of prepaid crude inventory and $38.4 million of assumed crude vendor liabilities | |||
December 2005
|
21 retail fuel and convenience stores, a network of four dealer-operated stores, four undeveloped lots and inventory in the Nashville, Tennessee area | BP Products North America, Inc. | $35.5 million |
76
77
78
79
80
Percentage of | ||||
Crude Oil | ||||
Source | Received | |||
East Texas Crude Oil
|
67% | |||
West Texas Intermediate Crude Oil
|
23% | |||
Foreign Sweet Crude Oil
|
10% |
| Gasoline. Gasoline accounted for approximately 52% of our refinerys production. The refinery produces four different grades of conventional gasoline (premium 92 and 93 octane, regular and mid-grade), as well as aviation gasoline. | |
| Diesel/jet fuels. Diesel and jet fuel products accounted for approximately 40% of our refinerys production. Diesel and jet fuel products include military specification jet fuel (JP-8), commercial jet fuel, high sulfur diesel (No. 2 oil), low sulfur diesel, and ultra low sulfur diesel. | |
| Petrochemicals. We produce small quantities of propane, refinery grade propylene and butanes. | |
| Other products. We produce small quantities of other products, including, anode grade coke, slurry oil, sulfur and other blendstocks. |
81
Delek | |||||||||||||||||||||||||||||||||||||||||
Year Ended December 31 | Ownership(2) | ||||||||||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005(1) | ||||||||||||||||||||||||||||||||||||||
Bpd | % | Bpd | % | Bpd | % | Bpd | % | Bpd | % | ||||||||||||||||||||||||||||||||
Refinery throughput:
|
|||||||||||||||||||||||||||||||||||||||||
Crude
|
50,893 | 96.5 | % | 50,540 | 96.2 | % | 46,885 | 93.9 | % | 48,251 | 96.8 | % | 51,906 | 97.7 | % | ||||||||||||||||||||||||||
Other blendstocks
|
1,873 | 3.5 | % | 1,992 | 3.8 | % | 3,051 | 6.1 | % | 1,584 | 3.2 | % | 1,244 | 2.3 | % | ||||||||||||||||||||||||||
Total refinery throughput
|
52,766 | 100.0 | % | 52,532 | 100.0 | % | 49,936 | 100.0 | % | 49,835 | 100.0 | % | 53,150 | 100.0 | % | ||||||||||||||||||||||||||
Products produced:
|
|||||||||||||||||||||||||||||||||||||||||
Gasoline
|
29,336 | 56.6 | % | 29,775 | 57.5 | % | 28,349 | 57.6 | % | 25,744 | 53.0 | % | 26,927 | 52.2 | % | ||||||||||||||||||||||||||
Diesel/ jet
|
18,452 | 35.6 | % | 17,627 | 34.0 | % | 17,613 | 35.8 | % | 18,688 | 38.5 | % | 20,779 | 40.2 | % | ||||||||||||||||||||||||||
Petrochemicals, LPG, NGLs
|
2,451 | 4.7 | % | 2,408 | 4.6 | % | 2,153 | 4.4 | % | 1,983 | 4.0 | % | 2,218 | 4.3 | % | ||||||||||||||||||||||||||
Other
|
1,591 | 3.1 | % | 2,040 | 3.9 | % | 1,108 | 2.2 | % | 2,185 | 4.5 | % | 1,684 | 3.3 | % | ||||||||||||||||||||||||||
Total products produced
|
51,830 | 100.0 | % | 51,850 | 100.0 | % | 49,223 | 100.0 | % | 48,600 | 100.0 | % | 51,608 | 100.0 | % | ||||||||||||||||||||||||||
(1) | Throughput during the year ended December 31, 2005 reflects reductions resulting from the turnaround conducted by the previous owner during the first quarter of 2005 and a three-week turnaround that we conducted in the fourth quarter of the year. Average throughput and production for the 216 day period from April 29, 2005 through November 30, 2005 were 54,878 bpd and 53,500 bpd, respectively, and for December 2005, the month in which we conducted our turnaround, were 41,110 bpd and 38,421 bpd, respectively. |
(2) | Effective April 29, 2005, we completed the acquisition of the Tyler refinery and related assets. We have operated the refinery for 247 days in the fiscal period ended December 31, 2005. |
| Delek Tank Farm: One 150,000 barrel and one 300,000 barrel tank. | |
| Nettleton Station: Five 50,000 barrel tanks. |
82
| Bradford Station: One 50,000 barrel and one 10,000 barrel tank. | |
| ARP Station: Two 50,000 barrel tanks. |
83
Year Ended December 31, | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
Number of stores (end of period)
|
243 | 331 | 349 | |||||||||
Average number of stores
|
242 | 310 | 330 | |||||||||
Retail fuel sales (thousands of gallons)
|
267,476 | 315,294 | 341,335 | |||||||||
Average retail gallons per average number of stores (thousands
of gallons)
|
1,105 | 1,017 | 1,034 | |||||||||
Retail fuel margin ($ per gallon)(1)
|
$0.154 | $0.155 | $0.165 | |||||||||
Lundberg Survey Rack-to-Retail Fuel Margin (per gallon)(2)
|
$0.137 | $0.116 | $0.153 |
(1) | Retail fuel margins per gallon are calculated as the retail sales price less fuel discounts, costs of product, and transportation. |
(2) | Rack-to-retail margins shown in the chart above are a weighted average composite of rack-to-retail margins for diesel and gasoline sales, including regular, medium grade and premium unleaded gasoline, in Alabama, Tennessee and Virginia, based on Lundberg Survey data. Of our 349 retail fuel and convenience stores, 326 are located in those states, and the margins have been weighted to correspond to our percentage sales of the various grades and types of fuel sold by us in those states. Because we report fuel sales as a composite of our gasoline and diesel sales, and because our retail fuel and convenience stores are concentrated in Alabama, Tennessee and Virginia, we believe that this Lundberg Survey Rack-to-Retail Margin represents the most accurate benchmark with which to compare our historical fuel margins to those of the industry. |
84
Year Ended December 31, | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
% | % | % | ||||||||||
Total merchandise sales as a percentage of net sales for our
retail segment
|
34.5 | % | 30.5 | % | 26.6 | % | ||||||
Comparable store merchandise sales change
|
(3.4 | )% | 4.1 | % | 1.4 | % | ||||||
Merchandise margin
|
28.4 | % | 29.5 | % | 29.8 | % | ||||||
Merchandise profit as a percentage of total margins
|
58.9 | % | 60.6 | % | 60.1 | % |
Year Ended December 31, | |||||||||||||
2003 | 2004 | 2005 | |||||||||||
Cigarettes
|
36.6% | 33.8% | 34.0% | ||||||||||
Other tobacco products
|
3.1% | 4.1% | 4.3% | ||||||||||
Beer
|
18.2% | 17.4% | 17.1% | ||||||||||
Soft drinks
|
8.8% | 9.3% | 9.3% | ||||||||||
Dairy products
|
6.5% | 7.0% | 8.8% | ||||||||||
Candy/ gum
|
2.8% | 2.7% | 3.0% | ||||||||||
Snacks/ groceries
|
7.1% | 6.9% | 7.0% | ||||||||||
Food service
|
6.1% | 6.0% | 6.0% | ||||||||||
General merchandise
|
7.5% | 8.6% | 6.8% | ||||||||||
Other
|
3.3% | 4.2% | 3.7% | ||||||||||
Total merchandise sales
|
100.0% | 100.0% | 100.0% | ||||||||||
| tracking sales of complementary products; for example, determining the impact of fuel price movements on in-store sales or tracking the impact of a beer promotion on cigarette sales; | |
| providing real-time fuel inventory data on a per store basis to optimize fuel purchase and distribution costs; |
85
| pricing fuel at individual stores on a daily basis, taking into account competitors prices, competitors historical behavior, daily changes in cost, and the impact of pricing on in-store merchandise sales; | |
| alerting us on a daily basis by store, district, and/or division to negative sales trends; for example, merchandise categories that are below budget or below the prior periods results; | |
| reconciling store reported daily cash deposits and credit card settlements with electronic data from our vendor relationships to manage our current assets; and | |
| integrating our security video with our point of sales transaction log in a searchable database that allows us to search for footage related to specific transactions, which enables us to identify potentially fraudulent transactions and employ real-world examples through which to train our employees. |
86
Number of | Remaining | Remaining | ||||||||||||||||||||||
Company- | Number of | Number of | Number of | Lease Term | Lease Term | |||||||||||||||||||
State | Operated Sites | Dealer Sites(1) | Owned Sites | Leased Sites | <3 Years(2) | >3 Years(2) | ||||||||||||||||||
Tennessee
|
198 | 8 | 104 | 102 | 3 | 99 | ||||||||||||||||||
Alabama
|
92 | 44 | 69 | 40 | 3 | 37 | ||||||||||||||||||
Virginia
|
36 | 0 | 26 | 10 | 0 | 10 | ||||||||||||||||||
Arkansas
|
15 | 0 | 7 | 8 | 0 | 8 | ||||||||||||||||||
Kentucky
|
3 | 0 | 1 | 2 | 0 | 2 | ||||||||||||||||||
Louisiana
|
2 | 0 | 0 | 2 | 0 | 2 | ||||||||||||||||||
Mississippi
|
2 | 0 | 2 | 0 | 0 | 0 | ||||||||||||||||||
Georgia
|
1 | 7 | 1 | 4 | 0 | 4 | ||||||||||||||||||
Florida
|
0 | 2 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Total
|
349 | 61 | 210 | 168 | 6 | 162 | ||||||||||||||||||
(1) | Includes 40 sites neither owned by nor subleased from us. |
(2) | Includes renewal options; measured as of December 31, 2005. |
Environmental Matters |
| restrictions on our ongoing operations through permits and regulations; | |
| liability for the remediation of contaminated soil, groundwater and other environmental media at our current or former facilities and at facilities where we have disposed of hazardous substances; | |
| specifications on the refined petroleum products we market, including gasoline and diesel fuel; and | |
| regulation of fuel storage at our retail fuel and convenience stores. |
87
88
Fuel Regulations. |
| Reformulated Fuels. EPA regulations also require that reformulated gasoline and low-sulfur diesel intended for all on-road consumers be produced for ozone non-attainment areas. Expenditures necessary to comply with existing reformulated fuels regulations are primarily discretionary. | |
| Tier 2 Motor Vehicle Emission Standards. The EPAs Tier 2 Motor Vehicle Emission Standards Final Rule for all passenger vehicles establishes standards for sulfur content in gasoline. These regulations mandate that the average sulfur content of gasoline produced at any refinery not exceed 30 parts per million, or ppm, during any calendar year, and that no individual gallon of gasoline exceed 80 ppm, after January 1, 2006. The previous standard for maximum per gallon sulfur content was gradually reduced from 1,000 ppm, to 450 ppm, to 300 ppm. Sulfur reduction on this large scale is capital intensive for refineries. Generally, refineries that met the Small Business Administration definition of a small refiner (less than 155,000 bpd throughput and employ less than 1,500 workers worldwide) and timely submitted applications to the EPA have until 2010 to comply. The previous owner of our refinery entered into an economic hardship waiver agreement with the EPA in November 2003, which allowed for the continued production of gasoline with per batch sulfur levels as high as 300 ppm, and annual average sulfur levels not to exceed 156 ppm, until December 2009. On May 6, 2005, the EPA approved a hardship waiver and compliance plan for meeting the federal gasoline sulfur standards at the Tyler refinery. Under this agreement, we may continue to produce gasoline with a maximum per gallon sulfur level of 300 ppm, and an annual average sulfur level not to exceed 156 ppm through November 2007, provided that, beginning June 1, 2006, 95% of all motor vehicle and no-road, locomotive and marine diesel fuel produced at the refinery does not exceed 15 ppm sulfur and constitutes no less than 24% of the refinerys total volume of crude intake. |
To ensure compliance with these diesel fuel requirements we decided to modify and expand an existing diesel desulfurization unit at the refinery. However, due to equipment delivery delays primarily resulting from spikes in manufacturing and refurbishment workloads in the aftermaths of Hurricanes Katrina and Rita, the expansion of the diesel desulfurization unit and compliance with the above fuel requirements cannot be achieved by June 1, 2006. We have initiated discussions with the EPA to request modification of our existing hardship waiver and compliance plan to reflect that the diesel desulfurization unit project will not be completed until September 1, 2006, and to provide for mitigation of emissions resulting from the production of non-road, locomotive and marine diesel fuel in excess of 15 ppm after June 1, 2006. These mitigation measures are not expected to have a material adverse effect on the business, financial condition and results of operations of the refinery. Other aspects of the existing hardship waiver and compliance plan for gasoline sulfur, including the final compliance date for gasoline sulfur, will remain in full force and effect. |
| Ultra-Low Sulfur Diesel Standards. The EPA has also promulgated on-road diesel regulations, which require a 97% reduction in the sulfur content of diesel fuel sold for highway use by June 1, 2006, with full compliance by January 1, 2010. Additional regulations covering nonroad, locomotive and marine diesel have also been promulgated. As of March 2005, the refinery was able to produce approximately 12,000 bpd of ultra-low sulfur diesel. This diesel currently satisfies the requirements of both the EPA on-road diesel regulation and the Texas Commission on Environmental Qualitys low emission diesel regulation (referred to as the TxLED program). |
89
Remediation Efforts Retail Fuel and Convenience Stores and Refinery. |
90
Other Governmental Regulation |
91
92
Name | Age | Position | ||||
Executive Officers and Directors
|
||||||
Ezra Uzi Yemin
|
37 | President, Chief Executive Officer and Director | ||||
Lynwood Gregory
|
56 | Senior Vice President | ||||
Frederec Green
|
40 |
Vice President and Chief Operating Officer
of Delek Refining, Inc. |
||||
Edward Morgan
|
36 | Chief Financial Officer, Vice President and Treasurer | ||||
Tony McLarty
|
48 | Vice President of Human Resources | ||||
Assi Ginzburg
|
31 | Vice President of Strategic Planning | ||||
Paul Pierce
|
45 |
Vice President of Marketing
of MAPCO Express, Inc. |
||||
Gabriel Last
|
59 | Director | ||||
Asaf Bartfeld
|
54 | Director | ||||
Ronel Ben-Dov
|
37 | Director | ||||
Zvi Greenfeld
|
59 | Director | ||||
Carlos E. Jordá
|
56 | Director Nominee | ||||
Charles H. Leonard
|
57 | Director Nominee | ||||
Philip L. Maslowe
|
57 | Director Nominee | ||||
Key Employees
|
||||||
John Colling, Jr.
|
49 | Treasurer of MAPCO Express, Inc. and Delek Refining, Inc. | ||||
Scotty Creason
|
42 | Director of Information Technology of MAPCO Express, Inc. and Delek Refining Inc. | ||||
Walter Franz
|
39 | Director of Pricing of MAPCO Express, Inc. | ||||
Kent Thomas
|
37 | General Counsel and Secretary | ||||
Dana Young
|
45 | Vice President of Real Estate of MAPCO Express, Inc. |
93
94
95
96
Controlled Company |
Committees of the Board of Directors |
Audit Committee |
97
Compensation Committee |
Director Compensation |
98
99
100
101
102
103
Annual Compensation
All Other
Compensation
Name and Principal Position
Salary($)
Bonus($)
($)(1)
President and Chief Executive Officer
$
261,692
$
350,000
$
46,895
Senior Vice President of Delek US
$
177,230
$88,615
$
12,741
Chief Operating Officer of Delek Refining
$
158,173
$104,087
$141
Chief Financial Officer, Vice President and Treasurer
$
150,000
$95,000
$
12,741
Vice President of Human Resources
$
140,000
$90,000
$
12,118
(1)
Includes the following payments for each named executive officer:
Premiums paid by us with
Severance and
Matching contributions to
respect to term life
vacation payments
our 401(k) plan
insurance policies
accrued in fiscal 2005
$
12,600
$
141
$
34,154
(a)
$
12,600
$
141
$
141
$
12,600
$
141
$
11,977
$
141
(a)
Includes $12,000 in severance payments and $24,000 in unused
accrued vacation days that are payable upon termination of
employment. See Employment Agreement with
President and Chief Executive Officer.
Number of Securities
Value of Unexercised In-The-
Underlying Unexercised
Money Options at Fiscal Year
Options at Fiscal Year End
End(1)
Name
Exercisable
Unexercisable
Exercisable
Unexercisable
787,797
1,181,696
$
10,217,727
$
15,326,597
(1)
The dollar values have been calculated by determining the
difference between the fair market value of the securities
underlying the options at December 31, 2005 and the
exercise prices of the options. Solely for
Table of Contents
purposes of determining the value of the options at
December 31, 2005 we have assumed that the fair market
value of the common stock issuable upon exercise of options was
$15.00, the assumed initial public offering price, which is the
midpoint of the range set forth on the cover page of this
prospectus, since our common stock was not traded on an
established market prior to this offering. Although none of
Mr. Yemins share purchase rights reflected above were
exercisable on December 31, 2005 because we were not a
public company on that date, the above calculations for
Mr. Yemin assume completion of this offering.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
| each person or entity who is known by us to beneficially own 5% or more of our outstanding common stock; | |
| each of our directors and director nominees; | |
| each of our executive officers named in the Summary Compensation Table; and | |
| all our current directors and executive officers as a group. |
104
Before Offering | After Offering(1) | |||||||||||||||
Number of | Percentage of | Number of | Percentage of | |||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||
Name of Beneficial Owners, Directors, Director Nominees and | Beneficially | Beneficially | Beneficially | Beneficially | ||||||||||||
Executive Officers | Owned | Owned | Owned | Owned | ||||||||||||
Delek Group Ltd.(2)(3)
|
39,389,869 | 100 | % | 39,389,869 | 79.8 | % | ||||||||||
Itshak Sharon (Tshuva)(4)
|
39,389,869 | 100 | 39,389,869 | 79.8 | ||||||||||||
Delek Petroleum Ltd.(2)(3)
|
39,389,869 | 100 | 39,389,869 | 79.8 | ||||||||||||
Delek Hungary Holding Limited Liability Company(2)(3)
|
39,389,869 | 100 | 39,389,869 | 79.8 | ||||||||||||
Ezra Uzi Yemin(5)
|
| | 787,797 | 1.6 | ||||||||||||
Lynwood Gregory
|
| | | | ||||||||||||
Frederec Green
|
| | | | ||||||||||||
Edward Morgan
|
| | | | ||||||||||||
Tony McLarty
|
| | | | ||||||||||||
Gabriel Last
|
| | | | ||||||||||||
Asaf Bartfeld
|
| | | | ||||||||||||
Ronel Ben-Dov
|
| | | | ||||||||||||
Zvi Greenfeld
|
| | | | ||||||||||||
Carlos E. Jordá
|
| | | | ||||||||||||
Charles H. Leonard
|
| | | | ||||||||||||
Philip L. Maslowe
|
| | | | ||||||||||||
All current directors and executive officers as a group
(11 persons)
|
| | 787,797 | 1.6 | % |
(1) | The number of shares of common stock to be outstanding after the offering: |
| gives effect to a 393,898.69-for-one split of our common stock effected on April 18, 2006; | |
| excludes 1,969,493 shares of common stock issuable upon the exercise of outstanding share purchase rights held by our president and chief executive officer, having a weighted average exercise price of $2.03 per share (except, in the case of Ezra Uzi Yemin, for 787,797 shares of common stock issuable upon the exercise of outstanding share purchase rights exercisable within 60 days after the date of completion of this offering); | |
| excludes 130,000 shares of common stock issuable upon the exercise of stock options to be granted to a director pursuant to an amended and restated consulting agreement under our 2006 long-term incentive plan upon completion of this offering; | |
| excludes 1,378,000 shares of common stock issuable upon the exercise of stock options to be granted to certain directors, officers and employees under our 2006 long-term incentive plan upon completion of this offering; | |
| excludes 71,500 shares of common stock underlying restricted stock units to be awarded to certain directors, officers and employees under our 2006 long-term incentive plan upon the filing of a registration statement on Form S-8 registering the shares of our common stock issuable under our 2006 long-term incentive plan, which Form S-8 we intend to file within 30 days after the completion of this offering; | |
| excludes 1,473,892 shares of common stock reserved for future grants or awards from time to time under our 2006 long-term incentive plan; and | |
105
| assumes no exercise by the underwriters of their option to purchase up to 1,500,000 additional shares of common stock from us if they sell more than 10,000,000 shares in the offering. |
(2) | Delek Group Ltd. is the parent company of Delek Petroleum Ltd., and Delek Petroleum Ltd. is the parent company of Delek Hungary Holding Limited Liability Company, the record owner of all of our outstanding shares of common stock prior to this offering. Each entity may therefore, be deemed to beneficially own the shares held by Delek Hungary Holding Limited Liability Company. |
(3) | The address of Delek Group Ltd. and Delek Petroleum Ltd. is Bet Adar Building, 7 Giborei Israel Street, P.O.B. 8464, New Industrial Park, Natanya (South) 42504, Israel. The address of Delek Hungary Holding Limited Liability Company is 1134 Budapest, Vaci ut 35, Hungary. |
(4) | Mr. Sharon (Tshuva) beneficially owns 62.2% of the outstanding equity and voting ordinary shares of Delek Group Ltd. through two corporations that he controls. Mr. Sharon (Tshuva) may be deemed to be a beneficial owner of the common stock beneficially owned by Delek Group Ltd. Mr. Sharon (Tshuva) disclaims beneficial ownership of the common stock beneficially owned by Delek Group Ltd. pursuant to the rules promulgated under the Securities Exchange Act of 1934, as amended, or Exchange Act, except to the extent of his pecuniary interest therein. This information is as of March 29, 2006, and is based on filings made by Delek Group Ltd. with the Israel Securities Authority. |
(5) | Consists of 787,797 shares of common stock that Mr. Yemin has the right to purchase within 60 days of the date of this prospectus, assuming the completion of this offering. |
106
107
108
109
| restricting dividends on the common stock; | |
| diluting the voting power of the common stock; | |
| impairing the liquidation rights of the common stock; or | |
| delaying or preventing a change in control without further action by the stockholders. |
110
Preferred Stock |
Advanced Notice Procedure |
Special Meetings of Stockholders |
111
| prior to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; | |
| upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding specified shares); or | |
| on or subsequent to such time, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2 / 3 % of the outstanding voting stock not owned by the interested stockholder. |
| any person that is the owner of 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the date of determination; and | |
| the affiliates and associates of any such person. |
112
113
| gives effect to a 393,898.69-for-one stock split of our common stock effected on April 18, 2006; | |
| excludes 1,969,493 shares of common stock issuable upon the exercise of outstanding share purchase rights held by our president and chief executive officer, having a weighted average exercise price of $2.03 per share; | |
| excludes 1,378,000 shares of common stock issuable upon the exercise of stock options to be granted to certain directors, officers and employees under our 2006 long-term incentive plan upon completion of this offering; | |
| excludes 130,000 shares of common stock issuable upon the exercise of stock options to be granted to a director pursuant to an amended and restated consulting agreement under our 2006 long-term incentive plan upon completion of this offering; | |
| excludes 71,500 shares of common stock underlying restricted stock units to be awarded to certain directors, officers and employees under our 2006 long-term incentive plan upon the filing of a registration statement on Form S-8 registering the shares of our common stock issuable under our 2006 long-term incentive plan, which Form S-8 we intend to file within 30 days after the completion of this offering; | |
| excludes 1,473,892 shares of common stock reserved for future grants or awards from time to time under our 2006 long-term incentive plan; and | |
| assumes no exercise by the underwriters of their option to purchase up to 1,500,000 additional shares of common stock from us if they sell more than 10,000,000 shares in the offering. | |
| one percent of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering, or | |
| the average weekly trading volume of our common stock on the New York Stock Exchange during the four calendar weeks preceding the date of filing of a notice on Form 144 with respect to the sale. |
114
115
| a citizen or individual resident of the United States; | |
| a corporation, partnership or other entity treated as a corporation or partnership, created in or under the laws of the United States or of any political subdivision thereof; | |
| an estate the income of which is subject to United States federal income taxation regardless of its source; or | |
| a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or a trust that has a valid election in effect under applicable United States Treasury regulations to be treated as a U.S. person. |
Distributions to Non-U.S. Holders |
116
| The gain is effectively connected with a Non-U.S. Holders conduct of a trade or business within the United States and, if a tax treaty applies, the gain is attributable to a Non-U.S. Holders U.S. permanent establishment. In such case, the Non-U.S. Holder will, unless an applicable tax treaty provides otherwise, generally be taxed on its net gain derived from the sale at regular graduated U.S. federal income tax rates, and in the case of a foreign corporation, may also be subject to the branch profits tax described above; | |
| A Non-U.S. Holder who is an individual holds our common stock as a capital asset, is present in the United States for 183 or more days in the taxable year of the sale or other disposition, and certain other conditions are met. In such a case, the Non-U.S. Holder will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by certain U.S. sourced capital losses; or | |
| We are or have been a United States real property holding corporation, or USRPHC, for United States federal income tax purposes during specified periods. |
117
118
Underwriters | Number of Shares | ||||
Lehman Brothers Inc.
|
|||||
Citigroup Global Markets Inc.
|
|||||
Credit Suisse Securities (USA) LLC
|
|||||
HSBC Securities (USA) Inc.
|
|||||
Morgan Keegan & Company, Inc.
|
|||||
William Blair & Company, L.L.C.
|
|||||
SunTrust Capital Markets, Inc.
|
|||||
IDB Capital Corp., an affiliate of the Israel Discount Bank of
New York
|
|||||
Total
|
10,000,000 | ||||
| the obligation to purchase all of the shares of common stock offered hereby, if any of the shares are purchased; | |
| the representations and warranties made by us to the underwriters are true; | |
| there is no material change in the financial markets; and | |
| we deliver customary closing documents to the underwriters. |
No Exercise | Full Exercise | |||||||
Per Share
|
$ | $ | ||||||
Total
|
$ | $ |
119
| during the last 17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event, or we are notified in writing by the representatives of the underwriters that, in their reasonable judgment, a material event relating to us has occurred; or | |
| prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period. |
| the history and prospects for the industry in which we compete; | |
| our financial information; | |
| the ability of our management and our business potential and earning prospects; | |
| the prevailing securities markets at the time of this offering; and | |
| the recent market prices of, and the demand for, publicly traded shares of generally comparable companies. |
120
| Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. | |
| A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase is not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares and/or purchasing shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. | |
| Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. | |
| Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
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122
123
124
Alkylation | A refining process for chemically combining isobutane with olefin hydrocarbons (e.g., propylene, butylene) through the control of temperature and pressure in the presence of an acid catalyst, usually sulfuric acid or hydrofluoric acid. The product, alkylate, an isoparaffin, has high octane value and is blended with motor and aviation gasoline to improve the antiknock value of the fuel. | |
Anode grade coke | Grade of petroleum coke from a delayed coker low in metals such as vanadium, nickel and iron that is suitable for making graphite anodes for the aluminum smelting industry. If the metals content does not qualify as anode grade coke, then the coke is generally known as fuel grade. The choice of whether a coke may qualify as anode or fuel grade is driven solely by the crude slate of the crude unit upstream of the coker and the metals contained therein. | |
Atmospheric column | Refinery unit operated at atmospheric pressure. | |
Barrel | Common unit of measure in the oil industry which equates to 42 U.S. gallons. | |
Blendstocks | Various hydrocarbon streams produced from crude oil, natural gas processing, partially refined products and additives, which when blended together produce finished gasoline and diesel fuel; these may include natural gasoline, FCC unit gasoline, ethanol, reformate or butane, among others. | |
Bpd | Barrels per day, normally calculated as an average figure over a longer period of time. In production terms, the number of barrels of crude oil produced from a well during a 24 hour period; in refining terms, the number of barrels of crude oil input or refined petroleum products output by a refinery. | |
Catalytic cracking | The refining process of breaking down the larger, heavier, and more complex hydrocarbon molecules into simpler and lighter molecules. Catalytic cracking is accomplished by the use of a catalytic agent and is an effective process for increasing the yield of gasoline from crude oil. Catalytic cracking processes fresh feeds and recycled feeds. | |
Fresh Feeds. Crude oil or petroleum distillates that are being fed to processing units for the first time. | ||
Recycled Feeds. Feeds that are continuously fed back for additional processing. | ||
Complexity | Gasoline producing refineries are disaggregated according to refinery complexity. A complex refinery refers to a refinery with secondary heavy oil upgrading units downstream of atmospheric distillation. These secondary units include catalytic crackers, catalytic hydrocrackers and fluid or delayed cokers. A topping refinery refers to a refinery with no secondary heavy oil upgrading units. A moderate complexity refinery such as the Tyler refinery is characterized by its ability to produce a high |
125
percentage of valuable transportation fuels (or conversely, a
low percentage of products with values lower than the cost of
crude oil), but without the ability to further refine these
products into chemicals, petrochemicals, or other specialty
products.
Crack spread
A simplified benchmark for refining margins that measures the
difference between the price for light products and crude oil.
For example, 5-3-2 crack spread is often referenced and
represents the approximate gross margin resulting from
processing one barrel of a benchmark crude oil into three fifths
of a barrel of gasoline, and two fifths of a barrel of high
sulfur diesel.
Crude oil
A mixture of hydrocarbons that exists in liquid phase in natural
underground reservoirs and remains liquid at atmospheric
pressure after passing through surface separating facilities.
Delayed coking
A process by which heavier crude oil fractions can be thermally
decomposed under conditions of elevated temperatures to produce
a mixture of lighter oils and petroleum coke. The light oils can
be processed further in other refinery units to meet product
specifications. The coke can be used either as a fuel or in
other applications such as the manufacturing of steel or
aluminum. Delayed coking is differentiated from fluid coking by
the alternating services of coke drums for process or drill-out
purposes.
Distillates
Primarily diesel fuel, kerosene and jet fuel.
FCC (fluidized catalytic cracking)
Catalytic conversion of heavier and more complex hydrocarbons
into lighter products and coke in a fluidized bed catalytic
reactor with continuous catalyst regeneration. The light oils
can be processed further in other refinery units to meet product
specifications.
Feedstocks
Hydrocarbon compounds, such as crude oil and natural gas
liquids, that are processed and/or blended into refined
petroleum products.
Gathering lines
The pipes used to transport oil and gas from a producing field
to the main transportation pipeline in the area.
Heavy oils
A general term for heavy fuel oils and residual fuel oil.
Henry Hub
The pricing point for natural gas futures contracts traded on
the New York Mercantile Exchange (NYMEX).
High conversion refinery
Incorporates all the basic building blocks found in both the
topping and hydroskimming refineries, and it also features gas
oil conversion units such as catalytic cracking and
hydrocracking units, olefin conversion units such as alkylation
or polymerization units, and, frequently, coking units which
process heavy oils and minimize or eliminate the production of
residual fuels.
Hydrotreating
The process whereby feedstocks are placed into contact with
hydrogen, under high pressure and at a high temperature, in the
presence of a catalyst, to reduce the content of sulfur,
nitrogen, metals, polyaromatics and olefins.
126
Independent refiner | A refiner that does not have crude oil exploration or production operations. An independent refiner purchases the crude oil used as feedstock in its refinery operations from third parties. | |
Isomerization | A refining process which alters the fundamental arrangement of atoms in the molecule without adding or removing anything from the original material. Used to convert normal butane into isobutane (C4), an alkylation process feedstock, and normal pentane and hexane into isopentane (C5) and isohexane (C6), high-octane gasoline components. | |
Jobber | A merchant who buys products (usually in bulk or lots) and then sells them to various retailers. | |
Long ton | 2,240 lbs. (approximately 1,000 kg). | |
Lundberg Survey | An independent market research company offering local and national coverage of fuel prices, fuel taxes, station population studies, and market shares. | |
Naphtha | A major constituent fractionated from crude oil during the refining process, also referred to as straight run gasoline, which is processed further in the naphtha hydrotreating unit, reformer unit and isomerization unit to increase octane or reduce vapor pressure. | |
No 2 oil | A petroleum distillate that can be used as either a diesel fuel or a fuel oil. | |
No. 2 Diesel Fuel. It is used in high speed diesel engines that are generally operated under uniform speed and load conditions, such as those in railroad locomotives, trucks, and automobiles. | ||
No. 2 Fuel Oil (Heating Oil). It is used in atomizing type burners for domestic heating or for moderate capacity commercial/industrial burner units. | ||
Platts | Platts is an industry recognized source for news, market commentary, transaction information and benchmark pricing covering global energy, petrochemical and metals markets. | |
Refined petroleum products | Hydrocarbon compounds, such as gasoline, diesel fuel, jet fuel and residual fuel that are produced by a refinery. | |
Refinery grade propylene | A by-product of FCC, coking and visbreaking, comprised primarily of a blend of propylene and propane. The FCC Unit is by far the largest source of this material. Propylene is used internally in a refinery to manufacture gasoline via alkylation or polymerization or, in some cases, as fuel. | |
Reforming | The thermal or catalytic conversion of petroleum naphtha into more volatile products of higher octane number. It represents the total effect of numerous simultaneous reactions such as cracking, polymerization, dehydrogenation, and isomerization. | |
Regeneration | In a catalytic process the reactivation of the catalyst, sometimes done by burning off the coke deposits under carefully controlled conditions of temperature and oxygen content of the regeneration gas stream. | |
Short ton | 2,000 lbs. (approximately 907 kg). |
127
Slurry oil | Slurry oil is a heavy oil produced in the catalytic cracking process. Slurry oil is normally sold as a heavy industrial fuel or recycled back into the oil refining process to make other refined petroleum products such as diesel. | |
Sour crude oil | A crude oil that is relatively high in sulfur content, requiring additional processing to remove the sulfur. | |
Sweet crude oil | A crude oil that is relatively low in sulfur content, requiring less processing to remove the sulfur. | |
Throughput | The actual volume per day processed through a unit or a refinery, typically expressed in barrels per day. | |
Throughput capacity | The amount of crude oil that can be processed through a unit or a refinery, typically expressed in barrels per day. The design capacity per day of a refinery process unit. | |
Turnaround | A periodically required standard procedure to refurbish and maintain a refinery that involves the shutdown and inspection of major processing units and occurs every three to five years. | |
Utilization | Ratio of throughput to the design or throughput capacity of a unit or a refinery. | |
WTI | West Texas Intermediate crude oil, a light, sweet crude oil, characterized by an API gravity between 38 and 40 and a sulfur content of less than 0.4 weight percent that is used as a benchmark for other crude oils. | |
Yield | The percentage of refined petroleum products that are produced from feedstocks. |
128
F-1
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
F-26
F-27
F-28
F-29
F-30
F-31
F-32
F-33
F-34
F-35
F-36
F-37
F-38
F-39
F-40
F-41
F-42
F-43
F-44
F-45
F-46
F-47
F-48
F-49
F-50
F-51
F-52
F-53
F-54
F-55
F-56
F-57
F-58
F-59
F-60
F-61
F-62
F-63
F-64
F-65
F-66
F-67
F-68
F-69
F-70
F-71
F-72
F-73
F-74
F-75
F-76
F-77
F-78
Table of Contents
Delek US Holdings, Inc.
/s/ Ernst & Young LLP
Table of Contents
Delek US Holdings, Inc.
/s/ Mayer Hoffman McCann P.C.
January 19, 2006, except for the
second and third paragraphs
of Note 15, as to which the date
is April 18, 2006
Table of Contents
Table of Contents
Year Ended December 31, 2003
2003
2004
2005
$600,157
$857,899
$2,031,869
500,181
730,780
1,731,625
62,704
80,060
133,088
12,874
15,122
23,495
8,784
12,374
16,092
(430
)
(898
)
(1,631
)
9,087
584,113
837,438
1,911,756
16,044
20,461
120,113
5,902
7,117
17,369
(30
)
(58
)
(2,144
)
120
1,210
3,021
3,466
(242
)
727
(1,527
)
591
5,750
8,996
20,776
10,294
11,465
99,337
3,814
4,132
34,954
6,480
7,333
64,383
267
$6,480
$7,333
$64,116
$0.16
$0.19
$1.64
0.01
$0.16
$0.19
$1.63
39,389,869
39,389,869
39,389,869
Table of Contents
Common Stock
Additional
Total
Paid-In
Retained
Shareholders
Shares
Amount
Capital
Earnings
Equity
39,389,869
$
394
$
40,727
$
820
$
41,941
6,480
6,480
39,389,869
394
40,727
7,300
48,421
7,333
7,333
39,389,869
394
40,727
14,633
55,754
64,116
64,116
39,389,869
$
394
$
40,727
$
78,749
$
119,870
Table of Contents
Year Ended December 31,
2003
2004
2005
$
6,480
$
7,333
$
64,116
9,092
13,205
18,384
143
3,742
3,943
8,866
(242
)
727
(1,527
)
(430
)
(898
)
(1,631
)
3,466
20
43
1,254
(1,440
)
(41,692
)
283
(2,164
)
(11,618
)
25,950
(127
)
(514
)
(3,206
)
213
(869
)
(1,634
)
717
(1,952
)
20,026
3,528
5,759
53,420
(83
)
277
309
122
1,190
1,530
412
338
1,037
(106
)
(988
)
5,194
40
2,606
185
(185
)
258
825
538
3,755
448
543
916
26,333
24,926
148,668
(26,586
)
(12,186
)
(22,150
)
(109,561
)
(91
)
(5,181
)
(6,974
)
(29,186
)
1,218
1,781
3,111
(16,149
)
(27,343
)
(162,313
)
3,500
25,000
35,000
(21,000
)
165,000
(825
)
32,000
30,000
(10,000
)
20,000
(10,000
)
(11,600
)
(11,600
)
(131,900
)
(500
)
(1,000
)
(5,000
)
33,700
(33,700
)
3,527
(3,527
)
9,000
(9,000
)
(318
)
(616
)
(57
)
(74
)
(10
)
(28,563
)
(2,043
)
(1,674
)
3,717
(100
)
(100
)
(2,289
)
(542
)
(1,993
)
(14,932
)
(2,242
)
5,616
54,107
7,942
3,199
40,462
10,965
18,907
22,106
$
18,907
$
22,106
$
62,568
$
5,739
$
5,969
$
16,998
$
$
190
$
25,830
$
$
108
$
40
$
(6,696
)
$
6,696
$
Table of Contents
1.
General
2.
Accounting Policies
Principles of Consolidation
Use of Estimates
Reclassifications
Cash and Cash Equivalents
Short-Term Investments
Table of Contents
Accounts Receivable
Inventory
Property, Plant and Equipment
Table of Contents
3-5 years
3-10 years
4 years
5-15 years
7-15 years
15-36 years
15-40 years
8-40 years
40 years
Refinery Turnaround Costs
Restricted Cash
Table of Contents
Goodwill
Derivatives
Fair Value of Financial Instruments
Table of Contents
Self-Insurance Reserves
Vendor Discounts and Deferred Revenue
Environmental Expenditures
Asset Retirement Obligations
Table of Contents
Revenue Recognition
Advertising Costs
Table of Contents
Operating Leases
Income Taxes
Stock-Based Compensation
Earnings Per Share
Table of Contents
Comprehensive Income
New Accounting Pronouncements
Table of Contents
3.
Inventory
December 31,
2004
2005
$
$
28,347
22,459
16,269
8,802
12,433
19,505
21,786
$
28,307
$
101,294
4.
Acquisitions
Table of Contents
$
58,830
6,938
985
3,096
3,729
(8,792
)
(41,560
)
$
23,226
December 31,
2003
2004
$
818,582
$
936,355
$
6,099
$
5,464
$
0.15
$
0.14
Table of Contents
$
33,853
59,885
26,436
(37,285
)
(1,825
)
(7,932
)
$
73,132
December 31,
2004
2005
$
1,775,567
$
2,312,161
$
16,706
$
68,686
$
16,706
$
68,419
$
0.42
$
1.74
$
0.42
$
1.73
$
34,902
1,490
37
$
36,429
Table of Contents
5.
Property, Plant and Equipment
December 31,
2004
2005
$
43,181
$
58,749
85,913
99,652
65,627
70,433
31,682
1,174
20,052
25,604
307
276
9,026
2,227
5,117
6,299
888
1,612
10,384
221,085
317,118
(31,792
)
(46,523
)
$
189,293
$
270,595
Table of Contents
6.
Non-Compete Agreements
December 31,
2003
2004
$
1,000
$
1,000
(351
)
(451
)
$
649
$
549
7.
Goodwill
Balance as of
Acquisitions
Balance as of
December 31,
and
December 31,
2003
Adjustments
2004
$
39,443
$
$
39,443
16,894
16,894
2,922
2,922
1,368
1,368
4,659
4,659
$
60,627
$
4,659
$
65,286
Balance as of
Acquisitions
Balance as of
December 31,
and
December 31,
2004
Adjustments
2005
$
39,443
$
(645
)
$
38,798
16,894
16,894
2,922
2,922
1,368
1,368
4,659
(930
)
3,729
$
65,286
$
(1,575
)
$
63,711
Table of Contents
8.
Equity Investment in Related Party LLC
Table of Contents
9.
Long-Term Obligations
December 31,
2004
2005
$
28,500
$
42,500
131,900
5,000
33,700
3,527
164,175
32,000
20,000
10,000
616
90
80
203,333
268,755
(19,516
)
(1,696
)
(3,500
)
(389
)
$
179,928
$
267,059
Notes Payable to Related Parties
Table of Contents
Credit Agreement Term Loans (A and B) and
Revolver
SunTrust Term Loan and Revolver
Senior Secured Credit Facility
Table of Contents
Senior Secured Credit Facility (continued)
SunTrust ABL Revolver
Table of Contents
Israel Discount Bank Note
Bank Leumi Note
Guarantee Fees
Table of Contents
Capital Lease Obligations
Debt Maturities
2006
2007
2008
2009
2010
Thereafter
Total
$
$
$25,000
$
$17,500
$
$42,500
1,650
1,650
1,650
1,650
1,650
155,925
164,175
32,000
32,000
20,000
20,000
10,000
10,000
46
27
7
80
$1,696
$31,677
$26,657
$1,650
$51,150
$155,925
$268,755
Derivative Instruments
Table of Contents
10.
Segment Data
Refining Segment
Retail Segment
Corporate and Other
Table of Contents
Year Ended December 31, 2005
Corporate,
Other and
Refining
Retail
Eliminations
Consolidated
$
930,556
$
1,100,961
$
352
$
2,031,869
888
(888
)
776,373
956,140
(888
)
1,731,625
45,866
86,857
365
133,088
$
109,205
$
57,964
$
(13
)
$
167,156
23,495
16,092
(1,631
)
9,087
$
120,113
$
235,616
$
367,421
$
3,123
$
606,160
$
18,771
$
10,415
$
$
29,186
11.
Income Taxes
Table of Contents
December 31,
2004
2005
$780
$1,606
237
918
50
114
1,067
2,638
(28,791
)
(33,463
)
7,369
2,462
1,177
1,471
3,018
2,651
(501
)
(651
)
(17,728
)
(27,530
)
$(16,661
)
$
(24,892
)
Table of Contents
Year Ended December 31,
2003
2004
2005
$
3,500
$
3,898
$
34,767
447
493
186
(133
)
(259
)
1
$
3,814
$
4,132
$
34,954
Year Ended December 31,
2003
2004
2005
$72
$189
$26,088
3,742
3,943
8,866
$
3,814
$
4,132
$
34,954
12.
Commitments and Contingencies
Litigation
Table of Contents
Table of Contents
Table of Contents
Vendor Commitments
Letters of Credit
Operating Leases
$9,672
9,094
8,777
8,517
8,527
105,737
$
150,324
13.
Employee Benefit Plan
Table of Contents
14.
Related Party Transactions
15.
Subsequent Events
Table of Contents
16.
Selected Quarterly Financial Data (Unaudited)
For the Three Month Periods Ending
March 31,
June 30,
September 30,
December 31,
2004
2004
2004
2004
$
155,722
$
219,349
$
242,900
$
239,928
2,729
6,224
5,323
6,185
349
3,140
1,261
2,583
0.01
0.08
0.03
0.07
Table of Contents
For the Three Month Periods Ending
March 31,
June 30,
September 30,
December 31,
2005
2005
2005
2005
$
229,087
$
459,707
$
698,747
$
644,328
2,213
20,355
55,398
42,147
432
6,863
32,492
24,596
165
6,863
32,492
24,596
0.01
0.17
0.83
0.63
0.00
0.17
0.83
0.63
Table of Contents
/s/ Ernst & Young LLP
Table of Contents
December 31,
2004
2003
ASSETS
$
$1
86,055
68,927
30,945
40,743
53,279
6,489
1,952
8,361
5,683
185,129
117,306
1,024
5,197
313
539
23,826
34,397
994
1,129
2,326
2,560
27,459
38,625
10,220
7,445
17,239
31,180
6,058
$
203,392
$
159,741
LIABILITIES AND OWNERS NET INVESTMENT
$57,294
$96,710
5,111
3,923
14,607
9,093
77,012
109,726
2,554
9,360
8,174
8,307
115,652
32,348
$
203,392
$
159,741
Table of Contents
Year Ended December 31
2004
2003
2002
$
703,994
$
349,026
$
337,411
135,218
320,612
297,176
839,212
669,638
634,587
664,224
331,258
325,436
131,854
321,589
296,878
4,074
4,466
3,784
5,891
5,958
5,313
(95
)
15,301
821,249
663,271
631,411
17,963
6,367
3,176
2,221
1,662
3,968
20,184
8,029
7,144
6,987
2,979
2,590
$13,197
$5,050
$4,554
Table of Contents
Retained
Accumulated
Total
Owners
Earnings/
Other
Owners
Net
Accumulated
Comprehensive
Net
Investment
Deficit
Income/Loss
Investment
$63,115
$(24,528
)
$
$38,587
4,554
4,554
(2,509
)
(2,509
)
2,045
(2,595
)
(2,595
)
60,520
(19,974
)
(2,509
)
38,037
5,050
5,050
(21
)
(21
)
5,029
(10,718
)
(10,718
)
49,802
(14,924
)
(2,530
)
32,348
13,197
13,197
(759
)
(759
)
12,438
70,866
70,866
$120,668
$(1,727
)
$(3,289
)
$115,652
Table of Contents
Year Ended December 31
2004
2003
2002
$13,197
$5,050
$4,554
5,891
5,958
5,313
15,301
(95
)
(9,019
)
(969
)
(2,237
)
(1,050
)
577
(3,991
)
(17,128
)
(3,516
)
(24,566
)
9,798
5,839
(12,316
)
(53,279
)
1,521
(6,302
)
(909
)
(39,416
)
5,506
33,774
1,188
905
120
4,936
1,360
4,070
(68,155
)
14,408
3,812
(2,807
)
(1,255
)
(1,576
)
95
(2,527
)
(2,712
)
(3,782
)
(1,576
)
70,866
(10,718
)
(2,595
)
70,866
(10,718
)
(2,595
)
(1
)
(92
)
(359
)
1
93
452
$
$1
$93
$
$4
$2
893
181
193
Table of Contents
Table of Contents
Cash and Cash Equivalents
Accounts Receivable
Credit Risk
Inventories
Other Assets
Table of Contents
Property, Plant and Equipment
Refinery Turnaround Costs
Table of Contents
Environmental Costs
Income Taxes
Asset Retirement Obligations
Owners Net Investment
Table of Contents
Corporate human resources
Finance, accounting, legal, and administration;
Information technology management services.
Sales and Operation Revenues
Interest and Other Income, Net
Recent Accounting Pronouncements
Table of Contents
2004
2003
(Thousands of dollars)
$26,361
$21,449
25,240
28,920
51,601
50,369
(21,183
)
(10,625
)
30,418
39,744
527
999
$30,945
$40,743
3.
Credit Arrangements
Table of Contents
4.
Derivatives and Hedging Activities
5.
Employee Benefit Obligations
Table of Contents
December 31
2004
2003
(Thousands of dollars)
$30,079
$30,184
122
659
1,857
1,951
(1,299
)
(1,071
)
(229
)
(124
)
1,333
3,332
(4,852
)
31,863
30,079
22,201
19,262
1,881
3,725
(1,299
)
(1,071
)
1,519
396
(219
)
(111
)
24,083
22,201
(7,780
)
(7,878
)
5,313
4,091
(8
)
(10
)
$(2,475
)
$(3,797
)
Table of Contents
Year Ended
December 31
2004
2003
(Thousands of dollars)
$(7,780
)
$(7,878
)
5,305
4,081
$(2,475
)
$(3,797
)
$1,224
$34
Year Ended December 31
2004
2003
2002
(Thousands of dollars)
$122
$659
$1,011
1,857
1,951
1,898
(1,988
)
(1,758
)
(2,099
)
(2
)
(9
)
(15
)
208
405
(110
)
(12
)
(47
)
$197
$1,126
$748
2004
2003
2003
6.00%
6.25%
6.75%
3.00%
3.00%
3.00%
9.00%
9.00%
9.75%
December 31
2004
2003
56.5%
57.7%
5.3%
5.2%
36.5%
35.8%
1.7%
1.3%
100.0%
100.0%
Table of Contents
Percent of Total Retirement Plan
Assets
Minimum
Target
Maximum
52
%
55
%
60
%
3
5
8
57
%
60
%
65
%
35
%
40
%
43
%
0
%
<1
%
5
%
$1,288,000
1,397,000
1,493,000
1,592,000
1,724,000
10,650,000
6.
Litigation and Contingencies
Table of Contents
Table of Contents
7.
Noncancellable Lease Commitments
Operating
Leases
$47
37
25
5
$114
8.
Fair Value of Financial Instruments
9.
Income Taxes
December 31
2004
2003
(Thousand of dollars)
$(1,801
)
$(8,929
)
(753
)
(432
)
(942
)
(1,255
)
(3,496
)
(10,616
)
7,933
5,199
859
1,244
511
496
9,303
6,939
$5,807
$(3,677
)
Table of Contents
2004
2003
2002
(Thousands of dollars)
$14,706
$3,628
$4,435
1,300
320
392
16,006
3,948
4,827
(8,307
)
(893
)
(2,060
)
(712
)
(76
)
(177
)
(9,019
)
(969
)
(2,237
)
$6,987
$2,979
$2,590
2004
2003
2002
35
%
35
%
35
%
3
%
3
%
3
%
(3
)%
(1
)%
(2
)%
35
%
37
%
36
%
10.
Subsequent Events
Table of Contents
Repayment of Outstanding Obligations under the
10
7
/
8
%
Senior Note Indenture
11.
Related Party Transactions
Table of Contents
Table of Contents
Three Months Ended
March 31
2005
2004
(Unaudited)
$195,560
$109,764
71,051
195,560
180,815
202,129
97,734
69,505
636
1,124
729
1,512
(95
)
203,494
169,780
(7,934
)
11,035
495
323
(7,439
)
11,358
(2,827
)
3,975
$(4,612
)
$7,383
Table of Contents
Three Months Ended
March 31
2005
2004
(Unaudited)
$(4,106
)
$8,988
58,789
4,773
54,683
13,761
(1,668
)
(394
)
95
(5,970
)
(263
)
(7,901
)
(299
)
(46,782
)
13,462
(46,782
)
13,462
$
$
Table of Contents
1.
Basis of Presentation
Use of Estimates
Inventories
Table of Contents
Other Current Assets
Asset Retirement Obligations
Owners Net Investment
Corporate human resources
Finance, accounting, legal and administration;
Information technology management services.
Interest and Other Income, Net
Recent Adoption
Table of Contents
2.
Supplementary Cash Flow Information
Three Months Ended
March 31
2005
2004
(Thousands of dollars)
$(1,157
)
$(10,712
)
2,588
55
32,229
(1,394
)
(406
)
21,340
11,835
5,266
1,677
(83
)
2,324
$58,789
$4,773
3.
Inventories
March 31
December 31
2005
2004
(Thousands of dollars)
$28,912
$26,361
33,257
25,240
62,169
51,601
(34,427
)
(21,183
)
27,742
30,418
615
527
$28,357
$30,945
Table of Contents
4.
Credit Arrangements
5.
Derivatives and Hedging Activities
Table of Contents
6.
Litigation and Contingencies
Table of Contents
7.
Employee Benefit Obligations
Three Months
Ended
March 31
2005
2004
(Thousands
of dollars)
$60
$31
473
464
(563
)
(497
)
(1
)
(1
)
83
52
$52
$49
Table of Contents
8.
Subsequent Events
9.
Related Party Transactions
Table of Contents
/s/ Ernst & Young LLP
Table of Contents
ASSETS
$2,732,562
1,516,170
658,254
6,802,068
215,741
30,568
11,955,363
8,965,042
23,831,906
30,361,226
7,952,137
1,275,403
234,006
72,619,720
(33,243,683
)
39,376,037
156,027
951,427
446,685
$52,885,539
LIABILITIES
$28,097,547
472,000
6,068,583
2,819,443
1,750,370
160,418
401,180
39,769,541
6,405,737
198,000
990,000
1,577,303
48,940,581
3,010
3,941,948
3,944,958
$52,885,539
Table of Contents
$
214,813,130
179,996,723
34,816,407
33,347,510
1,468,897
764,939
464,500
105,418
404,443
(3,320,199
)
(1,580,899
)
(112,002
)
$(112,002
)
Table of Contents
Common
Retained
Stock
Earnings
Total
$
3,010
$
4,653,950
$
4,656,960
(600,000
)
(600,000
)
(112,002
)
(112,002
)
$
3,010
$
3,941,948
$
3,944,958
Table of Contents
$(112,002
)
4,545,813
(764,939
)
(464,500
)
(116,138
)
253,878
(4,237
)
1,744,207
(24,877
)
(317,946
)
4,739,259
2,734,836
(4,291,303
)
244,816
(1,311,651
)
(55,000
)
1,011,681
(4,245,858
)
(600,000
)
(3,889,177
)
(461,569
)
3,194,131
$2,732,562
$2,778,610
$24,877
Table of Contents
1.
Summary of Significant Accounting Policies
Nature of Business
Consolidation
Cash and Cash Equivalents
Inventories
Property and Equipment
15-20 years
20 years
5-7 years
5 years
5-7 years
Table of Contents
Income Taxes
Revenue Recognition
Accounts Receivable Trade
Vendor Discounts and Deferred Revenue
Fair Value of Financial Instruments
Use of Estimates
Table of Contents
Debt Issuance Costs
Comprehensive Income
Recent Accounting Pronouncements
2.
Inventories
$
1,316,423
4,741,429
744,216
$
6,802,068
Table of Contents
3.
Notes Receivable Related Parties
$817,496
164,499
981,995
30,568
$951,427
4.
Long-Term Debt
$17,102,196
9,645,659
3,295,050
1,330,625
1,513,516
301,043
33,188,089
1,315,195
34,503,284
28,097,547
$6,405,737
Table of Contents
$
27,493,043
756,894
776,630
797,883
2,989,826
373,813
$
33,188,089
Line of Credit
Derivative Instruments
5.
Capital Lease Obligations
$
3,335,189
2,232,119
$
1,103,070
Table of Contents
$686,830
488,756
281,330
37,619
1,494,535
179,340
$1,315,195
6.
Operating Leases
$1,521,570
1,446,741
1,368,366
1,309,491
1,056,268
3,606,688
$10,309,124
Table of Contents
7.
Income Taxes
$
22,672
2,886
(25,558
)
$
$26,350
35,805
33,560
(95,715
)
(2,653,936
)
2,058,849
341,000
61,380
579,230
15,008
(401,531
)
$
Table of Contents
$(30,801
)
(3,920
)
25,558
9,163
$
8.
Sale of Trucks
9.
Commitments and Contingencies
Litigation
Service Contract
10.
Subsequent Events
Table of Contents
Table of Contents
II-1
II-2
II-3
II-4
II-5
Item 13.
Other Expenses of Issuance and Distribution.
Amount to Be Paid
$
24,610
$
23,500
$
306,000
$
300,000
$
1,500,000
$
1,250,000
$
10,000
$
10,000
$
75,890
$
3,500,000
Item 14.
Indemnification of Directors and Officers.
Table of Contents
Table of Contents
Item 15.
Recent Sales of Unregistered Securities.
Item 16.
Exhibits and Financial Statement Schedules.
Exhibit
No.
Description
1
.1
Form of Underwriting Agreement.
3
.1
Amended and Restated Certificate of Incorporation.
3
.2
Amended and Restated Bylaws.
4
.1*
Specimen common stock certificate.
5
.1
Opinion of Fulbright & Jaworski L.L.P.
10
.1§
Employment Agreement, dated as of May 1, 2004, by and
between MAPCO Express, Inc., Uzi Yemin and Delek US Holdings,
Inc.
10
.1(a)§
Amendment No. 1 to Employment Agreement, dated as of
October 31, 2005 and effective as of September 15,
2005, by and among MAPCO Express, Inc., Delek US Holdings, Inc.
and Uzi Yemin.
10
.1(b)§
Amendment No. 2 to Employment Agreement, dated as of
February 1, 2006, by and among MAPCO Express, Inc., Delek
US Holdings, Inc. and Uzi Yemin.
10
.1(c)
Amendment No. 3 to Employment Agreement, dated as of
April 17, 2006, by and among MAPCO Express, Inc., Delek US
Holdings, Inc. and Uzi Yemin.
10
.2
Amended and Restated Consulting Agreement, dated as of
April 11, 2006, by and between Greenfeld-Energy Consulting,
Ltd. and Delek Refining, Ltd.
10
.3
Form of Indemnification Agreement for Directors and Officers.
10
.4
Registration Rights Agreement, dated as of April 17, 2006,
by and between Delek US Holdings, Inc. and Delek Group Ltd.
10
.5+§
Distribution Service Agreement, dated as of January 1,
2005, by and between MAPCO Express, Inc. and McLane Company,
Inc. DBA McLane Grocery Distribution.
10
.6+§
RPC Agreement, dated as of May 30, 2001, by and between
Williams Refining & Marketing, LLC and MAPCO Express,
Inc.
10
.6(a)§
Assignment and Assumption Agreement effective as of
March 3, 2003, by and between Williams Refining &
Marketing, L.L.C., Williams Generating Memphis, L.L.C., Williams
Memphis Terminal, Inc., and Williams Petroleum Pipeline Systems,
Inc. and The Premcor Refining Group Inc.
10
.6(b)§
Assignment of the RPC Agreement between Williams Refining &
Marketing, LLC and MAPCO Express, Inc., dated May 30, 2001,
from The Premcor Refining Group, Inc. to Valero Marketing and
Supply Company, effective December 1, 2005.
10
.7§
Amended and Restated Credit Agreement, dated as of
April 28, 2005, among MAPCO Express, Inc., MAPCO Family
Centers, Inc., the several lenders from time to time party to
the Agreement, Lehman Brothers Inc., SunTrust Bank, Bank Leumi
USA and Lehman Commercial Paper Inc.
10
.7(a)§
First Amendment to Amended and Restated Credit Agreement, dated
as of August 18, 2005, among MAPCO Express, Inc., MAPCO
Family Centers, Inc., the several banks and other financial
institutions or entities from time to time parties thereto,
Lehman Brothers Inc., SunTrust Bank, Bank Leumi USA and Lehman
Commercial Paper Inc.
Table of Contents
Exhibit
No.
Description
10
.7(b)§
Second Amendment to Amended and Restated Credit Agreement, dated
as of October 11, 2005, among MAPCO Express, Inc., the
several banks and other financial institutions or entities from
time to time parties to the Agreement, Lehman Brothers Inc.,
SunTrust Bank, Bank Leumi USA and Lehman Commercial Paper Inc.
10
.7(c)§
Third Amendment to Amended and Restated Credit Agreement, dated
as of December 15, 2005, among MAPCO Express, Inc., the
several banks and other financial institutions or entities from
time to time parties to the Credit Agreement, Lehman Brothers
Inc., SunTrust Bank, Bank Leumi USA and Lehman Commercial Paper
Inc.
10
.7(d)
Fourth Amendment to Amended and Restated Credit Agreement, dated
as of April 18, 2006, among MAPCO Express, Inc., the
several banks and other financial institutions or entities from
time to time parties to the Credit Agreement, Lehman Brothers,
Inc., SunTrust Bank, Bank Leumi USA and Lehman Commercial Paper
Inc.
10
.8§
Amended and Restated Revolving Credit Agreement, dated as of
May 2, 2005, among Delek Refining, Ltd., Delek Pipeline
Texas, Inc., the several banks and other financial institutions
and lenders from time to time party thereto, SunTrust Bank, The
CIT Group/ Business Credit, Inc., National City Business Credit,
Inc., Bank of America, N.A. and PNC Business Credit, Inc.
10
.8(a)§
First Amendment to Amended and Restated Credit Agreement, dated
as of October 1, 2005, among Delek Refining, Ltd., Delek
Pipeline Texas, Inc., various financial institutions, SunTrust
Bank and The CIT Group/ Business Credit, Inc.
10
.9§
Stock Purchase Agreement, dated as of March 29, 2004, by
and among Delek US Holdings, Inc., MAPCO Family Centers, Inc.
(n/k/a MAPCO Express, Inc.) and John R. Williamson.
10
.10§
Refinery Purchase and Sale Agreement, dated as of March 14,
2005, by and between La Gloria Oil and Gas Company, Delek
Refining, Ltd., Delek Pipeline Texas, Inc. and Delek Texas Land,
Inc.
10
.10(a)§
Amendment to Refinery Purchase and Sale Agreement, dated as of
April 29, 2005, by and between La Gloria Oil and Gas
Company, Delek Refining, Ltd., Delek Pipeline Texas, Inc. and
Delek Texas Land, Inc.
10
.10(b)§
Second Amendment to Refinery Purchase and Sale Agreement and
Indemnity Agreement, dated October 10, 2005, by and between
La Gloria Oil and Gas Company (renamed Tyler Holding
Company, Inc.), Delek Refining, Ltd., Delek Pipeline Texas, Inc.
and Delek Texas Land, Inc.
10
.11+§
Pipeline Capacity Lease Agreement, dated April 12, 1999,
between La Gloria Oil and Gas Company and Scurlock Permian
LLC.
10
.11(a)+§
One-Year Renewal of Pipeline Capacity Lease Agreement, dated
December 21, 2004, between Plains Marketing, L.P., as
successor to Scurlock Permian LLC, and La Gloria Oil and
Gas Company.
10
.11(b)+§
Assignment of the Pipeline Capacity Lease Agreement, as amended
and renewed on December 21, 2004, by La Gloria Oil and
Gas Company to Delek Refining, Ltd.
10
.11(c)+§
Amendment to One-Year Renewal of Pipeline Capacity Lease
Agreement, dated January 15, 2006, between Delek Refining,
Ltd. and Plains Marketing, L.P.
10
.11(d)§
Extension of Pipeline Capacity Lease Agreement, dated
January 15, 2006, between Delek Refining, Ltd. and Plains
Marketing, L.P.
10
.11(e)+
Modification and Extension of Pipeline Capacity Lease Agreement,
effective May 1, 2006, between Delek Refining, Ltd. and
Plains Marketing, L.P.
10
.12+§
Branded Jobber Contract, dated December 15, 2005, between
BP Products North America, Inc. and MAPCO Express, Inc.
10
.13
Delek US Holdings, Inc. 2006 Long-Term Incentive Plan.
10
.13(a)
Form of Delek US Holdings, Inc. 2006 Long-Term Incentive
Plan Restricted Stock Unit Agreement.
10
.13(b)
Director Form of Delek US Holdings, Inc. 2006 Long-Term
Incentive Plan Stock Option Agreement.
10
.13(c)
Officer Form of Delek US Holdings, Inc. 2006 Long-Term
Incentive Plan Stock Option Agreement.
10
.14
Description of Director Compensation.
10
.15§
Management and Consulting Agreement, dated as of January 1,
2006, by and between Delek Group Ltd. and Delek
US Holdings, Inc.
16
.1§
Letter from Ernst & Young LLP re Change in Certifying
Accountant.
16
.2§
Letter from Mayer Hoffman McCann P.C. re Change in Certifying
Accountant.
21
.1§
Subsidiaries of the Registrant.
Table of Contents
Exhibit
No.
Description
23
.1
Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
23
.2
Consent of Ernst & Young LLP.
23
.3
Consent of Ernst & Young LLP.
23
.4
Consent of Ernst & Young LLP.
23
.5
Consent of Mayer Hoffman McCann P.C.
24
.1§
Power of Attorney (on signature page).
99
.1§
Consent of Director Nominee, Carlos E. Jordá.
99
.2§
Consent of Director Nominee, Charles H. Leonard.
99
.3§
Consent of Director Nominee, Philip L. Maslowe.
*
To be filed by amendment.
+
Confidential treatment has been requested with respect to
certain portions of this exhibit pursuant to Rule 406 of
the Securities Act. Omitted portions have been filed separately
with the Securities and Exchange Commission.
§
Previously filed.
Item 17.
Undertakings.
1. For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
2. For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Table of Contents
II-6
DELEK US HOLDINGS, INC.
(Registrant)
By:
/s/
Ezra Uzi Yemin
Name: Ezra Uzi Yemin
Title: President and Chief Executive Officer
Signature
Title
Date
/s/
Ezra Uzi Yemin
Ezra Uzi Yemin
President and Chief Executive Officer (Principal Executive
Officer) and Director
April 19, 2006
/s/
Edward Morgan
Edward Morgan
Chief Financial Officer, Vice President and Treasurer (Principal
Financial
and Accounting Officer)
April 19, 2006
*
Gabriel Last
Director
April 19, 2006
*
Asaf Bartfeld
Director
April 19, 2006
*
Ronel Ben-Dov
Director
April 19, 2006
*
Zvi Greenfeld
Director
April 19, 2006
*By:
/s/
Edward Morgan
*Edward Morgan
Attorney-In-Fact
Table of Contents
Exhibit
No.
Description
1
.1
Form of Underwriting Agreement.
3
.1
Amended and Restated Certificate of Incorporation.
3
.2
Amended and Restated Bylaws.
4
.1*
Specimen common stock certificate.
5
.1
Opinion of Fulbright & Jaworski L.L.P.
10
.1§
Employment Agreement, dated as of May 1, 2004, by and
between MAPCO Express, Inc., Uzi Yemin and Delek US Holdings,
Inc.
10
.1(a)§
Amendment No. 1 to Employment Agreement, dated as of
October 31, 2005 and effective as of September 15,
2005, by and among MAPCO Express, Inc., Delek US Holdings, Inc.
and Uzi Yemin.
10
.1(b)§
Amendment No. 2 to Employment Agreement, dated as of
February 1, 2006, by and among MAPCO Express, Inc., Delek
US Holdings, Inc. and Uzi Yemin.
10
.1(c)
Amendment No. 3 to Employment Agreement, dated as of
April 17, 2006, by and among MAPCO Express, Inc., Delek US
Holdings, Inc. and Uzi Yemin.
10
.2
Amended and Restated Consulting Agreement, dated as of
April 11, 2006, by and between Greenfeld-Energy Consulting,
Ltd. and Delek Refining, Ltd.
10
.3
Form of Indemnification Agreement for Directors and Officers.
10
.4
Registration Rights Agreement, dated as of April 17, 2006,
by and between Delek US Holdings, Inc. and Delek Group Ltd.
10
.5+§
Distribution Service Agreement, dated as of January 1,
2005, by and between MAPCO Express, Inc. and McLane Company,
Inc. DBA McLane Grocery Distribution.
10
.6+§
RPC Agreement, dated as of May 30, 2001, by and between
Williams Refining & Marketing, LLC and MAPCO Express,
Inc.
10
.6(a)§
Assignment and Assumption Agreement effective as of
March 3, 2003, by and between Williams Refining &
Marketing, L.L.C., Williams Generating Memphis, L.L.C., Williams
Memphis Terminal, Inc., and Williams Petroleum Pipeline Systems,
Inc. and The Premcor Refining Group Inc.
10
.6(b)§
Assignment of the RPC Agreement between Williams Refining &
Marketing, LLC and MAPCO Express, Inc., dated May 30, 2001,
from The Premcor Refining Group, Inc. to Valero Marketing and
Supply Company, effective December 1, 2005.
10
.7§
Amended and Restated Credit Agreement, dated as of
April 28, 2005, among MAPCO Express, Inc., MAPCO Family
Centers, Inc., the several lenders from time to time party to
the Agreement, Lehman Brothers Inc., SunTrust Bank, Bank Leumi
USA and Lehman Commercial Paper Inc.
10
.7(a)§
First Amendment to Amended and Restated Credit Agreement, dated
as of August 18, 2005, among MAPCO Express, Inc., MAPCO
Family Centers, Inc., the several banks and other financial
institutions or entities from time to time parties thereto,
Lehman Brothers Inc., SunTrust Bank, Bank Leumi USA and Lehman
Commercial Paper Inc.
10
.7(b)§
Second Amendment to Amended and Restated Credit Agreement, dated
as of October 11, 2005, among MAPCO Express, Inc., the
several banks and other financial institutions or entities from
time to time parties to the Agreement, Lehman Brothers Inc.,
SunTrust Bank, Bank Leumi USA and Lehman Commercial Paper Inc.
10
.7(c)§
Third Amendment to Amended and Restated Credit Agreement, dated
as of December 15, 2005, among MAPCO Express, Inc., the
several banks and other financial institutions or entities from
time to time parties to the Credit Agreement, Lehman Brothers
Inc., SunTrust Bank, Bank Leumi USA and Lehman Commercial Paper
Inc.
Table of Contents
Exhibit
No.
Description
10
.7(d)
Fourth Amendment to Amended and Restated Credit Agreement, dated
as of April 18, 2006, among MAPCO Express, Inc., the
several banks and other financial institutions or entities from
time to time parties to the Credit Agreement, Lehman Brothers,
Inc., SunTrust Bank, Bank Leumi USA and Lehman Commercial Paper
Inc.
10
.8§
Amended and Restated Revolving Credit Agreement, dated as of
May 2, 2005, among Delek Refining, Ltd., Delek Pipeline
Texas, Inc., the several banks and other financial institutions
and lenders from time to time party thereto, SunTrust Bank, The
CIT Group/ Business Credit, Inc., National City Business Credit,
Inc., Bank of America, N.A. and PNC Business Credit, Inc.
10
.8(a)§
First Amendment to Amended and Restated Credit Agreement, dated
as of October 1, 2005, among Delek Refining, Ltd., Delek
Pipeline Texas, Inc., various financial institutions, SunTrust
Bank and The CIT Group/ Business Credit, Inc.
10
.9§
Stock Purchase Agreement, dated as of March 29, 2004, by
and among Delek US Holdings, Inc., MAPCO Family Centers, Inc.
(n/k/a MAPCO Express, Inc.) and John R. Williamson.
10
.10§
Refinery Purchase and Sale Agreement, dated as of March 14,
2005, by and between La Gloria Oil and Gas Company, Delek
Refining, Ltd., Delek Pipeline Texas, Inc. and Delek Texas Land,
Inc.
10
.10(a)§
Amendment to Refinery Purchase and Sale Agreement, dated as of
April 29, 2005, by and between La Gloria Oil and Gas
Company, Delek Refining, Ltd., Delek Pipeline Texas, Inc. and
Delek Texas Land, Inc.
10
.10(b)§
Second Amendment to Refinery Purchase and Sale Agreement and
Indemnity Agreement, dated October 10, 2005, by and between
La Gloria Oil and Gas Company (renamed Tyler Holding
Company, Inc.), Delek Refining, Ltd., Delek Pipeline Texas, Inc.
and Delek Texas Land, Inc.
10
.11+§
Pipeline Capacity Lease Agreement, dated April 12, 1999,
between La Gloria Oil and Gas Company and Scurlock Permian
LLC.
10
.11(a)+§
One-Year Renewal of Pipeline Capacity Lease Agreement, dated
December 21, 2004, between Plains Marketing, L.P., as
successor to Scurlock Permian LLC, and La Gloria Oil and
Gas Company.
10
.11(b)+§
Assignment of the Pipeline Capacity Lease Agreement, as amended
and renewed on December 21, 2004, by La Gloria Oil and
Gas Company to Delek Refining, Ltd.
10
.11(c)+§
Amendment to One-Year Renewal of Pipeline Capacity Lease
Agreement, dated January 15, 2006, between Delek Refining,
Ltd. and Plains Marketing, L.P.
10
.11(d)§
Extension of Pipeline Capacity Lease Agreement, dated
January 15, 2006, between Delek Refining, Ltd. and Plains
Marketing, L.P.
10
.11(e)+
Modification and Extension of Pipeline Capacity Lease Agreement,
effective May 1, 2006, between Delek Refining, Ltd. and
Plains Marketing, L.P.
10
.12+§
Branded Jobber Contract, dated December 15, 2005, between
BP Products North America, Inc. and MAPCO Express, Inc.
10
.13
Delek US Holdings, Inc. 2006 Long-Term Incentive Plan.
10
.13(a)
Form of Delek US Holdings, Inc. 2006 Long-Term Incentive
Plan Restricted Stock Unit Agreement.
10
.13(b)
Director Form of Delek US Holdings, Inc. 2006 Long-Term
Incentive Plan Stock Option Agreement.
10
.13(c)
Officer Form of Delek US Holdings, Inc. 2006 Long-Term
Incentive Plan Stock Option Agreement.
10
.14
Description of Director Compensation.
10
.15§
Management and Consulting Agreement, dated as of January 1,
2006, by and between Delek Group Ltd. and Delek
US Holdings, Inc.
16
.1§
Letter from Ernst & Young LLP re Change in Certifying
Accountant.
16
.2§
Letter from Mayer Hoffman McCann P.C. re Change in Certifying
Accountant.
21
.1§
Subsidiaries of the Registrant.
23
.1
Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit 5.1).
23
.2
Consent of Ernst & Young LLP.
Table of Contents
Exhibit
No.
Description
23
.3
Consent of Ernst & Young LLP.
23
.4
Consent of Ernst & Young LLP.
23
.5
Consent of Mayer Hoffman McCann P.C.
24
.1§
Power of Attorney (on signature page).
99
.1§
Consent of Director Nominee, Carlos E. Jordá.
99
.2§
Consent of Director Nominee, Charles H. Leonard.
99
.3§
Consent of Director Nominee, Philip L. Maslowe.
*
To be filed by amendment.
+
Confidential treatment has been requested with respect to
certain portions of this exhibit pursuant to Rule 406 of
the Securities Act. Omitted portions have been filed separately
with the Securities and Exchange Commission.
§
Previously filed.
EXHIBIT 1.1
10,000,000
DELEK US HOLDINGS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_______ __, 2006
LEHMAN BROTHERS INC.
CITIGROUP GLOBAL MARKETS INC.,
As Representatives of the several
Underwriters named in Schedule 1 attached hereto,
c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
Delek US Holdings, Inc., a Delaware corporation (the "COMPANY"),
proposes to sell 10,000,000 shares (the "FIRM STOCK") of the Company's common
stock, par value $0.01 per share (the "COMMON STOCK"). In addition, the Company
proposes to grant to the underwriters (the "UNDERWRITERS") named in Schedule 1
attached to this agreement (this "AGREEMENT") an option to purchase up to
1,500,000 additional shares of the Common Stock on the terms set forth in
Section 2 (the "OPTION STOCK"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "STOCK." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.
1. Representations, Warranties and Agreements of the Company. The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 relating to the Stock has
(i) been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and the
rules and regulations (the "RULES AND REGULATIONS") of the Securities and
Exchange Commission (the "COMMISSION") thereunder; (ii) been filed with
the Commission under the Securities Act; and (iii) become effective under
the Securities Act. Copies of such registration statement and any
amendment thereto have been delivered by the Company to you as the
representatives (the "REPRESENTATIVES") of the Underwriters. As used in
this Agreement:
(i) "APPLICABLE TIME" means [ ] [a.m.][p.m.] (New York City time) on the date of this Agreement;
(ii) "EFFECTIVE DATE" means the date and time as of which such registration statement[, or the most recent post-effective amendment thereto,] was declared effective by the Commission;
(iii) "ISSUER FREE WRITING PROSPECTUS" means each "free writing prospectus" (as defined in Rule 405 of the Rules and Regulations) prepared by or on behalf of the Company or used or referred to by the Company in connection with the offering of the Stock;
(iv) "PRELIMINARY PROSPECTUS" means any preliminary prospectus relating to the Stock included in such registration statement or filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations;
(v) "PRICING DISCLOSURE PACKAGE" means, as of the Applicable Time, the most recent Preliminary Prospectus, together with each Issuer Free Writing Prospectus filed or used by the Company on or before the Applicable Time, other than a road show that is an Issuer Free Writing Prospectus but is not required to be filed under Rule 433 of the Rules and Regulations;
(vi) "PROSPECTUS" means the final prospectus relating to the Stock, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations; and
(vii) "REGISTRATION STATEMENT" means such registration statement, as amended as of the Effective Date, including any Preliminary Prospectus or the Prospectus and all exhibits to such registration statement.
The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending the effectiveness of the Registration Statement, and no proceeding or examination for such purpose has been instituted or, to the Company's knowledge, threatened by the Commission.
(b) The Company was not at the time of initial filing of the Registration Statement and at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Rules and Regulations) of the Stock, is not on the date hereof and will not be on the applicable Delivery Date (as defined in Section 4) an "ineligible issuer" (as defined in Rule 405).
(c) The Registration Statement conformed and will conform in all material respects on the Effective Date and on the applicable Delivery Date, and any amendment to the Registration Statement filed after the date hereof will conform in all material respects when filed, to the requirements of the Securities Act and the Rules and Regulations. The Preliminary Prospectus conformed, and the Prospectus will conform, in all material respects when filed with the Commission pursuant to Rule 424(b) and on the applicable Delivery Date to the requirements of the Securities Act and the Rules and Regulations.
(d) The Registration Statement did not, as of the Effective Date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein, which information is specified in Section 8(e).
(e) The Prospectus will not, as of its date and on the applicable Delivery Date, contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Prospectus in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein, which information is specified in Section 8(e).
(f) The Pricing Disclosure Package, when considered together with
the public offering price of the Stock, number of shares of Stock and the
underwriting discount included on the cover page of the Prospectus, as of
the Applicable Time, did not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Pricing Disclosure Package in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is specified in
Section 8(e).
(g) Each Issuer Free Writing Prospectus (including, without limitation, any road show that is a free writing prospectus under Rule 433), when considered together with the public offering price of the Stock, number of shares of Stock and the underwriting discount included on the cover page of the Prospectus and the Pricing Disclosure Package, as of the Applicable Time, did not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(h) Each Issuer Free Writing Prospectus conformed or will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations on the date of first use, and the Company has complied with all prospectus delivery and any filing requirements applicable to such Issuer Free Writing Prospectus pursuant to the Rules and Regulations. The Company has not made any offer relating to the Stock that would constitute an Issuer Free Writing Prospectus without the prior written consent of the Representatives. The Company has retained in accordance with the Rules and Regulations all Issuer Free Writing Prospectuses that were not required to be filed pursuant to the Rules and Regulations. The Company has taken all actions necessary so that any "road show" (as defined in Rule 433 of the Rules and Regulations) in connection with the offering of the Stock will not be required to be filed pursuant to the Rules and Regulations.
(i) Each of the Company and its subsidiaries (as defined in Section 17) has been duly organized, is validly existing and, except for subsidiaries that are partnerships,
in good standing as a corporation or other business entity under the laws of its jurisdiction of organization and is duly qualified to do business and, except for subsidiaries that are partnerships, in good standing as a foreign corporation or other business entity in each jurisdiction in which its ownership or lease of property or the conduct of its businesses requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, financial condition, results of operations or prospects of the Company and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"). Each of the Company and its subsidiaries has all corporate, partnership or limited liability company power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries listed in Exhibit 21.1 to the Registration Statement. None of the subsidiaries of the Company other than MAPCO Express, Inc. and Delek Refining, Inc. is a "significant subsidiary" (as defined in Rule 405).
(j) The Company has an authorized capitalization as set forth in each of the most recent Preliminary Prospectus and the Prospectus, and all of the issued shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and non-assessable, conform in all material respects to the description thereof contained in each of the most recent Preliminary Prospectus and the Prospectus and were issued in compliance with federal and state securities laws and not in violation of any preemptive right, resale right, right of first refusal or similar right. All of the Company's outstanding options, warrants and other rights to purchase or exchange any securities for shares of the Company's capital stock have been duly authorized and validly issued, conform in all material respects to the description thereof contained in each of the most recent Preliminary Prospectus and the Prospectus and were issued in compliance with federal and state securities laws. All of the issued shares of capital stock of each subsidiary of the Company that is a corporation have been duly authorized and validly issued and are fully paid and non-assessable; all of the outstanding partnership interests of Delek Refining, Ltd. have been duly authorized and validly issued; all of the outstanding membership interests of Delek U.S. Refining GP, LLC have been duly authorized and validly issued; and all of the issued shares of capital stock, partnership interests and membership interests of each subsidiary of the Company are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for such liens, encumbrances, equities or claims (i) created under debt agreements referred to or described in the most recent Preliminary Prospectus and the Prospectus or filed as exhibits to the Registration Statement, or (ii) as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(k) The shares of the Stock to be issued and sold by the Company to the Underwriters hereunder have been duly authorized and, upon payment and delivery in accordance with this Agreement, will be validly issued, fully paid and non-assessable, will conform to the description thereof contained in each of the most recent Preliminary Prospectus and the Prospectus, will be issued in compliance with federal and state
securities laws and will be free of statutory and contractual preemptive rights, rights of first refusal and similar rights.
(l) The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. This Agreement has been duly and validly authorized, executed and delivered by the Company.
(m) The execution, delivery and performance of this Agreement by the
Company, the consummation of the transactions contemplated hereby and the
application of the proceeds from the sale of the Stock as described under
"Use of Proceeds" in each of the most recent Preliminary Prospectus and
the Prospectus will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, impose any lien, charge or
encumbrance upon any property or assets of the Company and its
subsidiaries, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, license or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject;
(ii) result in any violation of the provisions of the charter or by-laws
(or similar organizational documents) of the Company or any of its
subsidiaries; or (iii) result in any violation of any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except, in the case of clause (i) or (iii),
where such conflict, breach, violation, imposition of a lien, charge or
encumbrance or default would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(n) No consent, approval, authorization or order of, or filing or registration with, any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets is required for the execution, delivery and performance of this Agreement by the Company, the consummation of the transactions contemplated hereby, the application of the proceeds from the sale of the Stock as described under "Use of Proceeds" in each of the most recent Preliminary Prospectus and the Prospectus, except for the registration of the Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and applicable state securities laws in connection with the purchase and sale of the Stock by the Underwriters, and such consents as may be required by the New York Stock Exchange or the by-laws and rules of the National Association of Securities Dealers, Inc. (the "NASD") in connection with the purchase and distribution of the Stock by the Underwriters.
(o) Except as identified in the most recent Preliminary Prospectus and the Prospectus or filed as exhibits to the Registration Statement, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the Securities Act.
(p) The Company has not sold or issued any securities that would be integrated with the offering of the Stock contemplated by this Agreement pursuant to the Securities Act, the Rules and Regulations or the interpretations thereof by the Commission.
(q) (i) Neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements included in the most recent Preliminary Prospectus, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, and (ii) since such date, there has not been any change in the capital stock or increase in the long-term debt of the Company or any of its subsidiaries or any adverse change, or any development involving a prospective adverse change, in or affecting the business, financial condition, results of operations or prospects of the Company and its subsidiaries taken as a whole, in the case of clause (i) or (ii), except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(r) Since the date as of which information is given in the most recent Preliminary Prospectus and except as may otherwise be described in the most recent Preliminary Prospectus, the Company has not (i) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations that were incurred in the ordinary course of business, (ii) entered into any material transaction not in the ordinary course of business or (iii) declared or paid any dividend on its capital stock.
(s) The historical financial statements (including the related notes and supporting schedules) of the Company and, to the Company's knowledge, the historical financial statements (including the related notes and supporting schedules) of the Tyler Refinery and McMurrey Pipeline and Williamson Oil Co., Inc. and Subsidiaries included in the most recent Preliminary Prospectus comply as to form in all material respects with the applicable requirements of Regulation S-X under the Securities Act and present fairly the financial condition, results of operations and cash flows of the entities purported to be shown thereby at the dates and for the periods indicated and have been prepared in conformity with accounting principles generally accepted in the United States applied on a consistent basis throughout the periods involved.
(t) The pro forma financial statements included in the most recent Preliminary Prospectus include assumptions that provide a reasonable basis for presenting the significant effects directly attributable to the transactions and events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma adjustments reflect the proper application of those adjustments to the historical financial statement amounts in the pro forma financial statements included in the most recent Preliminary Prospectus. The pro forma financial statements included in the most recent Preliminary Prospectus comply as to form in all material respects with the applicable requirements of Regulation S-X under the Act.
(u) Ernst & Young LLP, who have audited certain financial statements of the Company and its consolidated subsidiaries, whose report appears in the most recent Preliminary Prospectus and who have delivered the initial letter referred to in Section 7(g) hereof, are an independent registered public accounting firm with respect to the Company for the fiscal years ended December 31, 2002, 2003 and 2005 as required by the Securities Act and the Rules and Regulations; and Mayer Hoffman McCann P.C., whose report appears in the most recent Preliminary Prospectus and who have delivered the initial letter referred to in Section 7(i) hereof, are an independent registered public accounting firm with respect to the Company for the year ended December 31, 2004 as required by the Securities Act and the Rules and Regulations.
(v) The Company and each of its subsidiaries have good and marketable title in fee simple to all real property used in the ordinary course of business by the Company or its subsidiaries and good and marketable title to all personal property owned by them, in each case free and clear of all monetary liens (other than for real property taxes and assessments not yet due and payable), except such as are described in the most recent Preliminary Prospectus or such as do not materially interfere with the use made of such property by the Company and its subsidiaries, and all assets held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as do not materially interfere with the use made of such assets by the Company and its subsidiaries.
(w) The Company and each of its subsidiaries carry, or are covered by, insurance from insurers of recognized financial responsibility in such amounts and covering such risks as the Company and its subsidiaries reasonably consider adequate for the conduct of their respective businesses and the value of their respective properties. All such policies of insurance of the Company and its subsidiaries are in full force and effect. There are no material claims by the Company or any of its subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause. The Company and its subsidiaries reasonably believe that they will be able to renew their existing insurance coverage as and when such coverage expires or to obtain replacement coverage adequate for the conduct of their respective businesses at a cost that would not reasonably be expected to have a Material Adverse Effect.
(x) The statistical and market-related data included under the captions "Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Our Industry" and "Business" in the most recent Preliminary Prospectus are based on or derived from sources that the Company believes to be reliable and accurate in all material respects.
(y) Neither the Company nor any subsidiary is, and as of the applicable Delivery Date and, after giving effect to the offer and sale of the Stock and the application of the net proceeds therefrom as described under "Use of Proceeds" in the most recent Preliminary Prospectus and the Prospectus, none of them will be, (i) an "investment company" within the meaning of such term under the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"), and the rules and
regulations of the Commission thereunder or (ii) a "business development company" (as defined in Section 2(a)(48) of the Investment Company Act).
(z) There are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the performance of this Agreement by the Company or the consummation of the transactions contemplated hereby by the Company; and to the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or others.
(aa) There are no legal or governmental proceedings or contracts or other documents of a character required to be described in the Registration Statement or the most recent Preliminary Prospectus or, in the case of documents, to be filed as exhibits to the Registration Statement, that are not described and filed as required. Neither the Company nor any of its subsidiaries has knowledge that any other party to any such contract, agreement or arrangement has any intention not to perform in all material respects as contemplated by the terms thereof; and that statements made in the most recent Preliminary Prospectus under the caption "Business - Government Regulation and Environmental Matters" insofar as they describe the terms of statutes, rules or regulations, legal or governmental proceedings or contracts and other documents, accurately describe the terms of such statutes, rules and regulations, legal and governmental proceedings and contracts and other documents in all material respects.
(bb) Except as described in the most recent Preliminary Prospectus, no relationship, direct or indirect, exists between or among the Company, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company, on the other hand, that is required to be described in the most recent Preliminary Prospectus or the Prospectus which is not so described.
(cc) No labor disturbance by the employees of the Company or its subsidiaries exists or, to the knowledge of the Company, is imminent that would reasonably be expected to have a Material Adverse Effect.
(dd) (i) Each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Security Act of 1974, as amended
("ERISA")) for which the Company or any member of its "Controlled Group"
(defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended (the "CODE")) would have any liability (each a
"PLAN") has been maintained in all material respects in compliance with
its terms and with the requirements of all applicable statutes, rules and
regulations including ERISA and the Code; (ii) with respect to each Plan
subject to Title IV of ERISA (a) no "reportable event" (within the meaning
of Section 4043(c) of ERISA) has occurred or is reasonably expected to
occur, (b) no "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not waived,
has occurred or is reasonably expected to occur, (c) the fair market value
of the assets
under each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan) and (d) neither the Company or any member of its Controlled Group has incurred, or reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC in the ordinary course and without default) in respect of a Plan (including a "multiemployer plan", within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service that it is so qualified and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.
(ee) (i) The Company and each of its subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof, subject to permitted
extensions, and have paid all taxes due thereon, and (ii) no tax
deficiency has been determined adversely to the Company or any of its
subsidiaries which is currently outstanding, except, in the case of clause
(i) or (ii), as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(ff) There are no transfer taxes or other similar fees or charges under Federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement or the issuance by the Company or sale by the Company of the Stock.
(gg) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws (or similar organizational documents),
(ii) is in default, and no event has occurred that, with notice or lapse
of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, license or other
agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject or (iii) is in
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over it or its property or
assets or has failed to obtain any license, permit, certificate, franchise
or other governmental authorization or permit necessary to the ownership
of its property or to the conduct of its business, except in the case of
clauses (ii) and (iii), to the extent any such conflict, breach, violation
or default would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(hh) The Company and each of its subsidiaries (i) maintain records that in reasonable detail accurately and fairly reflect transactions and dispositions of assets and (ii) maintain a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's general or specific authorizations, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (C) access to assets is permitted only in accordance with management's general or specific authorization and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences.
(ii) Except as disclosed in the most recent Preliminary Prospectus, since the date of the most recent balance sheet of the Company and its consolidated subsidiaries reviewed or audited by Ernst & Young LLP, the Company has not been advised of (A) any significant deficiencies in the design or operation of internal controls that would reasonably be expected to adversely affect the ability of the Company and each of its subsidiaries to record, process, summarize and report financial data, or any material weaknesses in internal controls and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls of the Company and each of its subsidiaries.
(jj) The Company and its directors or officers, in their capacities as such, are in compliance, in all material respects, with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith.
(kk) The section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" in the most recent Preliminary Prospectus accurately and fully describes (A) the accounting policies that the Company believes are the most important in the portrayal of the Company's financial condition and results of operations and that require management's most difficult, subjective or complex judgments ("CRITICAL ACCOUNTING POLICIES"); (B) the judgments and uncertainties affecting the application of Critical Accounting Policies; and (C) the likelihood that materially different amounts would be reported under different conditions or using different assumptions and an explanation thereof.
(ll) The Company and each of its subsidiaries have such permits, licenses, patents, franchises, certificates of need and other approvals or authorizations of governmental or regulatory authorities ("PERMITS") as are necessary under applicable law to own their properties and conduct their businesses in the manner described in the most recent Preliminary Prospectus, except for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or except as described in the most recent Preliminary Prospectus; each of the Company and its subsidiaries has fulfilled and performed all of its material obligations with respect to the Permits, and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other impairment of the rights of the holder or any such Permits, except for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or except as described in the most recent Preliminary Prospectus.
(mm) The Company and each of its subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, know-how, software, systems and technology (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses, and, to the Company's knowledge, the
conduct of their respective businesses will not conflict with, and the Company and its subsidiaries have not received any notice of any claim of conflict with, any such rights of others, except for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(nn) The Company and each of its subsidiaries (i) are, and at all times prior hereto were, in compliance with all applicable laws, regulations, ordinances, rules, orders, judgments, decrees, permits or other legal requirements of any governmental authority, including without limitation any national, state, regional, or local authority, relating to the protection of human health or safety, the environment, or natural resources, or to hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS") applicable to such entity, which compliance includes, without limitation, obtaining, maintaining and complying with all permits and authorizations and approvals required by Environmental Laws to conduct their respective businesses, and (ii) have not received notice of any actual or alleged violation of Environmental Laws, or of any potential liability for or other obligation concerning the presence, disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except in the case of clause (i) or (ii) where such non-compliance, violation, liability, or other obligation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or has been described in the most recent Preliminary Prospectus. Except as described in the most recent Preliminary Prospectus, (A) there are no proceedings that are pending, or, to the knowledge of the Company, contemplated, against the Company or any of its subsidiaries under Environmental Laws in which a governmental authority is also a party, other than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed, and (B) the Company and its subsidiaries have not received written notice of any threatened action, claim or notice of non-compliance or violation, investigation or proceeding with respect to Environmental Laws, or liabilities or other obligations under Environmental Laws or concerning hazardous or toxic substances or wastes, pollutants or contaminants, that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(oo) Neither the Company nor any subsidiary is in violation of or has received notice of any violation with respect to any federal or state law relating to discrimination in the hiring, promotion or pay of employees, nor any applicable federal or state wage and hour laws, nor any state law precluding the denial of credit due to the neighborhood in which a property is situated, except for those violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Affect.
(pp) Except as described in or contemplated by the most recent Preliminary Prospectus, no subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary's capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary's property or assets to the Company or any other subsidiary of the Company.
(qq) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries, has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
(rr) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "MONEY LAUNDERING LAWS") and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.
(ss) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
(tt) Each Preliminary Prospectus, the Prospectus and each Issuer Free Writing Prospectus comply, and any further amendments or supplements thereto will comply, in all material respects, with any applicable laws or regulations of foreign jurisdictions in which such Preliminary Prospectus, Prospectus or such Issuer Free Writing Prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed Share Program described in Section 3. No consent, approval, authorization or order of, or filing or registration with, any court or governmental agency or body, other than such as have been obtained, is required under the securities laws and regulations of any foreign jurisdiction in which the Directed Shares are offered or sold outside the United States.
(uu) The Company has not offered, or caused Lehman Brothers Inc. to offer, Stock to any person pursuant to the Directed Share Program with the specific intent to unlawfully influence (i) a customer or supplier of the Company to alter the customer's or supplier's level or type of business with the Company or (ii) a trade journalist or
publication to write or publish favorable information about the Company, its business or its products.
(vv) The Company has not distributed and, prior to the later to occur of any Delivery Date and completion of the distribution of the Stock, will not distribute any offering material in connection with the offering and sale of the Stock other than any Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus to which the Representatives have consented in accordance with Section 1(h) or 5(a)(vi) and any Issuer Free Writing Prospectus set forth on Schedule 3 hereto and, in connection with the Directed Share Program described in Section 3, the enrollment materials prepared by Lehman Brothers Inc.
(ww) The Company has not taken and will not take, directly or indirectly, any action designed to or that has constituted or that would reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the shares of the Stock.
(xx) The Stock has been approved for listing, subject to official notice of issuance and evidence of satisfactory distribution, on the New York Stock Exchange.
Any certificate signed by any two officers of the Company and delivered to the Representatives or counsel for the Underwriters in connection with the offering of the Stock shall be deemed a representation and warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase of the Stock by the Underwriters. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Company agrees to sell 10,000,000 shares of the Firm Stock to the several Underwriters, and each of the Underwriters, severally and not jointly, agrees to purchase the number of shares of the Firm Stock set forth opposite that Underwriter's name in Schedule 1 hereto. The respective purchase obligations of the Underwriters with respect to the Firm Stock shall be rounded among the Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 1,500,000 additional shares of Option Stock. Such option is
exercisable in the event that the Underwriters sell more shares of Common Stock
than the number of shares of Firm Stock in the offering and as set forth in
Section 4 hereof. Each Underwriter agrees, severally and not jointly, to
purchase the number of shares of Option Stock (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of shares of Option Stock to be sold on such
Delivery Date as the number of shares of Firm Stock set forth in Schedule 1
hereto opposite the name of such Underwriter bears to the total number of shares
of Firm Stock.
The price of both the Firm Stock and any Option Stock purchased by the Underwriters shall be $- per share.
The Company shall not be obligated to deliver any of the Firm Stock or Option Stock to be delivered on the applicable Delivery Date, except upon payment for all such Stock to be purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters. Upon authorization by the Representatives of the release of the Firm Stock, the several Underwriters propose to offer the Firm Stock for sale upon the terms and conditions to be set forth in the Prospectus.
It is understood that approximately 500,000 shares of the Firm Stock (the "DIRECTED SHARES") will initially be reserved by the several Underwriters for offer and sale upon the terms and conditions to be set forth in the Prospectus and in accordance with the rules and regulations of the NASD to employees of the Company and its subsidiaries and persons having business relationships with the Company and its subsidiaries who have heretofore delivered to Lehman Brothers Inc. indications of interest to purchase shares of Firm Stock in form satisfactory to Lehman Brothers Inc. (such program, the "DIRECTED SHARE PROGRAM") and that any allocation of such Firm Stock among such persons will be made in accordance with timely directions received by Lehman Brothers Inc. from the Company; provided that under no circumstances will Lehman Brothers Inc. or any Underwriter be liable to the Company or to any such person for any action taken or omitted in good faith in connection with such Directed Share Program. It is further understood that any Directed Shares not affirmatively reconfirmed for purchase by any participant in the Directed Share Program by 10:00 A.M., New York City time, on the date hereof or otherwise not purchased by such persons will be offered by the Underwriters to the public upon the terms and conditions set forth in the Prospectus.
The Company agrees to pay all reasonable fees and disbursements incurred by the Underwriters in connection with the Directed Share Program and any stamp duties or other taxes incurred by the Underwriters in connection with the Directed Share Program.
4. Delivery of and Payment for the Stock. Delivery of and payment for the Firm Stock shall be made at 10:00 A.M., New York City time, on the third full business day following the date of this Agreement or at such other date or place as shall be determined by agreement between the Representatives and the Company. This date and time are sometimes referred to as the "INITIAL DELIVERY DATE." Delivery of the Firm Stock shall be made to the Representatives for the account of each Underwriter against payment by the several Underwriters through the Representatives and of the respective aggregate purchase prices of the Firm Stock being sold by the Company to or upon the order of the Company of the purchase price by wire transfer in immediately available funds to the accounts specified by the Company. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. The Company shall deliver the Firm Stock through the facilities of The Depository Trust Company ("DTC") unless the Representatives shall otherwise instruct.
The option granted in Section 2 will expire 30 days after the date
of this Agreement and may be exercised in whole or from time to time in part by
written notice being given to the Company by the Representatives; provided that
if such date falls on a day that is not a business day, the option granted in
Section 2 will expire on the next succeeding business day. Such notice shall set
forth the aggregate number of shares of Option Stock as to which the option
is being exercised, the names in which the shares of Option Stock are to be registered, the denominations in which the shares of Option Stock are to be issued and the date and time, as determined by the Representatives, when the shares of Option Stock are to be delivered; provided, however, that this date and time shall not be earlier than the Initial Delivery Date nor earlier than the second business day after the date on which the option shall have been exercised nor later than the fifth business day after the date on which the option shall have been exercised. Each date and time the shares of Option Stock are delivered is sometimes referred to as an "OPTION STOCK DELIVERY DATE," and the Initial Delivery Date and any Option Stock Delivery Date are sometimes each referred to as a "DELIVERY DATE."
Delivery of the Option Stock by the Company and payment for the Option Stock by the several Underwriters through the Representatives shall be made at 10:00 A.M., New York City time, on the date specified in the corresponding notice described in the preceding paragraph or at such other date or place as shall be determined by agreement between the Representatives and the Company. On the Option Stock Delivery Date, the Company shall deliver or cause to be delivered the Option Stock to the Representatives for the account of each Underwriter against payment by the several Underwriters through the Representatives and of the respective aggregate purchase prices of the Option Stock being sold by the Company to or upon the order of the Company of the purchase price by wire transfer in immediately available funds to the accounts specified by the Company. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. The Company shall deliver the Option Stock through the facilities of DTC unless the Representatives shall otherwise instruct.
5. Further Agreements of the Company and the Underwriters. (a) The Company agrees:
(i) To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the last Delivery Date except as provided herein; to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment or supplement to the Registration Statement or the Prospectus has been filed and to furnish the Representatives with copies thereof; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of the Prospectus or any Issuer Free Writing Prospectus, of the suspension of the qualification of the Stock for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding or examination for any such purpose or of any request by the Commission for the amending or supplementing of the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of the Prospectus or any Issuer Free Writing Prospectus or suspending any such qualification, to use promptly its reasonable best efforts to obtain its withdrawal;
(ii) To furnish promptly to each of the Representatives and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith;
(iii) To deliver promptly to the Representatives such number of the following documents as the Representatives shall reasonably request: (A) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits other than this Agreement and the computation of per share earnings), (B) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus and (C) each Issuer Free Writing Prospectus; and, if the delivery of a prospectus is required at any time after the date hereof in connection with the offering or sale of the Stock or any other securities relating thereto and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus in order to comply with the Securities Act, to notify the Representatives and, upon their request, to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended or supplemented Prospectus that will correct such statement or omission or effect such compliance;
(iv) To file promptly with the Commission any amendment or supplement to the Registration Statement or the Prospectus that may, in the judgment of the Company or the Representatives, be required by the Securities Act or requested by the Commission;
(v) Prior to filing with the Commission any amendment or supplement to the Registration Statement or the Prospectus, to furnish a copy thereof to the Representatives and counsel for the Underwriters and obtain the consent of the Representatives to the filing;
(vi) Not to make any offer relating to the Stock that would constitute an Issuer Free Writing Prospectus without the prior written consent of the Representatives;
(vii) To retain in accordance with the Rules and Regulations all Issuer Free Writing Prospectuses not required to be filed pursuant to the Rules and Regulations; and if at any time after the date hereof any events shall have occurred as a result of which any Issuer Free Writing Prospectus, as then amended or supplemented, would conflict with the information in the Registration Statement, the most recent Preliminary Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or, if for any other reason it shall be necessary to amend or supplement any Issuer Free Writing Prospectus, to notify the Representatives and, upon their request, to file such document and to prepare and furnish without charge to each Underwriter as many copies as the Representatives may
from time to time reasonably request of an amended or supplemented Issuer Free Writing Prospectus that will correct such conflict, statement or omission or effect such compliance;
(viii)As soon as practicable after the Effective Date (it being understood that the Company shall have until at least 410 or, if the fourth quarter following the fiscal quarter that includes the Effective Date is the last fiscal quarter of the Company's fiscal year, 455 days after the end of the Company's current fiscal quarter), to make generally available to the Company's security holders and to deliver to the Representatives an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158);
(ix) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the Stock;
provided that in connection therewith the Company shall not be required to
(i) qualify as a foreign corporation in any jurisdiction in which it would
not otherwise be required to so qualify, (ii) file a general consent to
service of process in any such jurisdiction or (iii) subject itself to
taxation in any jurisdiction in which it would not otherwise be subject;
(x) For a period commencing on the date hereof and ending on the
180th day after the date of the Prospectus (the "LOCK-UP PERIOD"), not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device that is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock or securities
convertible into or exchangeable for Common Stock (other than (i) the
Stock and shares issued pursuant to employee benefit plans, qualified
stock option plans or other employee compensation plans existing on the
date hereof or pursuant to currently outstanding options, warrants or
rights, or (ii) Common Stock, shares, options, warrants or other
securities convertible into or exchangeable for Common Stock issued as
consideration in bona fide merger or acquisition transactions and which
represent in the aggregate no more than __% of the Company's outstanding
Common Stock), or sell or grant options, rights or warrants with respect
to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the grant of options pursuant to
option plans existing on the date hereof or contemplated to be adopted as
disclosed in the most recent Preliminary Prospectus), (2) enter into any
swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, (3) file or cause to be filed a
registration statement, including any amendments, with respect to the
registration of any shares of Common Stock or securities convertible,
exercisable or exchangeable into Common Stock or any other securities of
the Company (other than any registration statement on Form S-8) or (4)
publicly disclose the intention to do any of the foregoing, in each case
without the prior written consent of
Lehman Brothers Inc. and Citigroup Global Markets Inc., on behalf of the Underwriters, and to cause each officer, key employee, director and stockholder of the Company or other person set forth on Schedule 2 hereto to furnish to the Representatives, prior to the Initial Delivery Date, a letter or letters, substantially in the form of Exhibit A hereto (the "LOCK-UP AGREEMENTS"); notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, then the restrictions imposed in this paragraph shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or the occurrence of the material event, unless Lehman Brothers Inc. and Citigroup Global Markets Inc., on behalf of the Underwriters, waive such extension in writing;
(xi) To apply the net proceeds from the sale of the Stock being sold by the Company as set forth in the Prospectus;
(xii) In connection with the Directed Share Program, to ensure that the Directed Shares will be restricted from sale, transfer, assignment, pledge or hypothecation to the same extent as sales and dispositions of Common Stock by the Company are restricted pursuant to Section 5(a)(x), and Lehman Brothers Inc. will notify the Company as to which Directed Share Participants will need to be so restricted. At the request of Lehman Brothers Inc., the Company will direct the transfer agent to place stop transfer restrictions upon such securities for such period of time as is consistent with Section 5(a)(x); and
(xiii)To comply with all applicable securities and other applicable laws, rules and regulations in each foreign jurisdiction in which the Directed Shares are offered in connection with the Directed Share Program.
(b) Each Underwriter severally agrees that such Underwriter has not, and shall not, include any "issuer information" (as defined in Rule 433) in any "free writing prospectus" (as defined in Rule 405) used or referred to by such Underwriter without the prior consent of the Company (any such issuer information with respect to whose use the Company has given its consent, "PERMITTED ISSUER INFORMATION"); provided that (i) no such consent shall be required with respect to any such issuer information contained in any document filed by the Company with the Commission prior to the use of such free writing prospectus and (ii) "issuer information," as used in this Section 5(b), shall not be deemed to include information prepared by or on behalf of such Underwriter on the basis of or derived from issuer information.
6. Expenses. The Company agrees, whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
to pay all costs, expenses, fees and taxes incident to and in connection with
(a) the authorization, issuance, sale and delivery of the Stock and any stamp
duties or other taxes payable in that connection, and the preparation and
printing of certificates for the Stock; (b) the preparation, printing and filing
under the Securities Act of the Registration Statement (including any exhibits
thereto), any Preliminary Prospectus, the Prospectus, any Issuer Free Writing
Prospectus and any amendment or supplement thereto; (c) the distribution of the
Registration Statement (including any exhibits
thereto), any Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment or supplement thereto, all as provided in this Agreement; (d) any required review by the NASD of the terms of sale of the Stock (including related reasonable and documented fees and expenses of counsel to the Underwriters); (e) the listing of the Stock on the New York Stock Exchange and/or any other exchange; (f) the qualification of the Stock under the securities laws of the several jurisdictions as provided in Section 5(a)(ix) and the preparation, printing and distribution of a Blue Sky Memorandum (including related reasonable and documented fees and expenses of counsel to the Underwriters); (g) the offer and sale of shares of the Stock by the Underwriters in connection with the Directed Share Program, including the reasonable and documented fees and disbursements of counsel to the Underwriters related thereto, reasonable and documented costs and expenses of preparation, printing and distribution of the Directed Share Program material and all stamp duties or other taxes incurred by the Underwriters in connection with the Directed Share Program; (h) the investor presentations on any "road show" undertaken in connection with the marketing of the Stock, including, without limitation, reasonable expenses associated with any electronic roadshow, reasonable travel and lodging expenses of the representatives and officers of the Company and fifty percent (50%) of the cost of any aircraft chartered in connection with the road show (the remaining fifty percent (50%) of such cost to be collectively borne by the Underwriters); and (i) all other costs and expenses incident to the performance of the obligations of the Company under this Agreement; provided that, except as provided in this Section 6 and in Section 11, the Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the Stock which they may sell and the expenses of advertising any offering of the Stock made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective obligations of the Underwriters hereunder are subject to the accuracy, when made and on each Delivery Date, of the representations and warranties of the Company contained herein, to the performance by the Company of its obligations hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in accordance with Section 5(a)(i); the Company shall have complied with all filing requirements applicable to any Issuer Free Writing Prospectus used or referred to after the date hereof; no stop order suspending the effectiveness of the Registration Statement or preventing or suspending the use of the Prospectus or any Issuer Free Writing Prospectus shall have been issued and no proceeding or examination for such purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company on or prior to such Delivery Date that the Registration Statement, the Prospectus or the Pricing Disclosure Package, or any amendment or supplement thereto, contains an untrue statement of a fact which, in the opinion of Simpson Thacher & Bartlett LLP, counsel for the Underwriters, is material or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Stock, the Registration Statement, the Prospectus and any Issuer Free Writing Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Underwriters, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.
(d) Fulbright & Jaworski L.L.P. shall have furnished to the Representatives its written opinion, as counsel to the Company, addressed to the Underwriters and dated such Delivery Date, in form and substance reasonably satisfactory to the Representatives, substantially in the form attached hereto as Exhibit B-1.
(e) Kent B. Thomas shall have furnished to the Representatives his written opinion, as General Counsel and Secretary of the Company, addressed to the Underwriters and dated such Delivery Date, in form and substance reasonably satisfactory to the Representatives, substantially in the form attached hereto as Exhibit B-2.
(f) The Representatives shall have received from Simpson Thacher & Bartlett LLP, counsel for the Underwriters, such opinion or opinions, dated such Delivery Date, with respect to the issuance and sale of the Stock, the Registration Statement, the Prospectus and the Pricing Disclosure Package and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the Representatives shall have received from Ernst & Young LLP a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are an independent registered public accounting firm with respect to the Company for the fiscal years ended December 31, 2002, 2003 and 2005 within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the most recent Preliminary Prospectus, as of a date not more than three days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings.
(h) With respect to the letter of Ernst & Young LLP referred to in the preceding paragraph and delivered to the Representatives concurrently with the execution of this Agreement (the "E&Y INITIAL LETTER"), the Company shall have furnished to the Representatives a letter (the "E&Y BRING-DOWN LETTER") of such accountants, addressed to the Underwriters and dated such Delivery Date (i) confirming that they are an independent registered public accounting firm with respect to the Company for the fiscal
years ended December 31, 2002, 2003 and 2005 within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the E&Y bring-down letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than three days prior to the date of the E&Y bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the E&Y initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the E&Y initial letter.
(i) At the time of execution of this Agreement, the Representatives shall have received from Mayer Hoffman McCann P.C. a letter, in form and substance satisfactory to the Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that they are an independent registered public accounting firm with respect to the Company for fiscal year ended December 31, 2004 within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the most recent Preliminary Prospectus, as of a date not more than three days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings.
(j) With respect to the letter of Mayer Hoffman McCann P.C. referred to in the preceding paragraph and delivered to the Representatives concurrently with the execution of this Agreement (the "MHM INITIAL LETTER"), the Company shall have furnished to the Representatives a letter (the "MHM BRING-DOWN LETTER") of such accountants, addressed to the Underwriters and dated such Delivery Date (i) confirming that they are an independent registered public accounting firm with respect to the Company for the fiscal year ended December 31, 2004 within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the MHM bring-down letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than three days prior to the date of the MHM bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the MHM initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the MHM initial letter.
(k) The Company shall have furnished to the Representatives a certificate, dated such Delivery Date, of its Chief Executive Officer and its principal financial officer stating that:
(i) The representations, warranties and agreements of the Company in Section 1 are true and correct on and as of such Delivery Date, and the Company
has complied with all its agreements contained herein and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to such Delivery Date;
(ii) No stop order suspending the effectiveness of the Registration Statement has been issued; and no proceedings or examination for that purpose have been instituted or, to the knowledge of such officers, threatened; and
(iii) They have carefully examined the Registration Statement, the Prospectus and the Pricing Disclosure Package, and, in their opinion, (A) (1) the Registration Statement, as of the Effective Date, (2) the Prospectus, as of its date and on the applicable Delivery Date, or (3) the Pricing Disclosure Package, when considered together with the public offering price of the Stock, number of shares of Stock and the underwriting discount included on the cover page of the Prospectus, as of the Applicable Time, did not and do not contain any untrue statement of a material fact and did not and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (except in the case of the Registration Statement, in the light of the circumstances under which they were made) not misleading, and (B) since the Effective Date, no event has occurred that should have been set forth in a supplement or amendment to the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus that has not been so set forth.
(l) (i) Neither the Company nor any of its subsidiaries shall have sustained, since the date of the latest audited financial statements included in the most recent Preliminary Prospectus, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree or (ii) except as described in the most recent Preliminary Prospectus, since such date there shall not have been any change in the capital stock or increase in the long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the business, financial condition, results of operations or prospects of the Company and its subsidiaries taken as a whole, the effect of which, in any such case described in clause (i) or (ii), is, in the reasonable judgment of the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Stock being delivered on such Delivery Date on the terms and in the manner contemplated in the Prospectus.
(m) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or materially limited or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions, including, without limitation, as a result of terrorist activities after the date hereof (or the effect of international conditions on the financial markets in the United States shall be such), as to make it, in the judgment of the Representatives, impracticable or inadvisable to proceed with the public offering or delivery of the Stock being delivered on such Delivery Date on the terms and in the manner contemplated in the Prospectus.
(n) The New York Stock Exchange shall have approved the Stock for listing, subject only to official notice of issuance and evidence of satisfactory distribution.
(o) The Lock-Up Agreements between the Representatives and the officers, key employees, directors and stockholders of the Company or other persons set forth on Schedule 2, delivered to the Representatives on or before the date of this Agreement, shall be in full force and effect on such Delivery Date.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its directors, officers and employees and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Stock), to which that Underwriter, director, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in (A) any Preliminary Prospectus, the Registration Statement, the Prospectus or in any amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or in any amendment or supplement thereto or (C) any Permitted Issuer Information used or referred to in any "free writing prospectus" (as defined in Rule 405) used or referred to by any Underwriter, (D) any "road show" (as defined in Rule 433) not constituting an Issuer Free Writing Prospectus (a "NON-PROSPECTUS ROAD SHOW") or (E) any Blue Sky application or other document prepared or executed by the Company (or based upon any written information furnished by the Company for use therein) specifically for the purpose of qualifying any or all of the Stock under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a "BLUE SKY APPLICATION"), (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Permitted Issuer Information, any Non-Prospectus Road Show or any Blue Sky Application, any material fact required to be stated therein
or
necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by any Underwriter in connection with, or relating in any manner to, the Stock or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its gross negligence or willful misconduct), and shall reimburse each Underwriter and each such director, officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Underwriter, director, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any such amendment or supplement thereto or in any Permitted Issuer Information, any Non-Prospectus Road Show or any Blue Sky Application, in reliance upon and in conformity with written information concerning such Underwriter furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein, which information consists solely of the information specified in Section 8(e). The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to any Underwriter or to any director, officer, employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the Company, its directors (including any person who, with his or her consent, is named in the Registration Statement as about to become a director of the Company), officers and employees, and each person who controls the Company within the meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such director, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Non-Prospectus Road Show or Blue Sky Application, or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Non-Prospectus Road Show or Blue Sky Application, any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Underwriter furnished to the Company through the Representatives by or on behalf of that Underwriter specifically for inclusion therein,
which information is limited to the information set forth in Section 8(e), and shall reimburse the Company, its directors, officers, employees or controlling persons promptly upon demand for any legal or other expenses reasonably incurred by the Company or such director, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability that any Underwriter may otherwise have to the Company or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 8. If any
such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified
party under this Section 8 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however, that the
Representatives shall have the right to employ counsel to represent
jointly the Representatives and those other Underwriters and their
respective directors, officers, employees and controlling persons who may
be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriters against the Company under this
Section 8 if (i) the Company and the Underwriters shall have so mutually
agreed; (ii) the Company has failed within a reasonable time to retain
counsel reasonably satisfactory to the Underwriters; (iii) the
Underwriters and their respective directors, officers, employees and
controlling persons shall have reasonably concluded that there may be
legal defenses available to them that are different from or in addition to
those available to the Company; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Underwriters
or their respective directors, officers, employees or controlling persons,
on the one hand, and the Company, on the other hand, and representation of
both sets of parties by the same counsel would be inappropriate due to
actual or potential differing interests between them, and in any such
event the fees and expenses of such separate counsel shall be paid by the
Company; it being understood, however, that the Company shall not be
liable for the expenses of more than one separate counsel (in addition to
any local counsel) incurred by the indemnified parties in any one
proceeding or series of related proceedings. No indemnifying party shall
(i) without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding and does not include any findings of fact or admissions of fault or culpability as to the indemnified party, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a), 8(b) or 8(f) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, from the offering of the Stock or (ii)
if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the Company, on the one hand, and the Underwriters, on
the other, with respect to the statements or omissions that resulted in
such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriters, on the
other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock
purchased under this Agreement (before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, on
the one hand, and the total underwriting discounts and commissions
received by the Underwriters with respect to the shares of the Stock
purchased under this Agreement, as set forth in the table on the cover
page of the Prospectus, on the other hand. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters,
the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were to be
determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of
the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 8(d) shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no Underwriter shall be required to contribute any amount in
excess
of the amount by which the net proceeds from the sale of the Stock underwritten by it exceeds the amount of any damages that such Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 8(d) are several in proportion to their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges and agrees that the statements regarding delivery of shares by the Underwriters set forth on the cover page of, and the concession figure and the paragraphs relating to stabilization, short positions and penalty bids, electronic distribution and discretionary sales by the Underwriters appearing under the caption "Underwriting" in, the most recent Preliminary Prospectus and the Prospectus are correct and constitute the only information concerning such Underwriters furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Non-Prospectus Road Show.
(f) The Company shall indemnify and hold harmless Lehman Brothers
Inc. (including its directors, officers and employees) and each person, if
any, who controls Lehman Brothers Inc. within the meaning of Section 15 of
the Securities Act ("LEHMAN BROTHERS ENTITIES"), from and against any
loss, claim, damage or liability or any action in respect thereof to which
any of the Lehman Brothers Entities may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action (i) arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the approval of the Company for distribution
to Directed Share Participants in connection with the Directed Share
Program or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) arises out of, or is based upon, the failure
of the Directed Share Participant to pay for and accept delivery of
Directed Shares that the Directed Share Participant agreed to purchase or
(iii) is otherwise related to the Directed Share Program; provided that
the Company shall not be liable under this clause (iii) for any loss,
claim, damage, liability or action that is determined in a final judgment
by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Lehman Brothers Entities. The
Company shall reimburse the Lehman Brothers Entities promptly upon demand
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred.
9. Defaulting Underwriters. If, on any Delivery Date, any Underwriter defaults in the performance of its obligations under this Agreement, the remaining non-defaulting Underwriters shall be obligated to purchase the Stock that the defaulting Underwriter agreed but failed to purchase on such Delivery Date in the respective proportions which the number of shares of the Firm Stock set forth opposite the name of each remaining non-defaulting
Underwriter in Schedule 1 hereto bears to the total number of shares of the Firm Stock set forth opposite the names of all the remaining non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the remaining non-defaulting Underwriters shall not be obligated to purchase any of the Stock on such Delivery Date if the total number of shares of the Stock that the defaulting Underwriter or Underwriters agreed but failed to purchase on such date exceeds 9.09% of the total number of shares of the Stock to be purchased on such Delivery Date, and any remaining non-defaulting Underwriter shall not be obligated to purchase more than 110% of the number of shares of the Stock that it agreed to purchase on such Delivery Date pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or those other underwriters satisfactory to the Representatives who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the Stock to be purchased on such Delivery Date. If the remaining Underwriters or other underwriters satisfactory to the Representatives do not elect to purchase the shares that the defaulting Underwriter or Underwriters agreed but failed to purchase on such Delivery Date, this Agreement (or, with respect to any Option Stock Delivery Date, the obligation of the Underwriters to purchase, and of the Company to sell, the Option Stock) shall terminate without liability on the part of any non-defaulting Underwriter or the Company, except that the Company will continue to be liable for the payment of expenses to the extent set forth in Sections 6 and 11. As used in this Agreement, the term "Underwriter" includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto that, pursuant to this Section 9, purchases Stock that a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company for damages caused by its default. If other Underwriters are obligated or agree to purchase the Stock of a defaulting or withdrawing Underwriter, either the Representatives or the Company may postpone the Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement, the Prospectus or in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be terminated by the Representatives by notice given to and received by the Company prior to delivery of and payment for the Firm Stock if, prior to that time, any of the events described in Sections 7(l) and 7(m) shall have occurred or if the Underwriters shall decline to purchase the Stock for any reason permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the Company shall fail to tender the Stock for delivery to the Underwriters by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition to the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled for any reason or (b) the Underwriters shall decline to purchase the Stock for any reason permitted under this Agreement (other than as permitted under Section 7(m)), the Company will reimburse the Underwriters for all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) incurred by the Underwriters in connection with this Agreement and the proposed purchase of the Stock, and upon demand the Company shall pay the full amount thereof to the Representatives. If this Agreement is terminated pursuant to Section 9 by reason of the default of one or more Underwriters, the
Company shall not be obligated to reimburse any defaulting Underwriter on account of those expenses.
12. Research Analyst Independence. The Company acknowledges that the Underwriters' research analysts and research departments are required to be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and that such Underwriters' research analysts may hold views and make statements or investment recommendations and/or publish research reports with respect to the Company and/or the offering that differ from the views of their respective investment banking divisions. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any conflict of interest that may arise from the fact that the views expressed by their independent research analysts and research departments may be different from or inconsistent with the views or advice communicated to the Company by such Underwriters' investment banking divisions. The Company acknowledges that each of the Underwriters is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities of the companies that may be the subject of the transactions contemplated by this Agreement.
13. No Fiduciary Duty. The Company acknowledges and agrees that in
connection with this offering, sale of the Stock or any other services the
Underwriters may be deemed to be providing hereunder, notwithstanding any
preexisting relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the
Underwriters: (i) no fiduciary or agency relationship between the Company and
any other person, on the one hand, and the Underwriters, on the other, exists;
(ii) the Underwriters are not acting as advisors, expert or otherwise, to the
Company, including, without limitation, with respect to the determination of the
public offering price of the Stock, and such relationship between the Company,
on the one hand, and the Underwriters, on the other, is entirely and solely
commercial, based on arms-length negotiations; (iii) any duties and obligations
that the Underwriters may have to the Company shall be limited to those duties
and obligations specifically stated herein; and (iv) the Underwriters and their
respective affiliates may have interests that differ from those of the Company.
The Company hereby waives any claims that the Company may have against the
Underwriters with respect to any breach of fiduciary duty in connection with
this offering.
14. Notices, Etc. All statements, demands, notices and agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail or facsimile transmission to Lehman Brothers Inc., 745 Seventh Avenue, New York, New York 10019, Attention: Syndicate Registration (Fax: 646-834-8133), with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Lehman Brothers Inc., 399 Park Avenue, 10th Floor, New York, New York 10022 (Fax: 212-520-0421); and
(b) if to the Company, shall be delivered or sent by mail or
facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: General Counsel (Fax:
615-224-1185).
Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the Representatives.
15. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Company and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Company contained in this Agreement shall also be deemed to be for the benefit of the directors, officers and employees of the Underwriters and each person or persons, if any, who control any Underwriter within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the Underwriters contained in Section 8(b) of this Agreement shall be deemed to be for the benefit of the directors of the Company, the officers of the Company who have signed the Registration Statement and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 15, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations, warranties and agreements of the Company and the Underwriters contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Stock and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them.
17. Definition of the Terms "Business Day" and "Subsidiary". For purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405.
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
19. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument.
20. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between the Company and the Underwriters, please indicate your acceptance in the space provided for that purpose below.
Very truly yours,
DELEK US HOLDINGS, INC.
Title:
Title:
Accepted:
LEHMAN BROTHERS INC.
CITIGROUP GLOBAL MARKETS INC.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By LEHMAN BROTHERS INC.
By CITIGROUP GLOBAL MARKETS INC.
SCHEDULE 1
Number of Shares Underwriters of Firm Stock ------------ ------------- Lehman Brothers Inc. .................................... Citigroup Global Markets Inc. ........................... Credit Suisse Securities (USA) LLC....................... HSBC Securities (USA) Inc. .............................. Morgan Keegan & Company, Inc. ........................... William Blair & Company, L.L.C. ......................... SunTrust Capital Markets, Inc............................ IDB Capital Corp., an affiliate of the Israel Discount Bank of New York ..................................... ---------- Total................................................. 10,000,000 ========== |
SCHEDULE 2
PERSONS DELIVERING LOCK-UP AGREEMENTS
Directors
Ezra Uzi Yemin
Gabriel Last
Asaf Bartfeld
Ronel Ben-Dov
Zvi Greenfeld
Carlos E. Jorda
Charles H. Leonard
Philip L. Maslowe
Officers and Key Employees
Ezra Uzi Yemin
Lynwood Gregory
Frederec Green
Edward Morgan
Tony McLarty
Assi Ginzburg
Paul Pierce
John Colling Jr.
Scotty Creason
Walter Franz
Kent Thomas
Dana Young
Stockholders and Other Persons
Delek Group Ltd.
Delek Petroleum Ltd.
Delek Hungary Holding Ltd.
SCHEDULE 3
ISSUER FREE WRITING PROSPECTUSES
EXHIBIT A
LOCK-UP LETTER AGREEMENT
LEHMAN BROTHERS INC.
CITIGROUP GLOBAL MARKETS INC.
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
The undersigned understands that you and certain other firms (the "UNDERWRITERS") propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing for the purchase by the Underwriters of shares (the "STOCK") of Common Stock, par value $0.01 per share (the "COMMON STOCK"), of Delek US Holdings, Inc., a Delaware corporation (the "COMPANY"), and that the Underwriters propose to reoffer the Stock to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the Underwriters, and for other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the prior written consent of Lehman Brothers Inc. and Citigroup Global Markets Inc., on behalf of the Underwriters, the undersigned will not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Common Stock (including, without limitation, shares of Common Stock that may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and shares of Common Stock that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for Common Stock, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise, (3) make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock or any other securities of the Company or (4) publicly disclose the intention to do any of the foregoing, for a period commencing on the date hereof and ending on the 180th day after the date of the Prospectus relating to the Offering (such 180-day period, the "LOCK-UP PERIOD").
Notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by this Lock-Up Letter Agreement shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or the occurrence of the material event, unless waive such extension in writing. The undersigned hereby further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this Lock-Up Letter Agreement during the period from the date of this Lock-Up Letter Agreement to and including the 34th day following the expiration of the Lock-Up Period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as such may have been extended pursuant to this paragraph) has expired. The foregoing sentence shall not apply to bona fide gifts, sales or other dispositions of shares of any class of the Company's capital stock, in each case that are made exclusively between and among the undersigned or members of the undersigned's family, or affiliates of the undersigned, including its partners (if a partnership) or members (if a limited liability company); provided that it shall be a condition to any such transfer that (i) the transferee/donee agrees to be bound by the terms of the lock-up letter agreement (including, without limitation, the restrictions set forth in the preceding sentence) to the same extent as if the transferee/donee were a party hereto, (ii) no filing by any party (donor, donee, transferor or transferee) under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), shall be required or shall be voluntarily made in connection with such transfer or distribution (other than a filing on a Form 5, Schedule 13D or Schedule 13G (or 13D-A or 13G-A) made after the expiration of the 180-day period referred to above), (iii) each party (donor, donee, transferor or transferee) shall not be required by law (including without limitation the disclosure requirements of the Securities Act of 1933, as amended, and the Exchange Act) to make, and shall agree to not voluntarily make, any public announcement of the transfer or disposition, and (iv) the undersigned notifies Lehman Brothers Inc. and Citigroup Global Markets Inc. at least two business days prior to the proposed transfer or disposition.
In furtherance of the foregoing, the Company and its transfer agent are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, (1) if the closing of the Offering has not occurred prior to __________, 2006, (2) if the Company notifies the Underwriters that it does not intend to proceed with the Offering, (3) if the Underwriting Agreement does not become effective, or (4) if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Stock, the undersigned will be released from its obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of factors, including market conditions. Any Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters.
[Signature page follows]
The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will execute any additional documents necessary in connection with the enforcement hereof. Any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.
Very truly yours,
Title:
EXHIBIT B-1
FORM OF OPINION OF ISSUER'S COUNSEL
Capitalized terms used herein without definition shall have the meanings ascribed to them in the Underwriting Agreement.
(i) Each of (A) the Company and (B) MAPCO Express, Inc., Delek Refining, Inc., MAPCO Fleet, Inc. and Delek Finance, Inc. (collectively, the "Delaware Corporate Subsidiaries") has been duly incorporated and is validly existing and in good standing as a corporation in its jurisdiction of incorporation. Each of Delek Pipeline Texas, Inc., MPC Pipeline Acquisition, Inc., Delek Land Texas, Inc. and MPC Land Acquisition, Inc. (collectively, the "Texas Corporate Subsidiaries") has been duly incorporated and is validly existing and in good standing as a corporation in its jurisdiction of incorporation. Delek Refining, Ltd. ("DRL") has been duly formed and is validly existing as a limited partnership in its jurisdiction of formation. Delek U.S. Refining GP, LLC ("DELEK LLC") has been duly formed and is validly existing and in good standing as a limited liability company in its jurisdiction of formation. Each of Williamson Oil Co., Inc., Gasoline Associated Services, Inc. and Liberty Wholesale Co., Inc. is validly existing and in good standing as a corporation in its jurisdiction of incorporation. Each of the Company, the Delaware Corporate Subsidiaries, the Texas Corporate Subsidiaries, DRL and Delek LLC is duly registered or qualified to do business as a foreign corporation, partnership or limited liability company under the laws of the jurisdictions set forth under its name on Schedule A hereto, and each of the Company, the Delaware Corporate Subsidiaries, the Texas Corporate Subsidiaries and Delek LLC is in good standing as a foreign corporation or limited liability company under the laws of the jurisdictions set forth under its name on Schedule A hereto. Each of the Company, the Delaware Corporate Subsidiaries and the Texas Corporate Subsidiaries has all necessary corporate power and authority, DRL has all necessary partnership power and authority, and Delek LLC has all limited liability company power and authority, necessary to own or hold its properties and conduct its business to be conducted on the date hereof, in each case in all material respects as described in the Registration Statement and the Prospectus.
(ii) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and non-assessable, conform in all material respects to the description thereof contained in the Prospectus and were issued in compliance with applicable federal securities laws and not in violation of any preemptive right, resale right, right of first refusal or similar right of any securityholder of the Company under federal or New York law, the Delaware General Corporation Law, the Company's charter or by-laws or any agreement or other instrument to which the Company is a party filed as an exhibit to the Registration Statement. The share purchase rights of Ezra Uzi Yemin have been duly authorized and conform in all material respects to the description thereof contained in the Prospectus under the caption "Management - Employment Agreement with President and Chief Executive Officer." All of (i) the issued shares of capital stock of each of the Delaware Corporate Subsidiaries have been duly authorized and validly issued, are fully paid, non-assessable and are owned of record, and to our knowledge, beneficially, directly or indirectly by
B-1-1
the Company; (ii) the issued shares of capital stock of each of the Texas Corporate Subsidiaries have been duly authorized and validly issued, are fully paid, non-assessable and are owned of record, and to our knowledge, beneficially, directly or indirectly by the Company; (iii) the partnership interests in DRL have been duly authorized and validly issued, and are owned of record, and to our knowledge, beneficially, directly or indirectly by the Company; (iv) the membership interests in Delek LLC have been duly authorized and validly issued, and are owned of record, and to our knowledge, beneficially, directly or indirectly by the Company; in the case of clauses (i), (ii), (iii) and (iv), to our knowledge, free and clear of all liens, encumbrances, equities or claims except for such liens, encumbrances, equities or claims under debt agreements described or referred to in the Prospectus or filed as exhibits to the Registration Statement or otherwise known to us, after inquiry of the Company but without any other independent investigation, and except for restrictions on transferability arising under the Securities Act and applicable state securities laws; in the case of clause (iii), to our knowledge, except for restrictions on transferability contained in the Agreement of Limited Partnership Agreement, dated as of February 24, 2005, of DRL, as described in the Prospectus or created or arising under the Texas Revised Limited Partnership Act; and in the case of clause (iv), to our knowledge, except for restrictions on transferability described in the Prospectus or created or arising under the Texas Limited Liability Company Act.
(iii) The sale and issuance of the shares of Stock to be issued and sold by the Company to the Underwriters under the Agreement have been duly authorized and, upon issuance and delivery by the Company against payment of the consideration set forth in the Agreement, such shares of Stock will be validly issued, fully paid and non-assessable and will conform in all material respects to the description thereof contained in the Prospectus.
(iv) There are no preemptive rights under federal or New York law or under the Delaware General Corporation Law to subscribe for or purchase shares of the Stock. There are no preemptive or other rights of any securityholder of the Company pursuant to the Company's charter or by laws or any agreement or other instrument filed as an exhibit to the Registration Statement, except as described in the Prospectus, to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Stock.
(v) The Agreement has been duly and validly authorized, executed and delivered by the Company.
(vi) Such counsel has been advised orally by the Commission that the Registration Statement was declared effective under the Securities Act on the date and time specified in such opinion, and the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein. To such counsel's knowledge, based solely on an oral confirmation by a member of the Commission's staff, as of the date hereof, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for such purpose has been instituted or threatened by the Commission.
(vii) (A) The Registration Statement, on the Effective Date and on the applicable Delivery Date, and (B) the Prospectus, when filed with the Commission pursuant to Rule 424(b) (without reference to Rule 424(b)(8)) and on the applicable Delivery Date, appear,
B-1-2
on their face, to comply as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations, except that in each case such counsel need express no opinion with respect to the financial statements and notes and schedules thereto or other financial and accounting data contained in or omitted from the Registration Statement or the Prospectus, and such counsel shall not assume any responsibility for the accuracy, completeness or fairness of the statements contained in such documents, except to the extent set forth in paragraphs (viii), (ix) and (x) below.
(viii) The statements made in the Prospectus under the caption "Description of Capital Stock," insofar as they purport to constitute summaries of the terms of the Common Stock (including the Stock), constitute accurate summaries of the terms of such Common Stock in all material respects.
(ix) The statements made in the Prospectus under the caption "Business - Government Regulation and Environmental Matters," insofar as they refer to statements of law, accurately describe, in all material respects, the portions of the federal Clean Air Act, the federal Clean Water Act of 1972, the federal Resource Conservation and Recovery Act, the U.S. Environmental Protection Agency's Fuels and Fuel Additive Regulations, and the federal Comprehensive Environmental Response, Compensation and Liability Act, each as in effect on the date hereof, addressed thereby.
(x) The statements made in the Prospectus under the caption "Material United States Federal Income Tax Considerations to Non-U.S. Holders," insofar as they refer to statements of law, accurately describe, in all material respects, the portions of the United States federal income tax laws addressed thereby.
In rendering such opinion, such counsel may [(i)] state that its opinion is limited to matters governed by the federal laws of the United States of America, the laws of the State of New York, the Delaware General Corporation Law, the Texas Business Corporation Act, the Texas Business Organizations Code, the Texas Revised Limited Partnership Act, the Texas Limited Liability Company Act and that such counsel is not admitted in the State of Delaware [and (ii) rely (to the extent such counsel deems proper and specifies in its opinion), as to matters involving the application of [insert description of any laws covered by supporting opinion] upon the opinion of other counsel of good standing; provided that such other counsel is satisfactory to counsel for the Underwriters and furnishes a copy of its opinion to the Representatives].
Such counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated such Delivery Date,
in form and substance satisfactory to the Representatives, to the effect that
(x) such counsel has acted as counsel to the Company in connection with the
preparation of the Registration Statement, the Prospectus and the Issuer Free
Writing Prospectuses set forth on a schedule to such opinion acceptable to
counsel for the Underwriters, and (y) based on the foregoing (relying in respect
of the determination of materiality to an extent such counsel deems appropriate
upon discussions with officers and other representatives of the Company), no
facts have come to the attention of such counsel which lead such counsel to
believe that:
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(a) the Registration Statement, at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading;
(b) the Prospectus, as of its date and as of such Delivery Date, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
(c) the most recent Preliminary Prospectus, together with the Issuer Free Writing Prospectuses set forth on a schedule to such opinion acceptable to counsel to the Underwriters, when considered together with the public offering price of the Stock, number of shares of Stock and the underwriting discount included on the cover page of the Prospectus, as of the Applicable Time, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading[, provided, however, that any statement contained in any of the foregoing documents shall be deemed to be modified or superseded to the extent that any information contained in any subsequent document modifies or replaces such statement],
except that in each case such counsel need express no belief with respect to (i) the financial statements and notes and schedules thereto or other financial and accounting data contained in or omitted from the Registration Statement, the Prospectus or the most recent Preliminary Prospectus, or (ii) the exhibits to the Registration Statement. The foregoing statement may be qualified by a statement to the effect that such counsel does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus or the most recent Preliminary Prospectus, except to the extent set forth in paragraphs (viii), (ix) and (x) above.
B-1-4
EXHIBIT B-2
FORM OF OPINION OF ISSUER'S GENERAL COUNSEL
Capitalized terms used herein without definition shall have the meanings ascribed to them in the Underwriting Agreement.
(i) The execution, delivery and performance of the Agreement by the Company, the consummation of the transactions contemplated by the Agreement by the Company and the application of the net proceeds from the sale of the Stock by the Company as described under "Use of Proceeds" in the Prospectus do not and will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, impose any lien, charge or encumbrance upon any property or assets of the Company and its subsidiaries, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, license or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject; (b) result in any violation of the provisions of the charter or by-laws (or similar organizational documents) of the Company or any of its subsidiaries; or (c) result in any violation of any statute or any rule or regulation, or any order known to such counsel issued by any federal or Tennessee state court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets, except, in the case of clause (a) or (c) above, where such conflict, breach, violation, imposition of a lien, charge or encumbrance or default would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(ii) Except for the registration of the Stock under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws in connection with the purchase and sale of the Stock by the Underwriters, and such consents as may be required by the New York Stock Exchange or the by-laws and rules of the National Association of Securities Dealers, Inc. in connection with the purchase and distribution of the Stock by the Underwriters, to the knowledge of such counsel, no consent, approval, authorization or order of, or filing or registration with, any federal or Tennessee state court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets is required for the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby.
(iii) Except as identified in the most recent Preliminary Prospectus and the Prospectus or filed as exhibits to the Registration Statement, to such counsel's knowledge, there are no contracts or agreements between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act.
B-2-1
(iv) To such counsel's knowledge, and except as described in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the performance of the Agreement by the Company or the consummation of the transactions contemplated thereby by the Company; and, to such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or others.
(v) To such counsel's knowledge, there are no contracts or other documents required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement that are not described and filed therewith as required.
In rendering such opinion, such counsel may [(i)] state that his
opinion is limited to matters governed by the federal laws of the United States
of America, the laws of the State of Tennessee and the Delaware General
Corporation Law and that such counsel is not admitted in the State of Delaware
[and (ii) rely (to the extent such counsel deems proper and specifies in its
opinion), as to matters involving the application of [insert description of any
laws covered by supporting opinion] upon the opinion of other counsel of good
standing; provided that such other counsel is satisfactory to counsel for the
Underwriters and furnishes a copy of its opinion to the Representatives].
Such counsel shall also have furnished to the Representatives a written statement, addressed to the Underwriters and dated such Delivery Date, in form and substance satisfactory to the Representatives, to the effect that no facts have come to the attention of such counsel which lead such counsel to believe that:
(a) the Registration Statement, at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading;
(b) the Prospectus, as of its date and as of such Delivery Date, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
(c) the most recent Preliminary Prospectus, together with the Issuer Free Writing Prospectuses set forth on a schedule to such opinion acceptable to counsel to the Underwriters, when considered together with the public offering price of the Stock, number of shares of Stock and the underwriting discount included on the cover page of the Prospectus, as of the Applicable Time, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading[; provided, however, that any statement contained in any of the foregoing documents shall be deemed to be modified or superseded to the extent that any information contained in any subsequent document modifies or replaces such statement],
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except that in each case such counsel need express no belief with respect to (i) the financial statements and the notes and schedules thereto or other financial and accounting data contained in or omitted from the Registration Statement, the Prospectus or the most recent Preliminary Prospectus, or (ii) the exhibits to the Registration Statement. The foregoing statement may be qualified by a statement to the effect that such counsel does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus or the most recent Preliminary Prospectus.
B-2-3
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DELEK US HOLDINGS, INC.
Delek US Holdings, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the "GCL"), DOES HEREBY CERTIFY:
1. The name of the corporation is Delek US Holdings, Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was April 10, 2001.
2. This Amended and Restated Certificate of Incorporation was duly adopted by the unanimous written consent of the Board of Directors of the corporation in accordance with Sections 242 and 245 of the GCL. The written consent of sole stockholder of the corporation was obtained in accordance with Section 228 of the GCL.
3. The text of the Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
FIRST: The name of the corporation is Delek US Holdings, Inc.
SECOND: The address of the registered office of the corporation in the State of Delaware is at 874 Walker Road, Suite C, City of Dover, County of Kent; and the name of its registered agent at such address is United Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under GCL as set forth therein.
FOURTH: The total number of shares of stock of all classes of stock which the corporation shall have the authority to issue is 120,000,000 shares, consisting solely of 110,000,000 shares of common stock, par value $0.01 per share (the "Common Stock"), and 10,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred Stock").
1. Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized by resolution or resolutions to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock and, with respect to each such series, to fix the voting powers, if any, designations, preferences and the relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of any such series, and to fix the number of shares constituting such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding). The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:
(a) the designation of the series, which may be by distinguishing number, letter or title;
(b) the number of shares of the series, which number the Board of Directors may thereafter increase or decrease (but not below the number of shares thereof then outstanding);
(c) whether dividends, if any, shall be cumulative or noncumulative, the dividend rate of the series, and the dates and preferences of the dividends of such series;
(d) the redemption rights and price or prices, if any, for shares of the series;
(e) the terms and amount of any sinking find provided for the purchase or redemption of shares of the series;
(f) the amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation;
(g) whether the shares of the series shall be convertible into shares of any other class or series, or any other security, of the corporation or any other entity, and, if so, the specification of such other class or series of such other security, the conversion price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible and all other terms and conditions upon which such conversion may be made;
(h) the right, if any, to subscribe for or to purchase any securities of the corporation or any other corporation or other entity;
(i) the voting rights, if any, of the holders of shares of the series; and
(j) any other relative, participating, optional, or other special powers, preferences or rights and qualifications, limitations, or restrictions thereof.
2. Common Stock. Subject to the rights of the holders of any series of Preferred Stock, the holders of Common Stock will be entitled to one vote on each matter submitted to a vote at a meeting of stockholders for each share of Common Stock held of record by such holder as of the record date of such meeting.
FIFTH: The corporation is to have perpetual existence.
SIXTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter or repeal any and all of the bylaws of the corporation.
SEVENTH: Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision of the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the bylaws of the corporation. Election of directors need not be by written ballot unless the bylaws of the corporation shall so provide.
EIGHTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any
class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of the GCL or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of the GCL, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.
NINTH: Subject to the rights of holders of Preferred Stock, if any, the number of directors that shall constitute the whole Board of Directors shall be as provided in the bylaws of the corporation, as the same may be amended from time to time. Such number of directors shall from time to time be fixed and determined by the directors as set forth in the bylaws of the corporation. The directors shall be elected at the annual meeting of stockholders, and each director elected shall hold office until his or her successor shall be elected and qualified. Directors need not be residents of Delaware or stockholders of the corporation. Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation.
If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification, or removal from office of any director, or otherwise, or if any new directorship is created by an increase in the authorized number of directors as provided in the bylaws or otherwise, a majority of the directors then in office, though less than a quorum, or a sole remaining director, may choose a successor or fill the newly created directorship. Any director so chosen shall hold office until the next election and until his or her successor shall be duly elected and qualified, unless sooner displaced. Any director may be removed either for or without cause by the holders of a majority of shares then entitled to vote at an election of directors.
Advance notice of stockholder nominations for the election of directors must be given in the manner provided in the bylaws of the corporation.
TENTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or thereafter prescribed by statute, and all rights conferred on the stockholders herein are granted subject to this reservation.
ELEVENTH: A director of this corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for the breach of any
fiduciary duty as a director, except a) for any breach of the director's duty of
loyalty to the corporation or its stockholders, b) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing violation of law,
c) under Section 174 of the GCL,as the same exists or hereafter may be amended,
or d) for any transaction from which the director derived an improper personal
benefit. If the GCL is amended after the date of incorporation of this Amended
and Restated
Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders of the corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification.
TWELFTH: The corporation shall, to the fullest extent permitted by the GCL (including, without limitation, Section 145 thereof), as amended from time to time, indemnify any officer or director whom it shall have power to indemnify from and against any and all of the expenses, liabilities or other losses of any nature. The indemnification provided herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity, while holding such office, and shall continue as to a person who has ceased to be a officer or director and shall inure to the benefit of the heirs, executors and administrators of such a person.
THIRTEENTH: The corporation may purchase and maintain insurance on behalf of any person who was or is a director, officer, employee or agent of the corporation or serving at the request of the corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability, whether or not the corporation would have the power to indemnify such person against such liability under the GCL.
FOURTEENTH: Upon the filing of this Amended and Restated Certificate of Incorporation with the Secretary of the State of the State of Delaware, each then outstanding share of Common Stock will automatically and without further action on the part of any person or entity be changed into 393,898.69 fully paid and nonassessable shares of Common Stock.
IN WITNESS WHEREOF, Delek US Holdings, Inc. has caused this Amended and Restated Certificate of Incorporation to be executed by its President and Chief Executive Officer, this 18th day of April, 2006.
/s/ Ezra Uzi Yemin -------------------------------------- Ezra Uzi Yemin President and Chief Executive Officer |
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
DELEK US HOLDINGS, INC.
Adopted on April 17, 2006
ARTICLE I
OFFICES
SECTION 1.01. Registered Office. The registered office of the corporation in the State of Delaware shall be in the City of Dover, County of Kent, and the name of its registered agent shall be United Corporate Services, Inc.
SECTION 1.02. Other Offices. The corporation also may have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Place of Meeting. All meetings of stockholders shall be held at such place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. The Board of Directors may, in its sole discretion and subject to such guidelines and procedures as the Board of Directors may from time to time adopt, determine that the meeting shall not be held at any specific place, but may instead be held solely by means of remote communication.
SECTION 2.02. Annual Meeting. The annual meeting of stockholders shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting.
(a) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders shall be made at an annual meeting of stockholders (i) pursuant to the corporation's notice of such meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the corporation who was a stockholder of record at the time of giving of the notice provided for in this section, who is entitled to vote at such meeting and who complies with the notice procedures set forth in this section. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of this subsection (a), the stockholder must have given timely notice thereof in writing to the Secretary of
the corporation and such other business must be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive office of the corporation not less than 120 calendar days, nor more than 90 calendar days, before the date of the corporation's proxy statement released to stockholders in connection with the previous year's annual meeting. In the event that the date of any annual meeting is more than 30 days before or more than 30 days after the anniversary date of the previous year's annual meeting, notice by a stockholder, to be timely, must be so delivered not earlier than 90 calendar days prior to such annual meeting and not later than 10 days following the day on which public announcement of the date of such meeting is first made by the corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above.
(b) A stockholder's notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in a solicitation of proxies for the election of directors in an election contest, or that is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and such nominated person's written consent to serve as a director if elected; (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made: (A) the name and address of such stockholder, as they appear on the corporation's books, and of such beneficial owner, and (B) the class and number of shares of the corporation's capital stock that are owned beneficially and of record by such stockholder and by any such beneficial owner. For purposes of these bylaws, the term "beneficial owner" and "beneficial ownership" shall have the meaning ascribed to such terms in Rule 13d-3 under the Exchange Act, and shall be determined in accordance with such rule.
(c) For purposes of this Section 2.02, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to the Exchange Act or furnished by the corporation to stockholders.
(d) Notwithstanding the foregoing provisions of this Section 2.02, a stockholder also shall comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the nomination of persons for election to the Board of Directors or the proposal of business to be considered by the stockholders at a meeting of stockholders. Nothing in this Section 2.02 shall be deemed to affect any rights of stockholders to request
inclusion of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(e) Only such persons who are nominated in accordance with the procedures set forth in these bylaws shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth herein. Except as otherwise provided by law, the corporation's certificate of incorporation, as amended or restated (the "Certificate of Incorporation") or these bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth herein and, if any proposed nomination or business was not made or proposed in compliance these bylaws, to declare that such non-compliant proposal or nomination be disregarded.
SECTION 2.03. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the corporation. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a specific place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
SECTION 2.04. Special Meeting. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by applicable law or by the Certificate of Incorporation, may be called by the Chairman of the Board or the President from time to time, and shall be called by the Secretary upon written request by a majority of the Board of Directors. Such request shall state the purposes of the proposed meeting. No business other than that stated in the corporation's notice of a special meeting of stockholders shall be transacted at such special meeting.
SECTION 2.05. Notice of Meeting. Written notice of the annual meeting of stockholders and each special meeting of stockholders, stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meetings, and, in the case of a special meeting, the purpose or purposes thereof, shall be given to each stockholder entitled to
vote thereat, not less than 10 nor more than 60 days before the meeting, unless allowed by applicable law and in accordance with Section 5.01 herein.
SECTION 2.06. Quorum. The holders of a majority of the shares of all classes of the corporation's capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders, except as otherwise provided by applicable law or by the Certificate of Incorporation. Notwithstanding the other provisions of the Certificate of Incorporation or these bylaws, the holders of a majority of the shares of the corporation's capital stock entitled to vote thereat, present in person or represented by proxy, whether or not a quorum is present, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.
SECTION 2.07. Voting. When a quorum is present at any meeting of the stockholders, the vote of the holders of a majority of the shares of the corporation's capital stock having voting power, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which, by express provision of applicable law, of the Certificate of Incorporation or of these bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Every stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder, bearing a date not more than three years prior to voting, unless such instrument provides for a longer period, and filed with the Secretary of the corporation before, or at the time of, the meeting. Every proxy must be appointed in accordance with the Delaware General Corporation Law. Each proxy shall be revocable unless expressly provided therein to be irrevocable or unless made irrevocable by law. If such instrument shall designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers in respect of the same portion of the shares as he is of the proxies representing such shares.
SECTION 2.08. Written Consent of Stockholders. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have
not consented in writing. A facsimile transmission, electronic mail or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section, provided that any such electronic transmission sets forth or is delivered with information from which the corporation can determine (a) that the electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (b) the date on which such stockholder or proxyholder or authorized person or persons transmitted such electronic transmission. The date on which such electronic transmission is transmitted shall be deemed to be the date on which such consent was signed.
"Electronic transmission," as used in these bylaws, means any form of communication not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by the recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
SECTION 2.09. Voting of Stock of Certain Holders. Shares of the corporation's capital stock standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the bylaws or equivalent organizational documents of such corporation may prescribe, or in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by the executor or administrator of such deceased person, either in person or by proxy. Shares standing in the name of a guardian, conservator, or trustee may be voted by such fiduciary, either in person or by proxy, but no such fiduciary shall be entitled to vote shares held in such fiduciary capacity without a transfer of such shares into the name of such fiduciary. Shares standing in the name of a receiver may be voted by such receiver. A stockholder whose shares are pledged shall be entitled to vote such shares, unless in the transfer by the pledgor on the books of the corporation, the stockholder has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or the stockholder's proxy, may represent the stock and vote thereon.
SECTION 2.10. Treasury Stock. The corporation shall not vote, directly or indirectly, shares of its own capital stock owned by it; and such shares shall not be counted in determining the total number of outstanding shares of the corporation's capital stock and for quorum purposes.
SECTION 2.11. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may, except as otherwise required by law, fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors and which record date shall not be more than 60 nor less than 10 days before the date of such meeting of stockholders, nor more than 60 days prior to the time for such other action as described above. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if
notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 2.12. Inspectors of Elections; Opening and Closing the Polls. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at each meeting of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.01. Powers. The business and affairs of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by applicable law or by the Certificate of Incorporation or by these bylaws directed or required to be exercised or done by the stockholders.
SECTION 3.02. Number, Election and Term. Except as otherwise provided in the Certificate of Incorporation, the number of directors that shall constitute the whole Board of Directors shall be not fewer than three nor more than nine. Such number of directors shall from time to time be fixed and determined by the directors and shall be set forth in the notice of any meeting of stockholders held for the purpose of electing directors. The directors shall be elected at the annual meeting of stockholders, except as provided in Section 3.03, and each director elected shall hold office until his or her successor shall be elected and qualified or until such director's earlier resignation or removal. Directors need not be residents of the State of Delaware or stockholders of the corporation. Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation.
SECTION 3.03. Vacancies, Additional Directors, and Removal From Office. If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification, or removal from office of any director, or otherwise, or if any new directorship is created by an increase in the authorized number of directors as provided in Section 3.02 or
otherwise, a majority of the directors then in office, though less than a quorum, or a sole remaining director, may choose a successor or fill the newly created directorship. Any director so chosen shall hold office until the next election and until his or her successor shall be duly elected and qualified, unless sooner displaced. Any director may be removed either for or without cause by the holders of a majority of shares then entitled to vote at an election of directors.
SECTION 3.04. Regular Meeting. A regular meeting of the Board of Directors shall be held each year, without other notice than this bylaw, at the place of, and immediately following, the annual meeting of stockholders; and other regular meetings of the Board of Directors shall be held each year, at such time and place as the Board of Directors may provide, by resolution, either within or without the State of Delaware, without other notice than such resolution. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting.
SECTION 3.05. Special Meeting. A special meeting of the Board of Directors may be called by the Chairman of the Board of Directors or by the President of the corporation and shall be called by the Secretary on the written request of any two directors. The Chairman or President so calling, or the directors so requesting, any such meeting shall fix the time and any place, either within or without the State of Delaware, as the place for holding such meeting. Special meeting may also be held by means of conference telephone or other communications equipment as set forth in Section 3.04.
SECTION 3.06. Notice of Special Meeting. Notice of special meetings of the Board of Directors shall be given to each director in writing by hand delivery, first-class mail, overnight mail or courier service, confirmed facsimile transmission or electronic transmission or orally by telephone at least 48 hours prior to the time of such meeting. Notice shall be given in accordance with Section 5.01. Any director may waive notice of any meeting in accordance with 5.02. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting, except that notice shall be given of any proposed amendment to the bylaws if it is to be adopted at any special meeting or with respect to any other matter where notice is required under applicable law.
SECTION 3.07. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law, by the Certificate of Incorporation or by these bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
SECTION 3.08. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof as provided in Article IV of these bylaws, may be taken without a meeting if all the members of the Board of Directors or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
SECTION 3.09. Compensation. The Board of Directors shall have authority to determine from time to time the amount of compensation, if any, that shall be paid to its members for their services as directors and as members of standing or special committees of the Board of Directors. The Board of Directors shall also have power, in its discretion, to provide for and to pay to directors rendering services to the corporation not ordinarily rendered by directors as such, special compensation appropriate to the value of such services as determined by the Board of Directors from time to time. No provision of these bylaws shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 4.01. Designation, Powers and Name. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees of the Board of Directors, including, if the Board of Directors shall so determine, an Executive Committee, each such committee to consist of one or more of the directors of the corporation in accordance with applicable laws. The committee shall have and may exercise such of the powers of the Board of Directors in the management of the business and affairs of the corporation as may be provided in such resolution but no such committee shall have the power or authority to (a) approve, adopt or recommend to the stockholders any action or matter (other than the election or removal of directors) required by applicable law to be submitted to the stockholders for approval or (b) adopt, amend or repeal any of these bylaws. The committee may authorize the seal of the corporation to be affixed to all papers that may require it. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
SECTION 4.02. Minutes. Each committee of the Board of Directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required.
SECTION 4.03. Compensation. Members of committees may be allowed compensation for attending committee meetings, if the Board of Directors shall so determine, in
accordance with Section 3.09.
ARTICLE V
NOTICE
SECTION 5.01. General. Whenever under the provisions of applicable law, the Certificate of Incorporation or these bylaws, notice is required to be given to any director, member of any committee, or stockholder, such notice need not be delivered personally, but may be given in writing and or mailed to such director, member, or stockholder; provided that in the case of a director or a member of any committee such notice may be given orally by telephone, overnight mail or courier service, facsimile transmission, electronic mail or similar medium of communication; provided further that in the case of a stockholder, notice may be given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. If mailed, notice to a director, member of a committee, or stockholder shall be deemed to be given five days after deposit in the United States mail first class in a sealed envelope, with postage thereon prepaid, addressed, in the case of a stockholder, to the stockholder at the stockholder's address as it appears on the records of the corporation or, in the case of a director or a member of a committee, to such person at his or her business address. If given by overnight mail or courier service, such notice shall be deemed adequately delivered twenty-four (24) hours after it was delivered to the overnight mail or courier service company. If sent by facsimile transmission, notice to a director or member of a committee shall be deemed to be given when the facsimile is transmitted and notice to a stockholder shall be deemed to be given when directed to a number at which the stockholder has consented to receive notice. If sent by e-mail transmission, notice to a director or member of a committee shall be deemed to be given when the e-mail is transmitted and notice to a stockholder shall be deemed to be given when directed to an electronic mail address at which the stockholder has consented to receive notice. If posted on an electronic network together with separate notice to the stockholder of such specific posting, notice to a stockholder shall be deemed given upon the later of (a) such posting, and (b) the giving of such separate notice; and if sent by any other form of electronic transmission, notice shall be deemed given to a stockholder when directed to the stockholder, in accordance with the stockholder's consent.
SECTION 5.02. Waiver. Whenever notice is required to be given under applicable law, the Certificate of Incorporation, or these bylaws, a written waiver, signed by the person or persons entitled to said notice, or a waiver by electronic transmission by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. Attendance of a person at a meeting shall constitute waiver of notice of such meeting except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or a committee thereof need be specified in any waiver of notice of such meeting.
ARTICLE VI
OFFICERS
SECTION 6.01. Officers. The officers of the corporation shall be a Chairman of the Board and a Vice Chairman of the Board (if such offices are created by the Board of Directors), a Chief Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, any one or more of which may be designated Executive Vice President or Senior Vice President, a Secretary and a Treasurer. The Board of Directors may appoint such other officers and agents, including Chief Operating Officer, Assistant Vice Presidents, Assistant Secretaries, and Assistant Treasurers, in each case as the Board of Directors shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board. Any two or more offices may be held by the same person. No officer shall execute, acknowledge, verify or countersign any instrument on behalf of the corporation in more than one capacity, if such instrument is required by law, by these bylaws or by any act of the corporation to be executed, acknowledged, verified, or countersigned by two or more officers. The Chairman and Vice Chairman of the Board shall be elected from among the directors. With the foregoing exceptions, none of the other officers need be a director, and none of the officers need be a stockholder of the corporation.
SECTION 6.02. Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors at its first regular meeting held after the annual meeting of stockholders or as soon thereafter as conveniently possible. Each officer shall hold office until his or her successor shall have been elected and qualified or until the effective date of his or her earlier resignation or removal, or until he or she shall cease to be a director in the case of the Chairman and the Vice Chairman.
SECTION 6.03. Removal and Resignation. Any officer or agent elected or appointed by the Board of Directors may be removed without cause by the affirmative vote of a majority of the Board of Directors whenever, in its judgment, the best interests of the corporation shall be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Any officer may resign at any time upon written notice to the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
SECTION 6.04. Vacancies. Any vacancy occurring in any office of the corporation by death, resignation, removal, or otherwise, may be filled by the Board of Directors.
SECTION 6.05. Salaries. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors or a committee thereof or pursuant to the direction of the Board of Directors or a committee thereof; and no officer shall be prevented from receiving such salary by reason of his or her also being a director.
SECTION 6.06. Chairman of the Board. The Chairman of the Board (if such office is created by the Board of Directors) shall preside at all meetings of the Board of Directors or of the stockholders of the corporation. The Chairman shall formulate and submit to
the Board of Directors or the Executive Committee matters of general policy for the corporation and shall perform such other duties as usually appertain to the office or as may be prescribed by the Board of Directors or the Executive Committee.
SECTION 6.07. Vice Chairman of the Board. The Vice Chairman of the Board (if such office is created by the Board of Directors) shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board. The Vice Chairman shall perform such other duties as from time to time may be prescribed by the Board of Directors or the Executive Committee or assigned by the Chairman of the Board.
SECTION 6.08. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control the business and affairs of the corporation. In the absence of the Chairman of the Board or the Vice Chairman of the Board (if such offices are created by the Board), the Chief Executive Officer shall preside at all meetings of the Board of Directors and of the stockholders. The Chief Executive Officer may also preside at any such meeting attended by the Chairman or Vice Chairman of the Board if he or she is so designated by the Chairman, or in the Chairman's absence by the Vice Chairman. The Chief Executive Officer shall have the power to appoint and remove subordinate officers, agents and employees, except those elected or appointed by the Board of Directors. The Chief Executive Officer shall keep the Board of Directors and the Executive Committee fully informed and shall consult them concerning the business of the corporation. He or she may sign, with the Treasurer, Secretary or any other officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of the corporation and any deeds, bonds, mortgages, contracts, checks, notes, drafts, or other instruments that the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated by these bylaws or by the Board of Directors to some other officer or agent of the corporation, or shall be required by law to be otherwise executed. The Chief Executive Officer shall vote, or give a proxy to any other officer of the corporation to vote, all shares of stock of any other corporation standing in the name of the corporation and in general he or she shall perform all other duties normally incident to the office of Chief Executive Officer and such other duties as may be prescribed by the stockholders, the Board of Directors, or the Executive Committee from time to time.
SECTION 6.09. President. The President shall be the chief operating officer of the corporation, subject to the control of the Board of Directors, and shall have general and active management and control of the day-to-day business and affairs of the corporation and shall report directly to the Chief Executive Officer, if the Board of Directors creates such a position. The President shall perform such other duties as from time to time are assigned to him or her by the Chief Executive Officer, the Board of Directors or the Executive Committee. In the absence of the Chief Executive Officer, or in the event of his or her inability or refusal to act, the President shall perform the duties and exercise the powers of the Chief Executive Officer. The President shall perform such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, the Board of Directors or the Executive Committee.
SECTION 6.10. Chief Financial Officer. The Chief Financial Officer shall serve as the principal advisor to the corporation in all matters relating to financial risks, financial
planning and record-keeping. The Chief Financial Officer shall report directly to the Chief Executive Officer. The Chief Financial Officer shall be responsible for and shall direct agents and employees in the performance of all financial duties and services for and on behalf of the corporation. The Chief Financial Officer shall perform such other duties and exercise such other powers as are commonly incidental to the office of the Chief Financial Officer, and such other duties as from time to time are assigned to him or her by the Chief Executive Officer, the Board of Directors or the Executive Committee.
SECTION 6.11. Vice Presidents. In the absence of the President, or in the event of his or her inability or refusal to act, the Executive Vice President (or in the event there shall be no Vice President designated Executive Vice President, any Vice President designated by the Board) shall perform the duties and exercise the powers of the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation. The Vice Presidents shall perform such other duties as from time to time may be assigned to them by the Chief Executive Officer, the President, the Board of Directors or the Executive Committee.
SECTION 6.12. Secretary. The Secretary shall (a) keep the minutes of the meetings of the stockholders, the Board of Directors and committees of the Board of Directors; (b) see that all notices are duly given in accordance with the provisions of these bylaws and as required by law; (c) be custodian of the corporate records and of the seal of the corporation, and see that the seal of the corporation or a facsimile thereof is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these bylaws; (d) keep or cause to be kept a register of the post office address of each stockholder which shall be furnished by such stockholder; (e) sign with the President, or an Executive Vice President or Vice President, certificates for shares of the corporation, the issue of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general, perform all duties normally incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Chief Executive Officer, the President, the Board of Directors or the Executive Committee.
SECTION 6.13. Treasurer. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever and deposit all such moneys in the name of the corporation in such banks, trust companies, or other depositories as shall be selected in accordance with the provisions of Section 7.03 of these bylaws; (c) prepare, or cause to be prepared, for submission at each regular meeting of the Board of Directors, at each annual meeting of the stockholders, and at such other times as may be required by the Board of Directors, the Chief Executive Officer, the President or the Executive Committee, a statement of financial condition of the corporation in such detail as may be required; and (d) in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Chief Executive Officer, the President, the Chief Financial Officer, the Board of Directors or the Executive Committee.
SECTION 6.14. Assistant Secretary and Treasurer. The Assistant Secretaries and Assistant Treasurers shall, in general, perform such duties as shall be assigned to them by the Chief Financial Officer, the Secretary or the Treasurer, respectively, or by the President, the Board of Directors, or the Executive Committee. The Assistant Secretaries and Assistant Treasurers shall, in the absence of the Secretary or Treasurer, respectively, perform all functions and duties which such absent officers may delegate, but such delegation shall not relieve the absent officer from the responsibilities and liabilities of his or her office. The Assistant Secretaries may sign, with the President or a Vice President, certificates for shares of the corporation, the issue of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine.
ARTICLE VII
CONTRACTS, CHECKS AND DEPOSITS
SECTION 7.01. Contracts. Subject to the provisions of Section 6.01, the Board of Directors may authorize any officer, officers, agent, or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.
SECTION 7.02. Checks. All checks, demands, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers or such agent or agents of the corporation, and in such manner, as the Board of Directors may determine.
SECTION 7.03. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board of Directors may select.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8.01. Issuance. Each stockholder of this corporation shall be entitled to a certificate or certificates representing the number of shares of capital stock registered in his or her name on the books of the corporation unless the Board of Directors has provided by resolution or resolutions that some or all of any or all classes of shares of the corporation stock shall be uncertificated shares. The certificates shall be in such form as may be determined by the Board of Directors, shall be issued in numerical order and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary. If any certificate is countersigned (1) by a transfer agent other than the corporation or any employee of the corporation, or (2) by a registrar other than the corporation or any employee of the corporation, any other signature on
the certificate may be a facsimile.
If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences, and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations, or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class of stock; provided that, except as otherwise provided by applicable law, in lieu of the foregoing requirements, there may be set forth on the face or back of such certificate, a statement that the corporation will furnish such information without charge to each stockholder who so requests. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in the case of a lost, stolen, destroyed, or mutilated certificate a new one may be issued therefor upon such terms and with such indemnity, if any, to the corporation as the Board of Directors may prescribe. Certificates shall not be issued representing fractional shares of stock.
SECTION 8.02. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the corporation a bond sufficient to indemnity it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
SECTION 8.03. Transfers. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. Transfers of shares shall be made only on the books of the corporation by the registered holder thereof, or by his or her attorney thereunto authorized by power of attorney and filed with the Secretary of the corporation or the transfer agent.
SECTION 8.04. Registered Stockholders. The corporation shall be entitled to treat the holder of record of any share or shares of the corporation's capital stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
ARTICLE IX
DIVIDENDS
SECTION 9.01. Declaration. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may declare dividends with respect to the shares of the corporation's capital stock at any regular or special meeting, pursuant to applicable law. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock, subject to the provisions of the Certificate of Incorporation.
SECTION 9.02. Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interest of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
INDEMNIFICATION AND INSURANCE
SECTION 10.01. Third Party Actions. The corporation shall indemnify any director or officer of the corporation, and may indemnify any other person, who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful.
SECTION 10.02. Actions by or in the Right of the Corporation. The corporation shall indemnify any director or officer and may indemnify any other person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the Court of Chancery or such other court shall deem proper.
SECTION 10.03. Mandatory Indemnification. To the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Sections 10.01 and 10.02, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
SECTION 10.04. Determination of Conduct. Any indemnification under
Section 10.01 or 10.02 (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or agent is
proper in the circumstances because the person has met the applicable standard
of conduct set forth in Section 10.01 or 10.02. Such determination shall be made
(a) by a majority vote of directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (b) by a committee of such
directors designated by majority vote of such directors, even though less than a
quorum, or (c) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (d) by the stockholders.
SECTION 10.05. Payment of Expenses in Advance. Expenses (including attorney's fees) incurred by an officer or director in defending a civil, criminal, administrative or investigative action, suit, or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this Article X. Any such expenses incurred by an employee or agent of the corporation at its discretion may be paid by the corporation upon receipt of such an undertaking.
SECTION 10.06. Indemnity Not Exclusive. The indemnification and advancement of expenses provided or granted hereunder shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, any other bylaw, agreement, vote of stockholders, or disinterested directors or otherwise, both as to action in a person's official capacity and as to action in another capacity while holding such office.
SECTION 10.07. Definitions. For purposes of this Article X:
(a) "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee, or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article X with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued;
(b) "other enterprises" shall include employee benefit plans;
(c) "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan;
(d) "serving at the request of the corporation" shall include any service as a director, officer, employee, or agent of the corporation that imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and
(e) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Article X.
SECTION 10.08. Continuation of Indemnity. The indemnification and advancement of expenses provided by or granted pursuant to this Article X shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
SECTION 10.09. Insurance, Contracts and Funding. The corporation may purchase and maintain insurance on behalf of any person who was or is a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the Delaware General Corporation Law. The corporation, without further stockholder approval, may enter into contracts with any director, officer, employee or agent in furtherance of the provisions of this section and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure that payment of such amounts as may be necessary to effect indemnification as provided in this section.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Seal. The corporate seal, if one is authorized by the Board of Directors, shall have inscribed thereon the name of the corporation, and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or otherwise reproduced.
SECTION 11.02. Books. The books of the corporation may be kept (subject to applicable law) outside the State of Delaware at the offices of the corporation, or at such other place or places as may be designated from time to time by the Board of Directors.
ARTICLE XII
AMENDMENT
Except as otherwise provided by law, the Certificate of Incorporation or these bylaws, these bylaws may be altered, amended, or repealed by a majority of the number of directors then constituting the Board of Directors at any regular meeting of the Board of Directors without prior notice, or at any special meeting of the Board of Directors if notice of such alteration, amendment, or repeal be contained in the notice of such special meeting.
Exhibit 5.1
FULBRIGHT & JAWORSKI L.L.P.
A Registered Limited Liability Partnership
666 Fifth Avenue, 31st Floor
New York, New York 10103-3198
WWW.FULBRIGHT.COM
telephone: (212) 318-3000
facsimile: (212) 318-3400
April 19, 2006
Delek US Holdings, Inc.
830 Crescent Centre Drive, Suite 300
Franklin, TN 37067
Dear Sirs:
We have acted as counsel to Delek US Holdings, Inc., a Delaware corporation (the "Company"), in connection with the registration under the Securities Act of 1933, as amended (the "Securities Act"), of 11,500,000 shares (the "Shares") of the Company's common stock, par value $0.01 per share ("Common Stock") (including up to 1,500,000 shares of Common Stock which may be purchased by the underwriters upon exercise of the option granted to them by the Company to cover over-allotments, if any), as described in the Company's Registration Statement on Form S-1 (Registration No. 333-131675), initially filed with the U.S. Securities and Exchange Commission (the "Commission") on February 8, 2006 (as amended to date and as it may subsequently be amended, the "Registration Statement").
We have examined originals or copies of such corporate records, as applicable, of the Company, certificates and other communications of public officials, certificates of officers of the Company and such other documents as we have deemed necessary for the purpose of rendering the opinions expressed herein. As to questions of fact material to the opinions expressed herein, we have, to the extent we deemed appropriate, relied on certificates of officers of the Company and on certificates and other communications of public officials. We have assumed the genuineness of all signatures on, and the authenticity of, all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as copies thereof, the due authorization, execution and delivery by the parties thereto other than the Company of all documents examined by us, and the legal capacity of each individual who signed any of those documents.
Based upon the foregoing, and having due regard for such legal considerations as we deem relevant, we are of the opinion that the Shares have been duly and validly authorized for issuance and, when issued by the Company in accordance with the terms of the underwriting agreement, the form of which has been filed as Exhibit 1.1 to the Registration Statement (the "Underwriting Agreement"), and upon receipt by the Company of payment therefor as provided in the Underwriting Agreement, will be legally issued, fully paid and nonassessable.
Delek US Holdings, Inc.
April 19, 2006
The opinions expressed herein are limited exclusively to the federal laws of the United States of America and the General Corporation Law of the State of Delaware, and we express no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and the reference to this firm under the caption "Legal Matters" in the prospectus contained therein. This consent is not to be construed as an admission that we are a party whose consent is required to be filed with the Registration Statement under the provisions of the Securities Act or the rules and regulations of the Commission promulgated thereunder.
The opinion expressed herein is solely for your benefit, and may be relied upon only by you.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P. Fulbright & Jaworski L.L.P. |
Exhibit 10.1(c)
AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 3 (this "Amendment") to the Employment Agreement, by and among MAPCO Express, Inc., ("Employer"), Delek US Holdings, Inc. ("Delek US") and Uzi Yemin ("Employee), entered into and effective as of May 1, 2004, and amended effective as of September 15, 2005 and February 1, 2006 (the "Employment Agreement"), is dated as of April 17, 2006.
WHEREAS, Employee, Employer and Delek US are parties to the Employment Agreement; and
WHEREAS, Employee, Employer and Delek US desire to amend certain terms of the Employment Agreement as described below.
NOW THEREFORE, in consideration of the mutual promises set forth in this Amendment and intending to be legally bound, Employee, Employer and Delek US agree as follows:
1. Section 2(c)(2) of the Employment Agreement is hereby amended by deleting the text of the section in its entirety and replacing it with:
"Housing Allowance. Employer will provide Employee with a company-provided house, rent-free, located at 108 River Court, Nashville, TN 37221-6701, or such other location reasonably acceptable to Employee.
2. This Amendment to the Employment Agreement shall have effect as of the date hereof.
3. Except as otherwise provided herein, the Employment Agreement shall continue unchanged and in full force and effect.
4. This Amendment may be executed in counterparts, each of which will be deemed an original but all of which together shall constitute one and the same agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Amendment No. 3 to Employment Agreement as of the date first above written.
MAPCO EXPRESS, INC.
By: /s/ Lynwood E. Gregory III ------------------------------------ Name: Lynwood E. Gregory III Title: EVP By: /s/ Tony McLarty ------------------------------------ Name: Tony McLarty Title: VP |
DELEK US HOLDINGS, INC.
By: /s/ Lynwood E. Gregory III ------------------------------------ Name: Lynwood E. Gregory III Title: EVP By: /s/ Tony McLarty ------------------------------------ Name: Tony McLarty Title: VP /s/ Uzi Yemin ------------------------------------ Uzi Yemin |
Exhibit 10.2
AMENDED & RESTATED CONSULTING AGREEMENT
This Amended and Restated Consulting Agreement (the "Agreement") is made and entered into as of April 11, 2006, by and between ZVI GREENFELD and GREENFELD-ENERGY CONSULTING, LTD. ("Consultant"), 10 Rabenu-Tam St., Tel- Aviv, Israel 63294, and DELEK REFINING, LTD. ("Delek"), 830 Crescent Centre Drive, Suite 300, Franklin, TN 37067.
Whereas, the parties entered into the Consulting Agreement dated May 1, 2005 (the "Original Agreement"); and
Whereas, the parties now wish to amend and restate the Original Agreement by way of this Agreement; and
Whereas, this Agreement is intended to entirely supplant the terms of the Original Agreement; and
Whereas, Delek has carefully considered the advisability of obtaining assistance and guidance in the furtherance of its refining operations; Delek has made independent inquiry concerning Consultant's ability and reputation; and Delek has determined that Consultant's services would be of great value in furtherance of Delek's interests.
Now, therefore, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Term. The term of this Agreement shall begin on May 1, 2005, and may be terminated by either party upon six (6) months advance notice to the other party.
2. Scope of Engagement. Delek engages Consultant to advise Delek in any and all areas of the refining industry, and Consultant accepts such engagement. Consultants services shall include, without limitation, assisting management in determining the capital budget of the Tyler refinery, evaluating the progress of capital projects, assisting management in selecting the most cost effective types and grades of crude oil, and evaluating the feasibility of increasing the refinery's production and profitability. This Agreement shall not be construed to create a partnership, joint venture or employee relationship between Consultant and Delek. It is specifically understood that Consultant is acting hereunder as an independent contractor. Consultant does and may have and maintain other interests of any kind, either of Consultant's own or in activities or enterprises of others, and Consultant shall have the right to render services to others, including without limitation, the same or similar services as to those to be rendered to Delek hereunder. Neither party, nor such party's directors, officers, employees or agents, shall bind or make any commitment on behalf of the other party.
3. Compensation. Delek shall provide Consultant with the following as compensation for services rendered hereunder:
(a) Delek shall pay Consultant seven thousand one hundred and fifty United States dollars (US$7,150.00) per month beginning May 1, 2005, and shall increase the compensation to seven thousand six hundred seventy United States dollars (US$7,670.00) per month beginning September 1, 2005;
(b) Delek shall reimburse Consultant for all reasonable out-of-pocket expenses (including, without limitation, travel expenses) incurred by Consultant on Delek's behalf or in connection with the performance of Consultant's services hereunder; and
(c) Provided that Delek's indirect parent company, Delek US
Holdings, Inc. ("Delek US"), completes an initial public offering of shares of
its common stock (the "IPO") during the term of this Agreement, Delek shall
cause Delek US to grant Zvi Greenfeld options, under and subject to Delek
U.S.'s 2006 Long Term Incentive Plan, to purchase one hundred and thirty
thousand (130,000) shares of Delek US common stock (which number of shares
gives effect to the contemplated stock split of the common stock of Delek US)
containing the following terms: (i) the grant shall be made effective upon the
completion of the IPO, (ii) all stock options shall be unvested at the time of
the grant, but shall vest as to twenty-six thousand (26,000) of the shares on
each of the first five (5) anniversary dates of completion of the IPO (provided
that this Agreement is in effect or the Consultant or Zvi Greenfeld continues
to provide services without interruption to Delek that are substantially
similar to those described herein, as the same may be amended with the consent
of the parties); (iii) the exercise price for all shares purchased pursuant to
the foregoing stock options shall be equal to the price per share of common
stock of Delek US sold to the public in the IPO; (iv) all unvested stock
options shall be immediately forfeited in the event that, prior to any vesting
date, the Agreement terminates or Consultant or Zvi Greenfeld ceases to provide
services without interruption to Delek that are substantially similar to those
described herein, as the same may be amended with the consent of the parties;
(v) the options shall have a term of ten (10) years; and (vi) all vested but
unexercised stock options must be exercised within one hundred eighty (180)
days from the date of termination of services hereunder but in no event after
expiration of the ten (10) year term.
4. Key Person. It is understood and agreed that the services of Zvi Greenfeld are essential to this Agreement, and that the services of Consultant described herein shall at all times be provided through Mr. Greenfeld personally. In the event that any change in business form, management, ownership or organization of Consultant or any other occurrence materially frustrates this intent, Delek may immediately terminate the term of this Agreement by written notice to Consultant. The parties agree that Mr. Greenfeld is an employee of Consultant and will not be classified or treated as an employee of Delek for any purpose.
5. Amendment. No amendment of the terms of this Agreement shall be valid unless made in writing and signed by all the parties hereto.
6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together, shall constitute one instrument.
If the foregoing sets forth your understanding, please indicate your acceptance by signing in the space provided below.
GREENFELD-ENERGY DELEK REFINING, LTD. by its General CONSULTING, LTD. Partner, Delek U.S. Refining GP, LLC: /s/ Zvi Greenfeld ------------------------------------- /s/ Tony McLarty By: Zvi Greenfeld ------------------------------------- Title: By: Tony McLarty Title: VP of Human Resources /s/ Zvi Greenfeld ------------------------------------- /s/ Frederec Green ZVI GREENFELD, Individually ------------------------------------- By: Frederec Green Title: VP of Refining and COO |
EXHIBIT 10.3
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of ___________, 2006 by and between DELEK US HOLDINGS, INC., a Delaware corporation (the "Company"), and ______________ ("Indemnitee").
W I T N E S S E T H:
WHEREAS, highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance and/or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of a corporation;
WHEREAS, the uncertainties relating to such insurance and indemnification have increased the difficulty of attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company (the "Board") has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
WHEREAS, although Indemnitee may be entitled to indemnification pursuant to the Company's certificate of incorporation, as amended (the "Certificate of Incorporation"), the Company's bylaws and the Delaware General Corporation Law ("DGCL"), the DGCL expressly provides that the indemnification provisions set forth therein are not exclusive, and thereby contemplates that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification;
WHEREAS, it is reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation and the bylaws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee believes that this Agreement is desirable to augment the protection available under the Certificate of Incorporation and the Company's bylaws and insurance, and may not be willing to serve as a director or officer or in other capacities without the additional protection provided for under this Agreement, and the Company desires Indemnitee to serve in such capacity and Indemnitee is willing to serve and continue to serve on the condition that he or she be so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
1. Services to the Company. Indemnitee will serve or continue to serve, at the will of the Company in accordance with the Company's bylaws, as a director or officer of one or more Enterprises for so long as Indemnitee is duly elected, appointed or requested or until Indemnitee tenders his or her resignation from all Enterprises.
2. Definitions. As used in this Agreement:
(a) A "Change in Control" shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
(i) Change in Board of Directors. During any period of two (2)
consecutive years (not including any period prior to the execution
of this Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in Sections 2(a)(ii) or
2(a)(iii)) whose election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the members of the
Board;
(ii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;
(iii) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; and
(iv) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.
(b) "Corporate Status" describes the status of a person who is or was a director, officer, trustee, partner, managing member, fiduciary, employee or agent of the Company or
of any other corporation, limited liability company, limited or general partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.
(d) "Enterprise" shall mean the Company and any other corporation, limited liability company, limited or general partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, employee, agent or fiduciary.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(f) "Expenses" shall include all reasonable attorneys' fees and expenses, retainers, court costs, transcript costs, fees of experts (including, without limitation, auditors and accountants), witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal(s) resulting from any Proceeding, including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. Should any payments by the Company to or for the account of an Indemnitee under this Agreement be determined to be subject to any federal, state or local income or excise tax, Expenses shall also include such amounts as are necessary to place Indemnitee in the same after-tax position after giving effect to all applicable taxes, Indemnitee would have been in had no such tax been determined to apply to those payments.
(g) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) any Enterprise, Delek Group Ltd. or any affiliate thereof or Indemnitee in any matter material to any such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.
(h) The term "Proceeding" shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether
brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken (or failure to act) by him or her or any action (or failure to act) on his or her part while acting as a director or officer of the Company, or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement, except one initiated by Indemnitee to enforce his or her rights under this Agreement; provided that, the term "Proceeding" shall not include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding by Indemnitee against the Company, including, without limitation, proceedings initiated by Indemnitee or involving a counterclaim by Indemnitee.
(i) Reference to "other enterprise" shall include employee benefit plans; references to "fines" shall include any excise tax assessed with respect to any employee benefit plan; references to "serving at the request of the Company" shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner "not opposed to the best interests of the Company" as referred to in this Agreement.
3. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding, he or she had no reasonable cause to believe that his or her conduct was unlawful.
4. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company unless, and then only to the extent that, the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.
5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully resolved claim, issue or matter. If Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which Indemnitee was successful. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
6. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.
7. Additional Indemnification.
(a) Notwithstanding any limitation in Sections 3, 4 or 5, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect to such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding; provided, however, that the Company shall have the right to consent to any settlement, which consent shall not be unreasonably withheld. No indemnity shall be made under this Section 7(a) on account of Indemnitee's conduct which constitutes a breach of Indemnitee's duty of loyalty to the Company or its stockholders or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law.
(b) For purposes of Section 7(a), the meaning of the phrase "to the fullest extent permitted by applicable law" shall include, but not be limited to: (i) to the fullest extent permitted by
the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL; and (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors and persons serving in certain other capacities at the request of a corporation.
8. Exclusions. Notwithstanding any other provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or under another valid and enforceable indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision and except for any payments which are required to be disgorged by Indemnitee; or
(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of other federal or state statutory law or common law; or
(c) except as otherwise provided in Section 13(e), in connection
with any Proceeding (or any part of any Proceeding) initiated by
Indemnitee, including any Proceeding (or any part of any Proceeding)
initiated by Indemnitee against the Company's directors, officers,
employees or other indemnitees, unless (i) such indemnification is
expressly required to be made by applicable law, (ii) the Board authorized
the Proceeding (or any part of the Proceeding) prior to its initiation or
(iii) the Company provides the indemnification, in its sole discretion,
pursuant to the powers vested in the Company to the fullest extent
permitted by applicable law.
9. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, to the fullest extent permitted by applicable law the Company shall advance the expenses incurred by Indemnitee in connection with any Proceeding within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee's ability to repay the expenses and without regard to Indemnitee's ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. Indemnitee shall qualify for advances solely upon the execution and delivery to the Company of an undertaking providing that Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.
10. Procedure for Notification and Defense of Claim.
(a) Within thirty (30) days after service of process on Indemnitee relating to notice of the commencement of any Proceeding, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The omission to notify the Company within such thirty (30) day period will not relieve the Company from any liability which it may have to Indemnitee under this Agreement except to the extent the failure of Indemnitee to provide such notice within thirty (30) days after receipt by Indemnitee of notice of the commencement of any Proceeding adversely affects the Company's rights, legal position, ability to defend or ability to obtain insurance coverage with respect to such Proceeding. The omission to notify the Company will not relieve the Company from any liability which it may have to Indemnitee otherwise than under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.
(b) If the Company shall be obligated to pay the Expenses of any Proceeding against Indemnitee, the Company shall be entitled to assume and control the defense of such Proceeding (with counsel consented to by Indemnitee, which consent shall not be unreasonably withheld), upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, consent to such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that if (i) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee or counsel selected by the Company shall have concluded that there may be a conflict of interest between the Company and Indemnitee or among Indemnitees jointly represented in the conduct of any such defense or (iii) the Company shall not, in fact, have employed counsel, to which Indemnitee has consented as aforesaid, to assume the defense of such Proceeding, then the reasonable fees and expenses of Indemnitee's counsel shall be at the expense of the Company. Notwithstanding the foregoing, Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee's expense.
(c) The Company will be entitled to participate in the Proceeding at its own expense. The Company will not, without prior written consent of Indemnitee, effect any settlement of a claim against Indemnitee in any threatened or pending Proceeding unless such settlement solely involves the payment of money and includes an unconditional release of Indemnitee from all liability on any claims that are or were threatened to be made against Indemnitee in the Proceeding.
11. Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 10(a), a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested
Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys' fees and expenses and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(b) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 11(a) hereof, the
Independent Counsel shall be selected as provided in this Section 11(b). If a
Change in Control shall not have occurred, the Independent Counsel shall be
selected by the Board, and the Company shall give written notice to Indemnitee
advising him or her of the identity of the Independent Counsel so selected. If a
Change in Control shall have occurred, the Independent Counsel shall be selected
by Indemnitee (unless Indemnitee shall request that such selection be made by
the Board, in which event the preceding sentence shall apply), and Indemnitee
shall give written notice to the Company advising it of the identity of the
Independent Counsel so selected. In either event, Indemnitee or the Company, as
the case may be, may, within ten (10) days after such written notice of
selection shall have been given, deliver to the Company or to Indemnitee, as the
case may be, a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of "Independent Counsel" as defined in
Section 2(g) of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If such
written objection is so made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection is
withdrawn or a court of competent jurisdiction has determined that such
objection is without merit. If, within twenty (20) days after submission by
Indemnitee of a written request for indemnification pursuant to Section 10(a)
hereof, no Independent Counsel shall have been selected and not objected to,
either the Company or Indemnitee may petition a court of competent jurisdiction
(the "Court") for resolution of any objection which shall have been made by the
Company or Indemnitee to the other's selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by the Court or by
such other person as the Court shall designate, and the person with respect to
whom all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 11(a) hereof. Upon the due commencement of any
judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing).
(c) The Company agrees to pay the reasonable fees and expenses of the Independent Counsel selected as provided in this Section 11 and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
12. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) If the person, persons or entity empowered or selected under
Section 11 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty (60) days after
receipt by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent a prohibition of such
indemnification under applicable law; provided, however, that such 60-day period
shall be extended for a reasonable time, not to exceed an additional thirty (30)
days, if the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of this Section
12(b) shall not apply (i) if the determination of entitlement to indemnification
is to be made by the stockholders pursuant to Section 11(a) of this Agreement
and if (A) within fifteen (15) days after receipt by the Company of the request
for such determination the Board has resolved to submit such determination to
the stockholders for their consideration at an annual meeting thereof to be held
within one hundred twenty (120) days after such receipt and such determination
is made thereat, or (B) a special meeting of stockholders is called within
fifteen (15) days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within one hundred five
(105) days after having been so called and such determination is made thereat,
or (ii) if the determination of entitlement to indemnification is made by
Independent Counsel pursuant to Section 11(a) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected by the Enterprise. The provisions of this Section 12(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act, of any director, trustee, partner, managing member, fiduciary, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
13. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to
Section 11 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 9 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 11(a) of this Agreement
within the time period specified in Section 12(b) of this Agreement, (iv)
payment of indemnification is not made pursuant to Section 5, 6 or 7 or the last
sentence of Section 11(a) of this Agreement within ten (10) days after receipt
by the Company of a written request therefor, or (v) payment of indemnification
pursuant to Section 3, 4 or 7 of this Agreement is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication by a court of
his or her entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his or her sole option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. The Company shall not
oppose Indemnitee's right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13, the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13, absent a prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
(e) The Company shall indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002 or other applicable law, such Expenses to Indemnitee which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement, any other agreement or provision of the Certificate of Incorporation or the Company's bylaws or under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.
14. Liability Insurance. The Company represents to Indemnitee that it
presently has in place certain directors' and officers' liability insurance
policies covering the directors and officers of the Company and any other
Enterprise for losses from wrongful acts. Subject only to the provisions of this
Section 14, the Company agrees that for the duration of Indemnitee's service as
a director and/or officer of the Company and/or any other Enterprise, and
thereafter for so long as Indemnitee shall be subject to any pending or possible
Proceeding, the Company shall use commercially reasonable efforts (taking into
account the scope and amount of coverage available relative to the cost thereof)
to cause to be maintained in effect one or more policies of directors' and
officers' liability insurance with reputable insurers providing coverage for
directors and/or officers of the Company and any other Enterprise that is at
least substantially comparable in scope and amount to that provided by the
Company's current policies of directors' and officers' liability insurance.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain such insurance if the Company determines in good faith that such
insurance is not reasonably available, that the premium costs for such insurance
are disproportionate to the amount of coverage provided, that the coverage
provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or that Indemnitee is covered by similar insurance
maintained by a subsidiary or parent of the Company. The Company shall promptly
notify Indemnitee of any good faith determination not to provide such coverage.
15. Non-Exclusivity; Survival of Rights; Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Company's bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate
of Incorporation, the Company's bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managing members, fiduciaries, employees or agents of the Company or of any other Enterprise which such person serves at the request of the Company, Indemnitee shall be an insured under such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, trustee, partner, managing member, fiduciary, employee or agent under such policy or policies. The Company may, but will not be required to, create a trust fund, grant a security interest or use other means, including, without limitation, a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy the obligations to indemnify and advance Expenses pursuant to this Agreement. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors' and officers' liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company and Indemnitee shall mutually cooperate and take all reasonable actions to cause such insurers to pay on behalf of the insureds, all amounts payable as a result of such proceeding in accordance with the terms of all applicable policies.
(c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, the Certificate of Incorporation, the Company's bylaws, contract, agreement or otherwise.
(e) The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other Enterprise.
16. Duration of Agreement, Successors and Assigns. This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after Indemnitee has ceased to occupy any positions or have any relationships described in Section 1 of this Agreement; and (b) the final termination of all actions, suits, proceedings or investigations pending or threatened during such ten (10) year period to which Indemnitee may be subject by reason of the fact that Indemnitee is or was a
director or officer of the Company or is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise which Indemnitee served at the request of the Company or by reason of anything done or not done by Indemnitee in any such capacity. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of and be enforceable by Indemnitee and his or her personal and legal representatives, heirs, executors, administrators, distributees, legatees and other successors.
17. Severability. If any provision or provisions of this Agreement or any application of any provision hereof shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. In the event that any court shall decline to reform a provision of the Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by the preceding sentence, the parties hereto shall take all actions as may be necessary or appropriate to replace the provision so held to be invalid, unenforceable or otherwise illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise illegal.
18. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of one or more Enterprises, and the Company acknowledges that Indemnitee is relying upon this Agreement in agreeing to serve and continuing to serve as a director or officer of one or more Enterprises.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the bylaws of the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.
(c) The indemnification and advancement of Expenses provided by or granted pursuant to this Agreement shall apply to Indemnitee's service as a (i) director or officer of the Company prior to the date of this Agreement and (ii) director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise which Indemnitee served at the request of the Company prior to the date of this Agreement.
19. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
20. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise.
21. Notices. Any notices, requests, demands or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission (but only if followed by transmittal by national overnight courier or hand for delivery on the next business day) or on receipt after dispatch by registered or certified mail, postage prepaid, addressed, or on the next business day if transmitted by national overnight courier, in each case as follows: (i) if to the Company, to Delek US Holdings, Inc., 830 Crescent Centre Drive, Suite 300, Franklin, Tennessee 37067, Attention: General Counsel (or Attention: Chief Executive Officer if the General Counsel is the Indemnitee), or to such other address as shall be furnished in writing to Indemnitee by the Company; and (ii) if to Indemnitee, to such address as set forth below Indemnitee's name on the signature page to this Agreement, or to such other addresses as shall be furnished in writing by Indemnitee to the Company.
22. Contribution. To the fullest extent permissible by applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
23. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 13 of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the "Delaware Court"), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the
Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
24. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
25. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.
DELEK US HOLDINGS, INC.
Title:
Title:
INDEMNITEE
Address:
EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made as of the 17th day of April, 2006, by and among Delek US Holdings, Inc., a Delaware corporation (the "COMPANY"), and Delek Group Ltd., an Israeli corporation ("DELEK GROUP").
RECITALS
WHEREAS, upon completion of an initial public offering of shares of common stock, par value $0.01 per share ("COMMON STOCK"), of the Company (the "INITIAL PUBLIC OFFERING"), the Company will cease to be an indirect wholly-owned subsidiary of Delek Group; and
WHEREAS, in connection with the Initial Public Offering, the Company desires to grant to Delek Group registration rights with respect to Delek Group's ownership (directly or through its Affiliates (as defined below)), of Common Stock, upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth in this Agreement, and intending to be legally bound, the parties agree as follows:
SECTION 1. REGISTRATION RIGHTS.
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the meanings set forth below:
(a) "AFFILIATE" means, with respect to any specified Person, (i) any other Person that owns (directly or indirectly), individually or as part of a group (as determined pursuant to Rule 13d-5 under the Exchange Act) greater than fifty percent (50%) of the voting stock or other capital interest of such specified Person, (ii) any other Person of whom greater than fifty percent (50%) of the voting stock or other capital interest is owned by (directly or indirectly), individually or as part of a group (as determined pursuant to Rule 13d-5 under the Exchange Act) by such specified Person, and (iii) any other Person directly or indirectly controlling, controlled by or under common control with such specified Person.
(b) "COMMISSION" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
(c) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any similar successor federal statute, and the rules and regulations thereunder, all as the same shall be in effect from time to time.
(d) "HOLDERS" means Delek Group (including any Affiliate of Delek Group that is the record holder of shares of Common Stock) and any permitted assignee of Delek Group's rights under this Agreement.
(e) "REGISTER," "REGISTERED" and "REGISTRATION" mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.
(f) "PERSON" means an individual, corporation, limited liability company, general or limited partnership, association, trust, unincorporated organization, other entity or group.
(g) "REGISTRABLE SECURITIES" means all shares of Common Stock owned
by the Holders from time to time; provided, however, that Registrable Securities
shall not include any shares of Common Stock (i) that have been disposed of in
accordance with an effective registration statement under the Securities Act,
(ii) that have been disposed of pursuant to Rule 144, (iii) that may be freely
distributed by the Holders in a public offering or otherwise without the need
for registration of qualification of such shares of Common Stock under the
Securities Act or any similar state law then in force in light of legal
requirements or market conditions and without any restriction on the volume or
manner of sale or any other limitations under Rule 144, (iv) that have ceased to
be outstanding, or (v) which the Holders agree in writing shall not be
Registrable Securities for purposes of this Agreement.
(h) "REGISTRATION EXPENSES" means all expenses incurred in effecting any registration pursuant to this Agreement, including, without limitation, all registration and qualification fees, printing expenses, filing fees, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, expenses of any regular or special audits incident to or required by any such registration and reasonable fees and disbursements of a single special counsel for the Holders selected by the Holders of a majority of the Registrable Securities to be so offered for sale and reasonably acceptable to the Company, and the compensation of regular employees of the Company, but shall not include Selling Expenses.
(i) "RULE 144" means Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.
(j) "RULE 145" means Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.
(k) "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.
(l) "SELLING EXPENSES" means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities.
(m) "SELLING HOLDER" means a Holder proposing to sell or distribute, or selling or distributing, Registrable Securities pursuant to this Agreement.
1.2 DEMAND REGISTRATION ON FORM S-3.
(a) If the Company is eligible for the use of Form S-3, the Holders shall collectively have, in addition to the rights set forth in Section 1.3, the right to request up to three registrations on Form S-3. Such requests shall be in writing and shall state the number of Registrable Securities to be disposed of and the intended methods of disposition of such Registrable Securities by the requesting Holder or Holders. In connection with any such request, the Company shall, subject to Section 1.2(b):
(i) promptly give written notice of the proposed registration to all other Holders; and
(ii) use its reasonable best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act and the Exchange Act) as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after such written notice from the Company is mailed or delivered.
(b) The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 1.2:
(i) if the Selling Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) on Form S-3 at an aggregate price to the public, net of expected Selling Expenses, of less than Ten Million Dollars ($10,000,000); or
(ii) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act.
(c) Subject to Section 1.2(b), the Company shall use its reasonable
best efforts to effect such a registration of the Registrable Securities so
requested as soon as practicable but in any event within one hundred twenty
(120) days after receipt of the request or requests of the Selling Holders
pursuant to Section 1.2(a); provided, however, that if (i) in the good faith
judgment of the Board of Directors of the Company, such registration would be
materially disadvantageous to the Company and the Board of Directors of the
Company concludes, as a result, that it is essential to defer the filing or
effectiveness of such registration statement at such time, and (ii) the Company
furnishes to such Holders a certificate signed by the Chief Executive Officer of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be materially disadvantageous to the Company for such
registration statement to be filed or become effective in the near future and
that it is, therefore, essential to defer the filing or effectiveness of such
registration statement, then the Company shall have the right to defer such
filing or effectiveness, upon furnishing such certificate, for a period of not
more than one hundred twenty (120) days; provided further, that the Company
shall not defer its obligation in this manner more than once in any rolling
twelve (12) month period.
(d) Any registration statement filed pursuant to this Section 1.2 may, subject to the provisions of Sections 1.2(e), 1.8 and 1.11 hereof, include other securities of the Company with respect to which registration rights have been granted and may include securities of the Company being sold for the account of the Company.
(e) If the Selling Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 1.2
and the Company shall include such information in the written notice referred to
in Section 1.2(a)(i). In such event the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Selling Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters of recognized national standing selected
for such underwriting by the Company (which underwriter or underwriters shall be
reasonably acceptable to a majority in interest of the Selling Holders).
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Company that marketing factors require a limitation of the number of
securities underwritten (including Registrable Securities), then the Company
shall so advise all Selling Holders of Registrable Securities that would
otherwise be underwritten pursuant hereto, and the Company shall include in such
registration (i) first, any shares to be sold by the Company, (ii) second, the
shares of Registrable Securities of the Selling Holders participating in the
requested registration, allocated pro rata among such Selling Holders in
proportion to the number of shares of Registrable Securities owned by them or
allocated among such Selling Holders as they may agree and advise the Company in
writing, and (iii) third, any shares to be sold by any other stockholder
exercising piggyback registration rights with respect to such shares. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration. To the extent that Registrable Securities
requested to be registered pursuant to this Section 1.2 are excluded from such
registration, then the Holders shall have the right to one additional request
for registration pursuant to Section 1.2(a), provided that the failure of such
Registrable Securities to be registered is through no fault of such Holders;
provided, however, that if, prior to a request for registration pursuant to
Section 1.2(a), an assignment pursuant to Section 1.10(b) of one or more of the
three demand registration rights granted pursuant to Section 1.2(a) has occurred
(a "DEMAND ASSIGNMENT"), the Holder that initiated the request to register
Registrable Securities that was excluded or withdrawn from the underwriting, and
not the other Holders, shall have the right to one additional request for
registration.
(f) The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 1.2 during the period starting with the date thirty (30) days prior to the Company's good faith estimate of the filing of, and ending on a date one hundred eighty (180) days after the effective date of, a registration statement initiated by the Company (other than a registration statement relating solely to employee benefit plans on Form S-3 or Form S-8 or similar forms that may be promulgated in the future, or a registration statement relating solely to a transaction pursuant to Rule 145 on Form S-4 or similar forms that may be promulgated in the future); provided, however, that the Company is actively employing in good faith its reasonable best efforts to cause such registration statement to become effective.
1.3 COMPANY REGISTRATION.
(a) If the Company shall determine to register any of its securities
either for its own account or the account of a security holder or holders
exercising their respective demand registration rights (other than pursuant to
Section 1.2 hereof), other than a registration relating solely to employee
benefit plans, a registration relating to a corporate reorganization or other
transaction under Rule 145, or a registration on any registration form that does
not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) use its reasonable best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 1.3(b) below, and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Holder and received by the Company
within fourteen (14) days after the written notice from the Company described in
clause (i) above is deemed to be given to the Holders in accordance with Section
2.5. Such written request may specify all or a part of a Holder's Registrable
Securities.
(b) In connection with any offering, other than the Initial Public
Offering, involving an underwriting of shares of the Company's capital stock,
the Company shall not be required under this Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters and, if
requested, enter into an underwriting agreement in customary form with an
underwriter or underwriters selected by the Company, and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities requested by Holders to be included
in such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering, the securities so included to be apportioned (i) first
pro rata among the Selling Holders according to the total amount of securities
requested to be included therein owned by each Selling Holder or allocated among
such Selling Holders as they may agree and advise the Company in writing, and
(ii) second, any remaining securities to any other selling stockholders
exercising registration rights with respect to such securities.
If any Person does not agree to the terms of any such underwriting or otherwise fails to comply with the provisions of this Agreement, such Person shall be excluded therefrom by written notice from the Company or the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.
(c) No Holder shall be entitled to exercise the registration rights set forth in this Section 1.3 except with respect to registrations by the Company that would occur after the
expiration of the lock-up period applicable to Delek Group in connection with the Initial Public Offering.
(d) The Company shall have the right to terminate or withdraw any registration initiated under this Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company if required under Section 1.4 below.
1.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 1.2 and 1.3 hereof shall be borne by the Company. All Selling Expenses
relating to securities so registered shall be borne by the holders of such
securities pro rata on the basis of the number of shares of securities so
registered on their behalf. Notwithstanding the foregoing, the Company shall not
be required to pay for any Registration Expenses of any registration begun
pursuant to Section 1.2 hereof if a registration demand initiated by the Holders
under Section 1.2(a) is subsequently withdrawn at the request of Selling Holders
of a majority of the Registrable Securities to be so registered (in which case
all participating Selling Holders shall bear such expenses pro rata based upon
the number of Registrable Securities that were to be registered in the withdrawn
registration statement and such withdrawn registration shall not constitute the
use by the Holders of a requested registration under Section 1.2); provided,
however, (a) that if at the time of such withdrawal the Seller Holders have
learned of a material adverse change in the condition, business or prospects of
the Company from that known to the Holders at the time of their request and they
have withdrawn the request with reasonable promptness following the Selling
Holders having learned of such material adverse change, then the Selling Holders
shall not be required to pay any of such Registration Expenses and such
withdrawn registration shall not constitute the use by the Holders of a demand
registration under Section 1.2; provided, however, that if, prior to a request
for registration pursuant to Section 1.2(a), a Demand Assignment has occurred,
the Holder that initiated the request to register Registrable Securities in the
withdrawn registration, and not the other Holders, shall have the right to one
additional request for registration; or (b) the Selling Holders agree (or, if a
Demand Assignment has occurred prior to a request for registration pursuant to
Section 1.2(a), the Holder that initiated the request to register Registrable
Securities in the withdrawn registration agrees) in writing to forego one demand
right pursuant to Section 1.2, then the Selling Holders shall not be required to
pay any of the Registration Expenses.
1.5 REGISTRATION PROCEDURES. In the case of each registration effected by the Company pursuant to Section 1.2 or 1.3, the Company will keep each Selling Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will use its reasonable best efforts to:
(a) prepare and file with the Commission a registration statement with respect to such shares and use its reasonable best efforts to cause such registration statement to become effective as soon as reasonably practicable thereafter (provided that before filing a registration statement or any amendments or supplements thereto, the Company shall furnish counsel for the Selling Holders with copies of all such documents proposed to be filed) and to cause such registration statement to comply as to form and content in all material respects with the Commission's forms, rules and regulations;
(b) keep such registration effective for a period of one hundred eighty (180) days in the case of a registration pursuant to Section 1.2 hereof, for a period of one hundred twenty (120) days in the case of a registration pursuant to Section 1.3 hereof, or until the Selling Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs;
(c) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;
(d) furnish such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Selling Holder from time to time may reasonably request;
(e) use all reasonable efforts to register or qualify such shares under such other securities or blue sky laws of such jurisdictions as such Selling Holder requests (and to maintain such registrations and qualifications effective for the applicable period of time set forth in Section 1.5(b) hereof), and to do any and all other acts and things which may be reasonably necessary or advisable to enable such Selling Holder to consummate the disposition in such jurisdictions of such shares; provided that, notwithstanding anything to the contrary in this Agreement with respect to the bearing of expenses, if any such jurisdiction shall require that expenses incurred in connection with the qualification of such shares in that jurisdiction be borne in part or full by such Selling Holder, then such Selling Holder shall pay such expenses to the extent required by such jurisdiction;
(f) notify each seller of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the occurrence of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing;
(g) use its reasonable best efforts to cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;
(h) provide a CUSIP number for all such Registrable Securities not later than the effective date of such registration;
(i) provide the transfer agent for the Common Stock with certificates for the Registrable Securities that are in a form eligible for deposit with The Depository Trust Company
(or, if the Registrable Securities are not in book-entry form, reasonably cooperate with each Selling Holder to facilitate timely preparation and delivery of certificates representing Registrable Securities sold pursuant to the effective registration statement and not bearing any restrictive legends (unless required by applicable law));
(j) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and to assist in any filings required to be made with the National Association of Securities Dealers by any underwriter in connection with any underwritten offering pursuant to a registration statement filed pursuant to Section 1.2 or 1.3 hereof;
(k) make available for reasonable inspection upon prior written notice by such Holder, by any underwriter participating in any distribution pursuant to such registration statement, and by any attorney, accountant or other agent bound by a confidentiality arrangement retained by such Holder or by any such underwriter, all financial and other records, pertinent corporate documents, and properties of the Company (other than confidential intellectual property or other property or information that is subject to legal confidentiality obligations);
(l) in connection with any underwritten offering pursuant to a registration statement filed pursuant to Sections 1.2 or 1.3 hereof, will enter into an underwriting agreement in usual and customary form reasonably necessary to effect the offer and sale of Registrable Securities; provided such underwriting agreement contains customary underwriting provisions and provided further that if the underwriter so requests the underwriting agreement will contain customary contribution provisions; and
(m) furnish, at the request of a majority of the Selling Holders participating in the registration, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to the underwriters in an underwritten public offering addressed to the underwriters and (ii) a letter dated as of such date from the Company's independent registered public accounting firm, in form and substance as is customarily given by independent registered public accounting firms to underwriters in an underwritten public offering addressed to the underwriters.
1.6 INDEMNIFICATION.
(a) The Company will indemnify each Selling Holder, each of such Selling Holder's Affiliates, officers, directors, managers, members, partners, legal counsel, accountants and representatives and each person controlling such Selling Holder within the meaning of Section 15 of the Securities Act with respect to which registration, qualification or compliance has been effected pursuant to this Section 1, and each underwriter, if any, and each person who controls within the meaning of Section 15 of the Securities Act any underwriter, against all claims, actions, losses, damages, and liabilities (joint or several) (or actions, proceedings or settlements in respect thereof) arising out of or based on any of the following statements, omissions or violations (each, a "VIOLATION"): (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, any offering circular or other related registration
statement or notification incident to any such registration, and any "free
writing prospectus" (as defined in Rule 405 under the Securities Act) prepared
by the Company, on behalf of the Company with its knowledge and consent, or used
or referred to by the Company in connection with any underwritten offering
pursuant to a registration statement filed under Section 1.2 or 1.3, or any
"road show" (as defined in Rule 433 under the Securities Act) not constituting a
"free writing prospectus" in connection with any underwritten public offering
pursuant to a registration statement filed under Section 1.2 or 1.3, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities laws or any rule or regulation thereunder
applicable to the Company in connection with any such registration,
qualification, or compliance with respect to any Registrable Securities, and
will reimburse each such Selling Holder, each of its Affiliates, officers,
directors, managers, members, partners, legal counsel, and accountants and each
person controlling such Holder, each such underwriter, and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred (and as incurred) in connection with investigating and defending or
settling any such claim, action, loss, damage, liability, or action; provided
that the Company will not be liable in any such case to the extent that any such
claim, action, loss, damage, liability, or expense arises out of or is based on:
(i) a Violation by the Company in reliance upon and in conformity with any
untrue statement or omission set forth in written information furnished to the
Company by such Holder or underwriter and stated to be specifically for use
therein, unless such Holder (or underwriter as the case may be) timely provided
to the Company additional information to correct the previously inaccurate or
incomplete information, or (ii) such Holders' failure, if required, to deliver a
copy of the registration statement or prospectus or any amendment or supplements
thereto after the Company has furnished such Holder with a sufficient number of
copies of the same. It is agreed that the indemnity agreement contained in this
Section 1.6(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld or
delayed).
(b) Each Selling Holder will, if Registrable Securities held by such Selling Holder are included in the securities as to which such registration, qualification, or compliance is being effected, indemnify, severally and not jointly, the Company, its Affiliates, each of its directors, officers, legal counsel, accountants and representatives and each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Selling Holder, and each of their Affiliates, officers, directors, managers, members, partners, legal counsel, accountants and representatives and each person controlling such Selling Holder or other stockholder, against all claims, actions, losses, damages and liabilities (joint or several) (or actions, proceedings or settlements in respect thereof) arising out of or based on any Violation, and will reimburse the Company and such Selling Holders, other stockholders, Affiliates, directors, officers, managers, members, partners, legal counsel, accountants, representatives, underwriters, or control persons for any legal or any other expenses reasonably incurred (as incurred) in connection with investigating and defending or settling any such claim, action, loss, damage, liability, or action, in each case to the extent but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission is made in such registration statement, prospectus, offering circular, "free writing prospectus," "road show" not constituting a "free writing prospectus" or other document in reliance upon and in conformity with written information furnished to the Company by such Selling Holder and stated to be specifically for use therein; provided, however, that the obligations of such Selling Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Selling Holder (which consent shall not be unreasonably withheld or delayed); provided further that in no event shall any indemnity under this Section 1.6(b) exceed the net proceeds from the offering received by such Selling Holder.
(c) Each party entitled to indemnification under this Section 1.6 (the "INDEMNIFIED PARTY") shall give written notice to the party required to provide indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld or delayed), and the Indemnified Party may participate in such defense at such party's expense, except that such participation by an Indemnified Party shall be at the expense of the Indemnifying Party if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests, as reasonably determined by either party, between such Indemnified Party and any other party represented by such counsel in such proceeding; provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 1, to the extent such failure is not prejudicial. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of an unconditional release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, action, damage, or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, action, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, action, damage, or expense as well as any other relevant equitable considerations; provided that in no event shall any contribution obligation of a Selling Holder hereunder exceed the net proceeds from the offering received by such Selling Holder. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied
by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
1.7 INFORMATION BY HOLDER. Each Selling Holder of Registrable Securities shall furnish to the Company such information regarding such Selling Holder and the distribution proposed by such Selling Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification, or compliance referred to in this Section 1.
1.8 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the date
of this Agreement, the Company shall not, without the prior written consent of
Holders holding a majority of the Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
that would allow such holder or prospective holder to (a) include such
securities in any registration filed under this Section 1, unless under the
terms of such agreement, (i) such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of the Registrable Securities of the
Holders which are included, or (ii) such registration rights are otherwise
expressly subordinate to the registration rights granted under this Agreement or
(b) make a demand registration which could result in such registration statement
being declared effective the earlier of either the date upon which the Company's
first becomes eligible to use Form S-3 or within one hundred twenty (120) days
following the effective date of a registration statement effected pursuant to
Section 1.2.
1.9 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, the Company agrees to:
(a) make and keep public information regarding the Company available as those terms are understood and defined in Rule 144, at all times from and after the effective date of the registration statement relating to the Initial Public Offering;
(b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; and
(c) so long as a Holder owns any Registrable Securities, furnish to the Holder forthwith upon written request a written statement as to the Company's compliance with the reporting requirements of Rule 144 (at any time from and after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents so filed and information as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.
1.10 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register securities granted to a Holder by the Company under this
Section 1 may be transferred or assigned by such Holder:
(a) to a transferee or assignee who is an Affiliate of the Holder; or
(b) to a transferee or assignee who is not an Affiliate of the Holder, provided that such transfer represents no less than 15% of the Common Stock owned by Delek Group (directly or through its Affiliates) as of the date of closing of the Initial Public Offering;
provided, in either case, that (i) the Company is given written notice as soon as practicable, and in any case within fifteen (15) days, after such assignment or transfer, stating the name and address of the transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned, and, in the case of a Demand Assignment, specifying the number of demand registration rights, if any, that were so transferred or assigned and the number of unused demand registration rights retained by such Holder, and (ii) the transferee or assignee of such rights assumes in writing the obligations of such Holder under this Agreement.
1.11 TERMINATION OF REGISTRATION RIGHTS. The rights to request registration of any Company securities pursuant to Sections 1.2 and 1.3 shall terminate as to any Holder upon the earliest of: (a) when all of the Registrable Securities may be sold in a single transaction during a single three (3) month period under Rule 144; and (b) when a Holder's Registrable Securities may be transferred under Rule 144(k) unless such Holder later becomes an affiliate of the Company (as defined in Rule 144) in which case such Holder's rights to request registration shall be revived until such Holder's rights otherwise terminate under this Section 1.11.
1.12 CHANGES IN COMMON STOCK. If there is any change in the Common Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Common Stock as so changed.
1.13 LOCK-UP ARRANGEMENTS. In consideration of the covenants and agreements of the Company contained herein, each Holder agrees that, in connection with any offering by the Company of its securities, whether for the account of the Company, any Holder, or any other holder of securities of the Company, such Holder shall, with respect to any Registrable Securities then held by such Holder which is not included in such offering, execute a customary "lock-up" agreement reasonably requested by the Company or, if such offering is an underwritten offering, by the underwriters in such offering; provided, however, that any such "lock-up" period shall not exceed 180 days (plus any conditional extension period customary in such "lock-up" agreements) after the initial sale of securities in such offering.
1.14 COMPLIANCE WITH APPLICABLE LAW. Each Holder covenants that, in disposing of such Holder's shares of Common Stock, such Holder will comply with Regulation M and Rule 10b-5 (or any successor provisions) under the Exchange Act and all other requirements of applicable law.
SECTION 2. MISCELLANEOUS.
2.1 EFFECTIVENESS. This Agreement shall become effective on the date on which the purchase and sale of shares of Common Stock pursuant to the Initial Public Offering first occurs.
2.2 GOVERNING LAW. This Agreement shall be governed in all respects by the laws of the State of Delaware without regard to conflicts of laws principles.
2.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the parties hereto.
2.4 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof, and any previous agreement between the parties relative to the specific subject matter hereof is superseded by this Agreement. Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the parties hereto.
2.5 NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by facsimile, delivered by an internationally recognized overnight courier or delivered by hand, addressed as follows:
(a) if to the Company:
Delek US Holdings, Inc. 830 Crescent Centre Drive, Suite 300 Franklin, Tennessee 37067 Facsimile: (615) 224-1185 Attention: General Counsel
with a copy to (which shall not constitute notice):
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Facsimile: (212) 318-3400 Attention: Mara H. Rogers, Esq.
(b) if to Delek Group:
Delek Group Ltd.
7 Giborei Israel Street
P.O. Box 8464
Industrial Zone South, Natanya 42504
Israel
Facsimile: 011 (972) 9-885-4955
Attention: President
with a copy to (which shall not constitute notice):
Delek Group Ltd.
7 Giborei Israel Street
P.O. Box 8464
Industrial Zone South, Natanya 42504
Israel
Facsimile: 011 (972) 9-885-4955
Attention: General Counsel
(c) if to any Holder other than Delek Group, to the address of such Holder furnished to the Company in writing from time to time.
All such notices and other written communications shall be effective at the time of confirmed facsimile transmission, the next business day after the date of delivery to a representative of an internationally recognized overnight courier or the date of delivery in the case of by hand delivery, as the case may be.
2.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach or default of the Company under this Agreement shall impair any such right, power or remedy of any Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default therefore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement or any waiver on the part of any Holder of any provisions or conditions of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to the Holders, shall be cumulative and not alternative.
2.7 SEVERABILITY. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
2.8 TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing or interpreting this Agreement.
2.9 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Agreement may be executed by facsimile signatures.
2.10 FURTHER ASSURANCES. The parties agree, from time to time and without further consideration, to execute and deliver such further documents and take such further actions as reasonably may be required to implement and effectuate the transactions contemplated in this Agreement.
2.11 NO THIRD-PARTY BENEFICIARIES. Other than as provided for herein, this Agreement is intended to inure to the benefit of the Company and the Holders, and no other Person shall have any rights, express or implied, by reason of this Agreement.
[signature page follows]
IN WITNESS WHEREOF, the Company and Delek Group have executed this Agreement on the date first above written.
DELEK US HOLDINGS, INC.
By: /s/ Ezra Uzi Yemin ------------------------------------ Name: Ezra Uzi Yemin Title: President and Chief Executive Officer By: /s/ Tony McLarty ------------------------------------ Name: Tony McLarty Title: VP of Human Resources |
DELEK GROUP LTD.
By: /s/ Ronel Ben-Dov -------------------------------- Name: Ronel Ben-Dov Title: VP and CFO By: /s/ Asaf Bartfeld --------------------------------- Name: Asaf Bartfeld Title: CEO |
EXHIBIT 10.7(d)
EXECUTION COPY
FOURTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
FOURTH AMENDMENT, dated as of April 18, 2006 (this "Amendment") to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 28, 2005 (as amended by the First Amendment, dated as of August 18, 2005, the Second Amendment, dated as of October 11, 2005, the Third Amendment, dated as of December 15, 2005, and as further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among MAPCO EXPRESS, INC., a Delaware corporation (the "Borrower"), the several banks and other financial institutions or entities from time to time parties to the Credit Agreement (the "Lenders"), LEHMAN BROTHERS INC., as advisor, sole lead arranger and sole bookrunner (in such capacity, the "Arranger"), SUNTRUST BANK, as syndication agent (in such capacity, the "Syndication Agent"), BANK LEUMI USA, as co-administrative agent (in such capacity, the "Co-Administrative Agent"), and LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make certain amendments to Credit Agreement, as in effect prior to the Fourth Amendment Effective Date (the "Existing Credit Agreement");
WHEREAS, the Lenders have agreed to make such amendments solely upon the terms and conditions provided for in this Amendment;
NOW, THEREFORE, in consideration of the premises herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise noted herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.
2. Amendment to Section 1.1 of the Credit Agreement. (a)
Section 1.1 of the Credit Agreement is hereby amended by deleting the
definitions of "Consolidated Fixed Charge Coverage Ratio" and "L/C Commitment"
in their entireties and substituting in lieu thereof the following in their
respective appropriate alphabetical order:
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio of (a) (x) Consolidated EBITDA of the Borrower and its Subsidiaries for such period minus (y) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such period on account of Capital Expenditures plus (z) the proceeds of any Holdings' Equity Contribution made during such period, including any such contributions made within thirty (30) days after the end of such period that are used by the Borrower and its Subsidiaries for Capital Expenditures made during such period, in
an aggregate amount not exceeding the amount of Capital Expenditures described in clause (y) above, to (b) Consolidated Fixed Charges for such period.
"L/C Commitment": $25,000,000.
(b) Section 1.1 of the Credit Agreement is hereby further amended by adding the following new definition in its appropriate alphabetical order:
"Holdings' Equity Contribution": any cash equity contribution to the Borrower made by Holdings.
3. Amendment to Section 7.7 of the Credit Agreement. Section 7.7 of the Credit Agreement is hereby amended by deleting Section 7.7(a) in its entirety and substituting in lieu thereof the following:
"(a) during any fiscal year of the Borrower, Capital Expenditures of the Borrower and its Subsidiaries in an aggregate amount not in excess of the amount set forth opposite such fiscal year below:
Fiscal Year Capital Expenditure ----------- ------------------- 2005 $12,000,000 2006 $33,000,000 2007 $40,000,000 2008 $40,000,000 2009 and thereafter $12,000,000 |
provided, that (i) up to 50% of any amount set forth above, if not
expended in the fiscal year for which it is permitted, may be
carried over for expenditure in the next succeeding fiscal year and
(ii) Capital Expenditures made pursuant to this clause (a) during
any fiscal year shall be deemed made, first, in respect of amounts
permitted for such fiscal year as provided above and second, in
respect of amounts carried over from the prior fiscal year pursuant
to subclause (i) above; and"
4. Conditions to Effectiveness. This Amendment shall become effective upon the date (the "Fourth Amendment Effective Date") on which the following conditions have been satisfied:
(a) Amendment. The Administrative Agent shall have received this Amendment, executed and delivered by a duly authorized officer of the Borrower.
(b) Acknowledgment and Consent. The Administrative Agent shall have received an Acknowledgment and Consent, substantially in the form of Exhibit A hereto, duly executed and delivered by each Guarantor.
(c) Lender Consent Letter. A Lender Consent Letter, substantially in the form of Exhibit B (a "Lender Consent Letter"), duly executed and delivered by the Required Lenders (as defined in the Existing Credit Agreement).
(d) Fees, etc. The Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented supported by customary documentation (including reasonable fees, disbursements and other charges of counsel to the Administrative Agent), on or before the Fourth Amendment Effective Date.
5. Representations and Warranties. The Borrowers hereby represent and warrant to the Administrative Agent and each Lender that (before and after giving effect to this Amendment):
(a) Each Loan Party has the corporate power and authority, and
the legal right, to make, deliver and perform this Amendment and the
Acknowledgment and Consent (the "Amendment Documents") to which it is a
party and, in the case of the Borrower, to borrow under the Credit
Agreement as amended hereby. Each Loan Party has taken all necessary
corporate or other action to authorize the execution, delivery and
performance of the Amendment Documents to which it is a party and, in
the case of the Borrower, to authorize the borrowings on the terms and
conditions of the Credit Agreement as amended by this Amendment (the
"Amended Credit Agreement"). No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the
Amendment Documents, the borrowings under the Amended Credit Agreement
or the execution, delivery, performance, validity or enforceability of
this Amendment or the Acknowledgment and Consent, except (i) consents,
authorizations, filings and notices which have been obtained or made
and are in full force and effect and (ii) the filings referred to in
Section 4.19 of the Credit Agreement. Each Amendment Document has been
duly executed and delivered on behalf of each Loan Party that is a
party thereto. Each Amendment Document and the Amended Credit Agreement
constitutes a legal, valid and binding obligation of each Loan Party
that is a party thereto, enforceable against each such Loan Party in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
(b) The execution, delivery and performance of the Amendment Documents, the borrowings under the Amended Credit Agreement, and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of the Borrower or any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents).
(c) Each of the representations and warranties made by any Loan Party herein or in or pursuant to the Loan Documents is true and correct in all material respects on and as of the Fourth Amendment Effective Date as if made on and as of such date (except that any representation or warranty which by its terms is made as of an earlier date shall be true and correct in all material respects as of such earlier date).
(d) The Borrower and the other Loan Parties have performed in all material respects all agreements and satisfied all conditions which this Amendment and the other Loan Documents provide shall be performed or satisfied by the Borrower or the other Loan Parties on or before the Fourth Amendment Effective Date.
(e) After giving effect to this Amendment, no Default or Event of Default has occurred and is continuing, or will result from the consummation of the transactions contemplated by this Amendment.
6. Payment of Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and expenses incurred in connection with this Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.
7. Limited Effect. Except as expressly provided hereby, all of the terms and provisions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect. The amendments contained herein shall not be construed as an amendment or waiver of any other provision of the Credit Agreement or the other Loan Documents or for any purpose except as expressly set forth herein or a consent to any further or future action on the part of the Borrower that would require the waiver or consent of the Administrative Agent or the Lenders.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9. Miscellaneous. (a) This Amendment may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment and the Lender Consent Letters signed by all the parties shall be lodged with the Borrower and the Administrative Agent. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof.
(b) The execution and delivery of the Lender Consent Letter by any Lender shall be binding upon each of its successors and assigns (including assignees of its Loans in whole or in part prior to effectiveness hereof).
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written.
MAPCO EXPRESS, INC.
By: /s/ Ed Morgan ------------------------------------ Name: Ed Morgan Title: CFO By: /s/ John Colling, Jr. ------------------------------------ Name: John Colling, Jr. Title: Treasurer |
[Signature Page to Fourth Amendment]
LEHMAN COMMERCIAL PAPER INC., as
Administrative Agent
By: /s/ Ritam Bhalla ------------------------------------ Name: Ritam Bhalla Title: Authorized Signatory |
[Signature Page to Fourth Amendment]
[***] TEXT OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND 17 C.F.R. SECTION 200.80(b)(4)
Exhibit 10.11(e)
MODIFICATION AND EXTENSION OF PIPELINE CAPACITY LEASE AGREEMENT
WHEREAS, LaGloria Oil & Gas Company ("LaGloria") and Plains Marketing, L.P. ("Plains") as successor to Scurlock Permian LLC executed that certain Pipeline Capacity Lease Agreement ("Lease") dated April 12, 1999, for an initial term of five (5) years commencing January 1, 2004 through December 31, 2004, a copy of which is attached hereto and incorporated herein in its entirety; and
WHEREAS, Delek Refining, Ltd. as successor in interest to LaGloria Oil & Gas Company and Plains Marketing, L.P. executed that certain One-Year Renewal of Pipeline Capacity Lease Agreement attached hereto and incorporated herein in its entirety renewing the Lease for one (1) additional lease year commencing on January 1, 2005 through December 31, 2005; and
WHEREAS, Plains Marketing, L.P. and Delek Refining, Ltd., hereinafter referred to as "Parties", executed an Amendment to the One-Year Renewal of Pipeline Capacity Lease Agreement changing the Monthly Rental payable by Delek Refining, Ltd. to Plains Marketing, L.P. in Section 4 from September 1, 2005 through December 31, 2005; and
WHEREAS, the One (1) year renewal of the Pipeline Capacity Lease Agreement was subsequently extended through April 30, 2006 by an Extension of Pipeline Capacity Lease Agreement ("Agreement") attached hereto and incorporated herein; and
WHEREAS, the Parties desire to again amend the rental provisions of
Section 4 and extend the Agreement for three (3) years and provide for
renegotiation of this Agreement in the event of extraordinary increases in
maintenance and operating costs (See "Renegotiation Criteria" paragraph below)
by Plains Marketing, L.P.;
NOW, THEREFORE, in consideration of the mutual benefits of the Parties hereto, by execution below Plains Marketing, L.P. and Delek Refining, Ltd. modify the Lease as follows:
The term of the Lease is hereby extended for an additional three (3) year term beginning May 1, 2006, and ending April 30, 2009.
For the first year of this Agreement commencing May 1, 2006 through April 30, 2007 the rental will be as follows:
For each calendar month in which the average deliveries is 27,000 barrels per day of crude oil or less, the monthly rental shall be calculated as follows:
Monthly Rental = Days in the month x the actual volume delivered up to and including 27,000 barrels per day x $[***] per barrel.
For the period commencing May 1, 2007 through April 30, 2008 the rental shall be calculated as follows:
[***] CONFIDENTIAL TREATMENT REQUESTED
Monthly Rental = Days in the month x the actual volume delivered up to and including 27,000 barrels per day x $[***] per barrel.
For the period commencing May 1, 2008 through April 30, 2009 the rental shall be calculated as follows:
Monthly Rental = Days in the month x the actual volume delivered up to and including 27,000 barrels per day x $[***] per barrel.
For each calendar month during the period May 1, 2006 through April 30, 2009 in which the average daily deliveries of crude oil exceeds 27,000 per day, the monthly rental on the barrels in excess of 27,000 barrels per day shall be calculated as follows:
Monthly Rental = Volume in excess of the 27,000 barrels per day x $[***] per barrel.
RENEGOTIATION CRITERIA
The above rental schedule includes normal operation and maintenance performed by Plains Marketing, L.P. including routine leak repair, cleanup, right of way issues and elective pipe replacement. However, if major repairs or an integrity upgrade are required due to regulatory compliance or significant pipe integrity loss between May 1, 2006 and April 30, 2009, the Parties shall negotiate an agreement to pay for such additional costs over and above the aforementioned rental schedule. In such event, Plains Marketing, L.P. will present to Delek Refining, Ltd. in writing the anticipated extraordinary costs and a proposed method of cost recovery. The Parties agree to negotiate in good faith and in a timely manner to resolve the method and period of cost recovery.
This Modification and Extension of Pipeline Capacity Agreement is executed in duplicate each of which is deemed an original for all purposes on the dates set forth below but effective May 1, 2006.
Plains Marketing, L.P. Delek Refining, Ltd. By Plains Marketing GP Inc. By Its General Partner Its General Partner Delek U.S. Refining GP, LLC By: /s/ George R. Coiner By: /s/ Tony McLarty ----------------------------- -------------------------------- Name: George R. Coiner Name: Tony McLarty ----------------------------- -------------------------------- Title: Senior Group Vice President Title: VP of Human Resources ----------------------------- -------------------------------- Date: April 6, 2006 Date: 3/29/06 ----------------------------- -------------------------------- By: /s/ Frederec Green -------------------------------- Name: Frederec Green -------------------------------- Title: COO -------------------------------- |
[***] CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.13
DELEK US HOLDINGS, INC.
2006 LONG-TERM INCENTIVE PLAN
1. Purpose. The purpose of the Delek US Holdings, Inc. 2006 Long-Term
Incentive Plan (the "Plan") is to establish a flexible vehicle through which
Delek US Holdings, Inc., a Delaware corporation (the "Company"), can attract,
motivate, reward and retain key personnel of the Company and its affiliates
through the grant of equity-based and/or cash incentive awards ("Awards").
Awards under the Plan may be in the form of: (a) options ("Options") to purchase
shares of the Company's common stock, $0.01 par value ("Common Stock") granted
pursuant to Section 5(b), including Options intended to qualify as "incentive
stock options" ("ISOs") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and Options which do not qualify as ISOs, (b)
stock appreciation rights ("SARs") granted pursuant to Section 5(c), (c)
restricted shares of Common Stock ("Restricted Stock") granted pursuant to
Section 5(d), (d) restricted stock units ("Restricted Stock Units") granted
pursuant to Section 5(e), and/or (e) other stock-based awards ("Other
Stock-Based Awards") or cash incentive awards ("Cash Incentive Awards") granted
pursuant to Section 5(f).
2. Eligibility. Awards under the Plan may be made to such directors, officers, employees, consultants and other individuals (including, advisory board members) who may perform services for the Company or its affiliates, as the Committee may select.
3. Available Shares. Subject to adjustment as provided in Section 7, the Company may issue an aggregate of 3,053,392 shares of Common Stock under the Plan, exclusive of (a) shares covered by the unexercised portion of an Award that terminates, expires, is canceled or is settled in cash, (b) shares forfeited or repurchased under the Plan, and (c) shares withheld or surrendered in order to pay the exercise or purchase price under an Award or to satisfy the tax withholding obligations associated with the exercise, vesting or settlement of an Award.
4. Administration.
(a) Committee. The Plan will be administered by the Compensation Committee of the Company's Board of Directors (the "Board") or such other committee comprised of at least two (2) members of the Board appointed by the Board from time to time (the "Committee"), provided that, the Board will have sole responsibility and authority for matters relating to the grant and administration of Awards to any member of the Board who is not an employee of the Company or its affiliates. Notwithstanding the foregoing, the full Board may perform any function of the Committee hereunder, in which case the term "Committee" shall refer to the Board.
(b) Responsibility and Authority of Committee. Subject to the provisions of the Plan, the Committee, acting in its discretion, will have responsibility and full power and authority to: (i) select the persons to whom Awards will be made, (ii) prescribe the terms and conditions of each Award and make amendments thereto, (iii) construe, interpret and apply the provisions of the Plan and of any agreement or other document evidencing an Award made under the Plan, and (iv) make any and all determinations and take any and all other actions as it deems
necessary or desirable in order to carry out the terms of the Plan. In exercising its responsibilities under the Plan, the Committee may obtain at the Company's expense such advice, guidance and other assistance from outside compensation consultants and other professional advisers as it deems appropriate.
(c) Delegation of Authority. Subject to the requirements of applicable law, the Committee may delegate to any person or group or subcommittee of persons (who may, but need not be, members of the Committee) such Plan-related functions within the scope of its responsibility, power and authority as it deems appropriate. Reference herein to the Committee with respect to functions delegated to another person, group or subcommittee will be deemed to refer to such person, group or subcommittee.
(d) Committee Actions. A majority of the members of the Committee shall constitute a quorum. The Committee may act by the vote of a majority of its members present at a meeting at which there is a quorum or by unanimous written consent. The Committee shall keep a record of its proceedings and acts and shall keep or cause to be kept such books and records as may be necessary in connection with the proper administration of the Plan.
(e) Indemnification. The Company shall indemnify and hold harmless each member of the Committee and the Board and any employee or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan is delegated from and against any loss, cost, liability (including any sum paid in settlement of a claim with the approval of the Board), damage and expense (including reasonable legal and other expenses incident thereto) arising out of or incurred in connection with the Plan, unless and except to the extent attributable to such person's fraud or willful misconduct.
5. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in this Section 5. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter, such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment or other service by the participant. The Committee shall require the payment of lawful consideration for an Award to the extent necessary to satisfy the requirements of the Delaware General Corporation Law, and may otherwise require payment of consideration for an Award except as limited by the Plan.
(b) Options. The Committee is authorized to grant Options to participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Common Stock purchasable under an Option shall be determined by the Committee, provided that such exercise price shall not be less than the "Fair Market Value" of a share of Common Stock on the date of grant of such Option. Unless otherwise determined by the Committee or required by applicable law, the Fair Market Value of a share of Common Stock as of any given date shall be the closing sale price per share of Common Stock reported on a consolidated basis for securities listed on the principal stock exchange or market on which the Common Stock is traded on the date as of
which such value is being determined or, if there is no sale on that day, then on the last previous day on which a sale was reported; provided, however, that, the Fair Market Value of a share of Common Stock on the date of the initial public offering of the Common Stock shall be the initial public offering price per share.
(ii) Option Term; Time and Method of Exercise. The Committee shall determine the term of each Option, which in no event shall exceed a period of ten (10) years from the date of grant. The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the methods by which the exercise price may be paid or deemed to be paid and the form of such payment (including, cash, Common Stock, other Awards or awards granted under other plans of the Company or any affiliate, or other property (including through "cashless exercise" arrangements, to the extent permitted by applicable law)), and the methods by or forms in which Common Stock will be delivered or deemed to be delivered to participants.
(c) Stock Appreciation Rights. The Committee is authorized to grant SARs to participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the participant to
whom it is granted a right to receive, upon exercise thereof, the excess of (1)
the Fair Market Value of one share of Common Stock on the date of exercise over
(2) the base price of the SAR as determined by the Committee, which base price
shall not be less than the Fair Market Value of a share of Common Stock on the
date of grant of such SAR.
(ii) Other Terms. The Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which a SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Common Stock will be delivered or deemed to be delivered to participants, whether or not a SAR shall be free-standing or in tandem or combination with any other Award, and the maximum term of an SAR, which in no event shall exceed a period of ten (10) years from the date of grant.
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination, at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise and under such other circumstances as the Committee may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan or any Award agreement evidencing the Restricted Stock, a participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee).
(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment or other service during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided that the Committee may provide, by rule or regulation or in any Award agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will lapse in whole or in part, including in the event of terminations resulting from specified causes.
(iii) Certificates for Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Committee may require that any dividends paid on a share of Restricted Stock shall be either (1) paid with respect to such Restricted Stock at the dividend payment date in cash, in kind, or in a number of shares of unrestricted Common Stock having a Fair Market Value equal to the amount of such dividends, or (2) automatically reinvested in additional Restricted Stock or held in kind, subject to the same terms as applied to the original Restricted Stock to which it relates. Unless otherwise determined by the Committee, Common Stock distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Common Stock or other property has been distributed.
(e) Restricted Stock Units. The Committee is authorized to grant Restricted Stock Units to participants, which are rights to receive Common Stock, other Awards, or a combination thereof at the end of a specified deferral or vesting period, subject to the following terms and conditions:
(i) Grant and Restrictions. The satisfaction of Restricted Stock Units will occur upon expiration of the applicable deferral or vesting period specified for an Award of Restricted Stock Units by the Committee. Restricted Stock Units shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse at the expiration of the deferral or vesting period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, and under such other circumstances as the Committee may determine at the date of grant or thereafter. Restricted Stock Units may be satisfied by delivery of Common Stock, other Awards, or a combination thereof, as determined by the Committee at the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment or other service during the applicable deferral or vesting period, all Restricted Stock Units that are at that time subject to such forfeiture conditions shall be
forfeited; provided that the Committee may provide, by rule or regulation or in any Award document, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock Units will lapse in whole or in part, including in the event of terminations resulting from specified causes.
(iii) Dividend Equivalents. Unless otherwise determined by the Committee, dividend equivalents on the specified number of shares of Common Stock covered by an Award of Restricted Stock Units shall be either (1) paid with respect to such Restricted Stock Units at the dividend payment date in cash or in shares of unrestricted Common Stock having a Fair Market Value equal to the amount of such dividends, or (2) deferred with respect to such Restricted Stock Units, either as a cash deferral or with the amount or value thereof automatically deemed reinvested in additional Restricted Stock Units.
(f) Other Stock-Based Awards and Cash Incentive Awards. The Committee is authorized, subject to limitations under applicable law, to grant to participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Stock or factors that may influence the value of Common Stock, including, without limitation, stock bonuses, dividend equivalents, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Stock, purchase rights for Common Stock, Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Committee, and Awards valued by reference to the book value of Common Stock or the value of securities of or the performance of specified subsidiaries or affiliates or other business units and awards designed to comply with or take advantage of other applicable local laws or jurisdictions other than the United States. The Committee shall determine the terms and conditions of such Awards. In addition, Cash Incentive Awards, including annual incentive Awards and long-term incentive Awards, denominated and settled in cash, may be granted under this Section 5(f), which Awards may be earned at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise and under such other circumstances as the Committee may determine at the date of grant or thereafter.
6. Limits on Transferability; Beneficiaries. No Award or other right or interest of a participant under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such participant to any party (other than the Company or an affiliate thereof), or assigned or transferred by such participant otherwise than by will or the laws of descent and distribution or to a beneficiary upon the death of a participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the participant only by the participant or his or her guardian or legal representative, except that Awards (other than ISOs) and other rights may be transferred to one or more transferees during the lifetime of the participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Committee, subject to any terms and conditions which the Committee may impose thereon. A beneficiary, transferee, or other person claiming any rights under the Plan from or through any participant shall be subject to all terms and conditions of the Plan and any Award agreement applicable to such participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee. For purposes hereof,
"beneficiary" shall mean the legal representatives of the participant's estate entitled by will or the laws of descent and distribution to receive the benefits under a participant's Award upon a participant's death, provided that, if and to the extent authorized by the Committee, a participant may be permitted to designate a beneficiary, in which case the "beneficiary" instead will be the person, persons, trust or trusts (if any are then surviving) which have been designated by the participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under the participant's Award upon such participant's death.
7. Capital Changes, Reorganization, Sale.
(a) Adjustments upon Changes in Capitalization. The aggregate number and class of shares issuable under the Plan, the number and class of shares and the exercise price per share covered by each outstanding Option, the number and class of shares and the base price per share covered by each outstanding SAR, the number and class of shares covered by each outstanding Restricted Stock Unit Award and Other Stock-Based Award, any per-share base or purchase price or target market price included in the terms of any such Award and all related terms shall be adjusted proportionately or as otherwise appropriate to reflect any increase or decrease in the number of issued shares of Common Stock resulting from a stock split or consolidation of shares or any like capital adjustment, or the payment of any stock dividend, and/or to reflect a change in the character or class of shares covered by the Plan arising from a readjustment or recapitalization of the Company's capital stock.
(b) Cash, Stock or Other Property for Stock. Except as otherwise provided in this Section, in the event of an Exchange Transaction (as defined below), all holders of Options and SARs shall be permitted to exercise their outstanding Options and SARs in whole or in part (whether or not otherwise exercisable) immediately prior to such Exchange Transaction, and any outstanding Options and SARs which are not exercised before the Exchange Transaction shall thereupon terminate. Notwithstanding the preceding sentence, if, as part of an Exchange Transaction, the stockholders of the Company receive capital stock of another corporation ("Exchange Stock") in exchange for their shares of Common Stock (whether or not such Exchange Stock is the sole consideration), and if the Board, in its sole discretion, so directs, then all outstanding Options and SARs shall be converted into options to purchase shares of, or stock appreciation rights with respect to, Exchange Stock. The amount and price of converted options and stock appreciation rights shall be determined by adjusting the amount and price of the Options and SARs granted hereunder on the same basis as the determination of the number of shares of Exchange Stock the holders of Common Stock shall receive in the Exchange Transaction and, unless the Board determines otherwise, the vesting conditions with respect to the converted options and stock appreciation rights shall be substantially the same as the vesting conditions set forth in the original Option or SAR agreement, as applicable. The Board, acting in its discretion, may accelerate the vesting of Restricted Stock and Restricted Stock Unit Awards and the exercisablity, vesting and/or settlement, as applicable, of Other Stock-Based Awards and Cash Incentive Awards and/or make such other adjustments to the terms of any such outstanding Awards, and/or provide for the conversion of such Awards (other than Cash Incentive Awards) into comparable awards relating to Exchange Stock, all as it deems appropriate in its sole discretion in the context of an Exchange Transaction.
(c) Definition of Exchange Transaction. For purposes hereof, the term "Exchange Transaction" means a merger (other than a merger of the Company in which the holders of Common Stock immediately prior to the merger have the same proportionate ownership of Common Stock in the surviving corporation immediately after the merger), consolidation, acquisition or disposition of property or stock, separation, reorganization (other than a mere reincorporation or the creation of a holding company), liquidation of the Company or any other similar transaction or event so designated by the Board in its sole discretion, as a result of which the stockholders of the Company receive cash, stock or other property in exchange for or in connection with their shares of Common Stock.
(d) Fractional Shares. In the event of any adjustment in the number of shares covered by any Award pursuant to the provisions hereof, any fractional shares resulting from such adjustment shall be disregarded, and each such Award shall cover only the number of full shares resulting from the adjustment.
(e) Determination of Board to be Final. All adjustments under this
Section shall be made by the Board, and its determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding and conclusive.
8. Tax Withholding. As a condition to the exercise of any Award, the delivery of any shares of Common Stock or payment of cash pursuant to any Award or the lapse of restrictions on any Award, or in connection with any other event that gives rise to a federal or other governmental tax withholding obligation on the part of the Company or an affiliate relating to an Award, the Company and/or the affiliate may (a) deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a participant whether or not pursuant to the Plan or (b) require the participant to remit cash (through payroll deduction or otherwise), in each case in an amount sufficient in the opinion of the Company to satisfy such withholding obligation. If the event giving rise to the withholding obligation involves a transfer of shares of Common Stock, then, at the sole discretion of the Committee, the participant may satisfy the withholding obligation described under this Section by electing to have the Company withhold shares of Common Stock or by tendering previously-owned shares of Common Stock, in each case having a fair market value equal to the amount of tax to be withheld (or by any other mechanism as may be required or appropriate to conform with local tax and other rules).
9. Amendment and Termination. The Board may amend or terminate the Plan, provided, however, that no such action may adversely affect a participant's rights under an outstanding Award without the participant's written consent. Any amendment that would increase the aggregate number of shares of Common Stock issuable under the Plan, that would modify the class of persons eligible to receive Awards under the Plan or that would otherwise be required to be approved by stockholders pursuant to applicable law or the requirements of any stock exchange or market upon which the Common Stock may then be listed shall be subject to the approval of the Company's stockholders. The Committee may amend the terms of any agreement or Award made hereunder at any time and from time to time, provided, however, that any amendment which would adversely affect a participant's rights under an outstanding Award may not be made without the participant's consent.
10. General Provisions.
(a) Shares Issued Under Plan. Shares of Common Stock available for issuance under the Plan may be authorized and unissued, held by the Company in its treasury or otherwise acquired for purposes of the Plan. No fractional shares of Common Stock will be issued under the Plan.
(b) Compliance with Law. The Company will not be obligated to issue or deliver shares of Common Stock pursuant to the Plan unless the issuance and delivery of such shares complies with applicable law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the requirements of any stock exchange or market upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(c) Transfer Orders; Placement of Legends. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or market upon which the Common Stock may then be listed, and any applicable federal or state securities law. The Company may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
(d) No Employment or other Rights. Nothing contained in the Plan or in any Award agreement shall confer upon any participant any right with respect to the continuation of his or her employment or other service with the Company or an affiliate or interfere in any way with the right of the Company and its affiliates at any time to terminate such employment or other service or to increase or decrease, or otherwise adjust, the other terms and conditions of the participant's employment or other service.
(e) Decisions and Determinations Final. All decisions and determinations made by the Board pursuant to the provisions hereof and, except to the extent rights or powers under the Plan are reserved specifically to the discretion of the Board, all decisions and determinations of the Committee, shall be final, binding and conclusive on all persons.
(f) Nonexclusivity of the Plan. No provision of the Plan, and neither its adoption by the Board or submission to the stockholders for approval, shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements, apart from the Plan, as it may deem desirable.
11. Governing Law. All rights and obligations under the Plan and each Award agreement or instrument shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflict of laws.
12. Term of the Plan. The Plan shall be effective as of the date of its adoption by the Board, subject to the approval of the stockholders of the Company within twelve (12) months from the date of such adoption by the Board. The Plan shall expire on the tenth anniversary of the date of its adoption by the Board, unless sooner terminated by the Board. The rights of any person with respect to an Award made under the Plan that is outstanding at the time of the
termination of the Plan shall not be affected solely by reason of the termination of the Plan and shall continue in accordance with the terms of the Award and of the Plan, as each is then in effect or is thereafter amended.
Exhibit 10.13(a)
DELEK US HOLDINGS, INC.
2006 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
AGREEMENT, made as of this _ day of _________, 200_ by and between Delek US Holdings, Inc., a Delaware corporation (the "Company"), and _______________ (the "Participant").
W I T N E S S E T H:
WHEREAS, pursuant to the Delek US Holdings, Inc. 2006 Long-Term Incentive Plan (the "Plan"), the Company desires to grant to the Participant, and the Participant desires to accept, an Award of Restricted Stock Units with respect to shares of the Company's common stock, $0.01 par value (the "Common Stock"), upon the terms and conditions set forth in this Agreement and the Plan. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, the parties hereto agree as follows:
1. Award. The Company hereby grants to the Participant an Award of Restricted Stock Units (the "RSUs") with respect to ________ shares of the Common Stock pursuant to the Plan.
2. RSUs. RSUs constitute an unfunded and unsecured promise of the Company to deliver to the Participant, subject to the satisfaction of the vesting conditions set forth in Section 3 below and the other terms and conditions of this Agreement and the Plan, that number of shares of Common Stock referenced by the RSUs. Until such delivery, the Participant shall have the rights of a general unsecured creditor of the Company with respect to the RSUs and shall not have any rights as a stockholder of the Company.
3. Vesting and Forfeiture. Except as otherwise provided herein or the Plan, the RSUs shall vest with respect to ________________ of the shares of Common Stock subject thereto on each of the following dates ____________________, provided that the Participant remains in continuous employment or other service with the Company or its affiliates through each applicable vesting date. The Participant shall forfeit the unvested portion of the RSUs upon the termination of the Participant's employment or other service with the Company or its affiliates.
4. Issuance and Delivery of Shares. Except as otherwise provided herein, a stock certificate registered in the name of the Participant representing the shares of Common Stock referenced by the vested portion of the RSUs shall be issued and delivered to the Participant promptly following the vesting date. The Participant shall have no right to receive any dividend or distribution with respect to such shares if the record date for such dividend or distribution is prior to the vesting date of the RSUs.
5. Dividend Equivalents. The Participant shall be credited with dividend equivalents for any cash dividends paid on the number of shares of Common Stock covered by the RSUs as a cash deferral (bearing interest at the then prevailing prime interest rate as set forth in The Wall Street Journal), which deferral shall be settled in cash upon vesting of the related RSUs, subject to the same terms and conditions as such RSUs.
6. Withholding and Consents. The delivery of shares of Common Stock represented by RSUs is conditioned on the Participant's satisfaction of any applicable withholding taxes in accordance with the Plan. The Participant's rights in respect of the RSUs are conditioned on the receipt to the full satisfaction of the Company of any required consents that the Company may determine to be necessary or advisable, including, without limitation, consents to deductions from wages or other arrangements satisfactory to the Company.
7. Nontransferability. The RSUs may not be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of the Participant to any party (other than the Company or an affiliate thereof), or assigned or transferred (collectively, "Transferred") by the Participant other than by will or the laws of descent and distribution or to a beneficiary upon the death of the Participant. Any attempt by the Participant or any other person claiming against, through or under the Participant to cause the RSUs or any part of it to be Transferred in any manner and for any purpose shall be null and void and without effect upon the Company, the Participant or any other person.
8. Compliance with Law; Transfer Orders; Legends. The Company will not be obligated to issue or deliver shares of Common Stock pursuant to this Agreement unless the issuance and delivery of such shares complies with applicable law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the requirements of any stock exchange or market upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. All certificates for shares of Common Stock delivered under this Agreement shall be subject to such stock-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or market upon which the Common Stock may then be listed, and any applicable federal or state securities law. The Company may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
9. No Employment or Other Rights. Nothing contained in the Plan or this Agreement shall confer upon the Participant any right with respect to the continuation of his or her employment or other service with the Company or its affiliates or interfere in any way with the right of the Company and its affiliates at any time to terminate such employment or other service or to increase or decrease, or otherwise adjust, the other terms and conditions of the Participant's employment or other service.
10. Provisions of the Plan. The provisions of the Plan, the terms of which are incorporated in this Agreement, shall govern if and to the extent that there are inconsistencies between those provisions and the provisions hereof. The Participant acknowledges receipt of a copy of the Plan prior to the execution of this Agreement.
11. Miscellaneous. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of law. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and, except as otherwise provided in the Plan, may not be modified other than by written instrument executed by the parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.
DELEK US HOLDINGS, INC.
By: ______________________________________________
Name:
Title:
By: ______________________________________________
Name:
Title:
PARTICIPANT:
Exhibit 10.13(b)
DIRECTOR FORM
DELEK US HOLDINGS, INC.
2006 LONG-TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
AGREEMENT, made as of this _ day of _________, 200_ (the "Grant Date"), by and between Delek US Holdings, Inc., a Delaware corporation (the "Company"), and __________________ (the "Optionee").
W I T N E S S E T H:
WHEREAS, pursuant to the Delek US Holdings, Inc. 2006 Long-Term Incentive Plan (the "Plan"), the Company desires to grant to the Optionee, and the Optionee desires to accept, an option to purchase shares of the Company's common stock, $0.01 par value (the "Common Stock"), upon the terms and conditions set forth in this Agreement and the Plan. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant. The Company hereby grants to the Optionee an option (the "Option") to purchase up to ______ shares of Common Stock, at a purchase price per share of ________ U.S. dollars ($______). This Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
2. Term of Option. The term of this Option shall be for a period of ten
(10) years from the date hereof, subject to earlier termination as provided
herein and the Plan.
3. Vesting of Option. Except as otherwise provided herein or the Plan, this Option shall become vested and exercisable with respect to ________ of the shares of Common Stock subject thereto on each of the following dates ____________________, provided that the Optionee remains in continuous service with the Company or its affiliates through each applicable vesting date.
4. Termination of Service.
(a) Death or Disability. If the Optionee's service with the Company
or its affiliates is terminated due to the Optionee's death or Disability (as
defined below), then: (i) that portion of this Option, if any, that is vested
and exercisable on the date of termination shall remain exercisable by the
Optionee (or, in the event of death, the Optionee's beneficiary) during the one
(1) year period following the date of termination but in no event after
expiration of the stated term hereof and, to the extent not exercised during
such period, shall thereupon terminate, provided that, in the event of a
termination due to Disability, if the Optionee dies during such one (1) year
period, then the Optionee's beneficiary may exercise this Option, to the extent
vested and exercisable by the Optionee immediately prior to his or her death,
for a period of one (1) year following the date of death but in no event after
expiration of the stated term hereof, and
(ii) that portion of this Option, if any, that is not exercisable on the date of termination shall thereupon terminate. For purposes of this Agreement, "Disability" shall mean the inability of an Optionee to perform the customary duties of the Optionee's service with the Company or its affiliates by reason of a physical or mental incapacity or illness which is expected to result in death or to be of indefinite duration.
(b) Other Termination. If the Optionee' s service with the Company
or its affiliates is terminated for any reason other than those set forth in
Section 4(a) above, then: (i) that portion of this Option, if any, that is
vested and exercisable on the date of termination shall remain exercisable by
the Optionee during the one hundred eighty (180) day period following the date
of termination but in no event after expiration of the stated term hereof and,
to the extent not exercised during such period, shall thereupon terminate, and
(ii) that portion of this Option, if any, that is not vested and exercisable on
the date of termination shall thereupon terminate.
5. Exercise and Payment. Once vested and exercisable, the Optionee may exercise this Option in whole or in part by delivering to the Secretary of the Company (a) a written notice of such exercise specifying the number of shares of Common Stock that the Optionee has elected to purchase and (b) payment in full of the exercise price and the withholding taxes due in connection with the exercise, unless other arrangements satisfactory to the Company are made for the satisfaction of such payment(s). The exercise price and applicable tax withholding obligation may be paid (i) in cash or by check, (ii) at the discretion of the committee, (1) by the delivery of previously-owned shares of Common Stock, (2) by means of a cashless exercise procedure, or (3) in any other form of legal consideration that may be acceptable to the Committee, or (iii) by a combination of the foregoing.
6. Rights as Stockholder. No shares of Common Stock shall be issued hereunder until full payment for such shares has been made and the applicable tax withholding obligation satisfied. The Optionee shall have no rights as a stockholder with respect to any shares covered by this Option until the date a stock certificate for such shares is issued to the Optionee.
7. Nontransferability. This Option may not be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of the Optionee to any party (other than the Company or an affiliate thereof), or assigned or transferred (collectively, "Transferred") by the Optionee other than by will or the laws of descent and distribution or to a beneficiary upon the death of the Optionee, and this Option may be exercised during the lifetime of the Optionee only by the Optionee or his or her guardian or legal representative. Any attempt by the Optionee or any other person claiming against, through or under the Optionee to cause this Option or any part of it to be Transferred in any manner and for any purpose shall be null and void and without effect upon the Company, the Optionee or any other person.
8. Compliance with Law; Transfer Orders; Legends. The Company will not be obligated to issue or deliver shares of Common Stock pursuant to this Option unless the issuance and delivery of such shares complies with applicable law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the requirements of any stock exchange or market upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. All certificates for shares of Common Stock delivered under this Option shall
be subject to such stock-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or market upon which the Common Stock may then be listed, and any applicable federal or state securities law. The Company may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
9. No Rights Conferred. Nothing contained in the Plan or this Agreement shall confer upon the Optionee any right with respect to the continuation of his or her service with the Company or its affiliates or interfere in any way with the right of the Company and its affiliates at any time to terminate such service or to increase or decrease, or otherwise adjust, the other terms and conditions of the Optionee's service.
10. Provisions of the Plan. The provisions of the Plan, the terms of which are incorporated in this Agreement, shall govern if and to the extent that there are inconsistencies between those provisions and the provisions hereof. The Optionee acknowledges receipt of a copy of the Plan prior to the execution of this Agreement.
11. Miscellaneous. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of law. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and, except as otherwise provided in the Plan, may not be modified other than by written instrument executed by the parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.
DELEK US HOLDINGS, INC.
By: _______________________
Name:
Title:
By: _______________________
Name:
Title:
OPTIONEE:
EXHIBIT 10.13(c)
OFFICER FORM
DELEK US HOLDINGS, INC.
2006 LONG-TERM INCENTIVE PLAN
STOCK OPTION AGREEMENT
AGREEMENT, made as of this _ day of _________, 200_ (the "Grant Date"), by and between Delek US Holdings, Inc., a Delaware corporation (the "Company"), and __________________ (the "Optionee").
W I T N E S S E T H:
WHEREAS, pursuant to the Delek US Holdings, Inc. 2006 Long-Term Incentive Plan (the "Plan"), the Company desires to grant to the Optionee, and the Optionee desires to accept, an option to purchase shares of the Company's common stock, $0.01 par value (the "Common Stock"), upon the terms and conditions set forth in this Agreement and the Plan. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant. The Company hereby grants to the Optionee an option (the "Option") to purchase up to ______ shares of Common Stock, at a purchase price per share of ________ U.S. dollars ($______). This Option is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
2. Term of Option. The term of this Option shall be for a period of ten
(10) years from the date hereof, subject to earlier termination as provided
herein and the Plan.
3. Vesting of Option. Except as otherwise provided herein or the Plan, this Option shall become vested and exercisable with respect to ________ of the shares of Common Stock subject thereto on each of the following dates ____________________, provided that the Optionee remains in continuous employment or other service with the Company or its affiliates through each applicable vesting date.
4. Termination of Employment or Other Service.
(a) Death or Disability. If the Optionee's employment or other service with the Company or its affiliates is terminated due to the Optionee's death or Disability (as defined below), then: (i) that portion of this Option, if any, that is vested and exercisable on the date of termination shall remain exercisable by the Optionee (or, in the event of death, the Optionee's beneficiary) during the one (1) year period following the date of termination but in no event after expiration of the stated term hereof and, to the extent not exercised during such period, shall thereupon terminate, provided that, in the event of a termination due to Disability, if the Optionee dies during such one (1) year period, then the Optionee's beneficiary may exercise this Option, to the extent vested and exercisable by the Optionee immediately prior to his or her death, for a period of one (1) year following the date of death but in no event after expiration of
the stated term hereof, and (ii) that portion of this Option, if any, that is not exercisable on the date of termination shall thereupon terminate. For purposes of this Agreement, "Disability" shall mean the inability of an Optionee to perform the customary duties of the Optionee's employment or other service with the Company or its affiliates by reason of a physical or mental incapacity or illness which is expected to result in death or to be of indefinite duration.
(b) Termination for Cause. If the Optionee's employment or other
service is terminated by the Company or its affiliates for Cause (as defined
below), then this Option (whether or not then vested and exercisable) shall
immediately terminate and cease to be exercisable. For purposes of this
Agreement, "Cause" shall mean the Optionee's (i) fraud, gross negligence or
willful misconduct involving the Company or its affiliates, (ii) conviction of,
or plea of nolo contendere to, a felony or crime involving moral turpitude, or
(iii) material breach of any written agreement between the Optionee and the
Company or any of its affiliates.
(c) Other Termination. If the Optionee' s employment or other service with the Company or its affiliates is terminated for any reason other than those set forth in Section 4(a) or 4(b) above, then: (i) that portion of this Option, if any, that is vested and exercisable on the date of termination shall remain exercisable by the Optionee during the thirty (30) day period following the date of termination but in no event after expiration of the stated term hereof and, to the extent not exercised during such period, shall thereupon terminate, and (ii) that portion of this Option, if any, that is not vested and exercisable on the date of termination shall thereupon terminate.
5. Exercise and Payment. Once vested and exercisable, the Optionee may exercise this Option in whole or in part by delivering to the Secretary of the Company (a) a written notice of such exercise specifying the number of shares of Common Stock that the Optionee has elected to purchase and (b) payment in full of the exercise price and the withholding taxes due in connection with the exercise, unless other arrangements satisfactory to the Company are made for the satisfaction of such payment(s). The exercise price and applicable tax withholding obligation may be paid (i) in cash or by check, (ii) at the discretion of the committee, (1) by the delivery of previously-owned shares of Common Stock, (2) by means of a cashless exercise procedure, or (3) in any other form of legal consideration that may be acceptable to the Committee, or (iii) by a combination of the foregoing.
6. Rights as Stockholder. No shares of Common Stock shall be issued hereunder until full payment for such shares has been made and the applicable tax withholding obligation satisfied. The Optionee shall have no rights as a stockholder with respect to any shares covered by this Option until the date a stock certificate for such shares is issued to the Optionee.
7. Nontransferability. This Option may not be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of the Optionee to any party (other than the Company or an affiliate thereof), or assigned or transferred (collectively, "Transferred") by the Optionee other than by will or the laws of descent and distribution or to a beneficiary upon the death of the Optionee, and this Option may be exercised during the lifetime of the Optionee only by the Optionee or his or her guardian or legal representative. Any attempt by the Optionee or any other person claiming against, through or under the Optionee to cause this Option or any
part of it to be Transferred in any manner and for any purpose shall be null and void and without effect upon the Company, the Optionee or any other person.
8. Compliance with Law; Transfer Orders; Legends. The Company will not be obligated to issue or deliver shares of Common Stock pursuant to this Option unless the issuance and delivery of such shares complies with applicable law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the requirements of any stock exchange or market upon which the Common Stock may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. All certificates for shares of Common Stock delivered under this Option shall be subject to such stock-transfer orders and other restrictions as the Company may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or market upon which the Common Stock may then be listed, and any applicable federal or state securities law. The Company may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
9. No Employment or Other Rights. Nothing contained in the Plan or this Agreement shall confer upon the Optionee any right with respect to the continuation of his or her employment or other service with the Company or its affiliates or interfere in any way with the right of the Company and its affiliates at any time to terminate such employment or other service or to increase or decrease, or otherwise adjust, the other terms and conditions of the Optionee's employment or other service.
10. Provisions of the Plan. The provisions of the Plan, the terms of which are incorporated in this Agreement, shall govern if and to the extent that there are inconsistencies between those provisions and the provisions hereof. The Optionee acknowledges receipt of a copy of the Plan prior to the execution of this Agreement.
11. Miscellaneous. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of law. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and, except as otherwise provided in the Plan, may not be modified other than by written instrument executed by the parties.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.
DELEK US HOLDINGS, INC.
Title:
Title:
OPTIONEE:
EXHIBIT 10.14
DELEK US HOLDINGS, INC.
DESCRIPTION OF DIRECTOR COMPENSATION
Effective upon the completion of this offering, each non-employee director of Delek US Holdings, Inc. (the "Company") who is not affiliated with Delek Group Ltd. will receive an annual fee of $25,000 and a fee of $1,500 per board meeting attended. Members of the audit and compensation committees who are non-employee directors not affiliated with Delek Group Ltd. will receive $1,000 per meeting attended.
In addition, upon the completion of this offering, each non-employee director who is not affiliated with Delek Group Ltd. will receive an initial grant of 3,000 stock options, each of which will have an exercise price per share equal to the initial offering price to the public and shall vest ratably on each of the first, second, third and fourth anniversaries of the grant date. Upon the filing of a Registration Statement with the Securities and Exchange Commission on Form S-8, each non-employee director who is not affiliated with Delek Group Ltd. will receive a grant of 1,500 restricted stock units, each of which will vest ratably on each of the first, second, third and fourth anniversaries of the date of the completion of this offering. Beginning in 2007, the Company intends to make annual grants to each non-employee director who is not affiliated with Delek Group Ltd. of 3,000 stock options.
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 17, 2006, except for the second and third paragraphs of Note 15, as to which the date is April 18, 2006, with respect to the consolidated balance sheet of Delek US Holdings, Inc. as of December 31, 2005 and the related consolidated statements of operations, changes in stockholder's equity and cash flows for the years ended December 31, 2003 and 2005, included in Amendment No. 2 to the Registration Statement (Form S-1 No. 333-131675) and related Prospectus of Delek US Holdings, Inc. for the registration of 11,500,000 shares of its common stock.
/s/ Ernst & Young LLP Nashville, Tennessee April 18, 2006 |
Exhibit 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 11, 2004, except for Note 10, as to which the date is April 30, 2004, with respect to the consolidated financial statements of Williamson Oil Co., Inc. included in Amendment No. 2 to the Registration Statement (Form S-1 No. 333-131675) and related Prospectus of Delek US Holdings, Inc. for the registration of 11,500,000 shares of its common stock.
/s/ Ernst & Young LLP Nashville, Tennessee April 18, 2006 |
Exhibit 23.4
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated December 21, 2005, with respect to the combined financial statements of Tyler Refinery and McMurrey Pipeline (A Business Component of Crown Central Petroleum Corporation) included in Amendment No. 2 to the Registration Statement (Form S-1 No. 333-131675) and related Prospectus of Delek US Holdings, Inc. for the registration of 11,500,000 shares of its common stock.
/s/ Ernst & Young LLP Baltimore, Maryland April 18, 2006 |
Exhibit 23.5
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As independent registered public accountants, we hereby consent to the use of our report dated January 19, 2006, except for the second and third paragraphs of Note 15, as to which the date is April 18, 2006, on the consolidated financial statements of Delek US Holdings, Inc. and Subsidiaries as of December 31, 2004 and for the year then ended (and to all references to our Firm) included in or made a part of this Amendment No. 2 to the Registration Statement on Form S-1.
MAYER HOFFMAN MCCANN P.C.
Plymouth Meeting, Pennsylvania
April 19, 2006