AMENDED AND RESTATED EMPLOYMENT AGREEMENT among PHILIP K. WOODLIEF, DOANE PET CARE COMPANY, and DOANE PET CARE ENTERPRISES, INC.
Exhibit
10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
among
XXXXXX X. XXXXXXXX,
XXXXX PET CARE COMPANY,
and
XXXXX PET CARE ENTERPRISES, INC.
among
XXXXXX X. XXXXXXXX,
XXXXX PET CARE COMPANY,
and
XXXXX PET CARE ENTERPRISES, INC.
A. This Amended And Restated Employment Agreement (this
“Agreement”), dated as of October 24, 2005, is made among Xxxxx Pet Care Company, a
Delaware corporation (the “Company”), Xxxxx Pet Care Enterprises, Inc., a Delaware
corporation (“Parent”), and Xxxxxx X. Xxxxxxxx (the “Employee”). Upon the terms
and subject to the conditions set forth herein, this Agreement is made with reference to the facts
and objectives set forth in the following Recitals, which shall constitute a part of this
Agreement. (Capitalized terms used herein and not otherwise defined in the text hereof are defined
in Section 21 hereof.)
RECITALS
A. The Employee is currently employed by the Company as Vice President, Finance, and Chief
Financial Officer, pursuant to the terms of a certain Employment Agreement, dated as of February
15, 1999, as the same has been amended by a First Amendment to Employment Agreement, dated as of
January 1, 2001 (collectively, the “Original Employment Agreement”), and is a party to a
certain Change in Control Severance Agreement with the Company, dated as of May 7, 2004 (the
“Change in Control Agreement”).
B. The Company is a wholly owned subsidiary of Parent.
C. Parent is contemplating a merger or other business combination (the “Merger”) with
an Affiliate of Ontario Teachers Pension Plan Board (“OTPP”), in which it is expected that
Parent will be the surviving or continuing corporation and OTTP will, directly or indirectly,
control Parent.
D. The parties desire to amend the Original Employment Agreement and the Change in Control
Agreement to combine those agreements into one document, to clarify the operation of the provisions
of the prior agreements in relation to the Merger, and to modify certain terms of those agreements
to govern the ongoing employment relationship between the Employee and the Company.
E. The Employee acknowledges that (i) the services to be performed by the Employee under this
Agreement are of a special and unique character; (ii) the business of the DPC Entities is currently
international in scope and the DPC Entities plan to continue to expand their business throughout
the world; (iii) the DPC Entities compete with other Persons that are or could be located in any
part of the world; and (iv) in order to maintain the value of the DPC Entities and the viability of
their businesses it is necessary that the Employee undertake not to utilize the Employee’s special
knowledge of the DPC Entities, their businesses, and their
relationships with customers and
suppliers to compete with the DPC Entities if the Employee were to leave the Company.
F. The Employee further acknowledges that the Employee will occupy a position of trust and
confidence with the Company and, during such employment, the Company will compensate the Employee,
among other purposes, to develop and preserve customer relationships and other goodwill exclusively
for the DPC Entities’ benefit and that, as a result, the Employee will develop customer
relationships and goodwill that are valuable and important to the DPC Entities and will become
familiar with the DPC Entities’ trade secrets, including, without limitation, its products,
formulas, processes, profit margins, customer preferences and requirements, and with other
proprietary and confidential information concerning the DPC Entities and their businesses.
G. The Employee further acknowledges that the use by the Employee for the Employee’s own
benefit or that of others of such goodwill, trade secrets, or proprietary and confidential
information or the solicitation of and/or doing competitive business with any of the DPC Entities’
customers or potential customers would have a material adverse effect on the DPC Entities and their
businesses and would place the DPC Entities at a substantial competitive disadvantage.
H. The Employee further acknowledges that the agreements and covenants contained in this
Agreement and, in particular, in Sections 6 and 7 hereof, are essential to protect the DPC Entities
and the goodwill of the DPC Entities’ businesses, are a condition precedent to the Company’s
willingness to enter this Agreement and to pay the consideration set forth in this Agreement, and
are necessary and reasonable in light of the particular businesses of the DPC Entities, the
Employee’s knowledge thereof, and the services the Employee will perform under this Agreement.
Now, Therefore, in consideration of the premises, the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree that, effective as of the date hereof, the
Original Employment Agreement and the Change in Control Agreement shall be superseded in their
entirety by the following terms and conditions:
AGREEMENT
1. Employment. The Company hereby agrees to employ the Employee, and the Employee hereby
accepts employment by the Company, on the terms and conditions contained in this Agreement.
2. Employment Term.
(a) Subject to Section 9 hereof, the term of the Employee’s employment under this Agreement
begins on the date of this Agreement and ends on the first anniversary of that date; provided,
however, that, commencing on the first anniversary of the date of this Agreement and each
subsequent anniversary, the term shall be extended for an additional one-year period
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unless either
the Employee or the Company gives the other party written notice at least thirty (30) days before
such anniversary that this Agreement shall terminate on the then scheduled expiration date (the
“Non-Extension Notice”). If such Non-Extension Notice is given, this Agreement shall
automatically terminate on such expiration date.
(b) The actual term of the Employee’s employment under this Agreement, including the original
term and any extension, continuation, or renewal thereof, is referred to in this Agreement as the
“Employment Term.”
3. Responsibilities. During the Employment Term, the Employee shall serve as Vice
President, Finance, and Chief Financial Officer of the Company, or in any other position or
capacity of equal or greater position or rank to which the Employee may from time to time be
elected or appointed, and shall perform such services for the Company as are reasonably required by
the Company, and as may be required by virtue of the offices and positions held by the Employee.
The Employee agrees that, as a part of the Employee’s duties under this Agreement, the Employee may
be required from time to time to perform services for Affiliates of the Company. The Employee
shall devote the Employee’s full time and best efforts to the performance of all responsibilities
to the DPC Entities and to further their respective businesses and interests.
4. Compensation and Bonus.
(a) The Company agrees to pay the Employee throughout the Employment Term an initial base
salary at the gross rate of $275,000 per annum (as adjusted in accordance with this Section 4(a),
hereinafter the “Base Salary”), which shall be payable in equal installments in accordance
with Company payroll practices from time to time in effect and subject to applicable withholdings
and deductions. The Employee’s Base Salary will be reviewed in good faith annually by the CEO or
the Board (or the compensation committee thereof) and will be increased (but not decreased) by the
Board or the compensation committee, after taking into consideration the recommendation of the CEO,
from time to time, based upon any increase in the scope of the Employee’s duties or
responsibilities and any other relevant factors.
(b) The Employee shall also be eligible for an annual bonus (the “Annual Bonus”) under
the terms of the Bonus Program. The amount of the Employee’s Annual Bonus will be equal to 75% of
the Employee’s Base Salary in effect at the end of the fiscal year for which the Annual Bonus is
determined if actual performance for such fiscal year equals 100% of each corporate and individual
goal established for such year under the Bonus Program. The Bonus Program may be modified or
supplemented by the Company from time to time, but in no event shall any such modification or
supplement be less beneficial financially to the Employee than the Program as described on
Exhibit A attached hereto.
5. Other Employee Benefits.
(a) During the Employment Term, the Company shall reimburse the Employee for all reasonable
expenses incurred by the Employee in the course of performing the
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Employee’s duties under this
Agreement in a manner consistent with the Company’s policies and practices in effect from time to
time with respect to travel, entertainment, and other business expenses, subject in all instances
to the Company’s requirements with respect to reporting, documentation, and approval of such
expenses.
(b) The Employee shall, during the Employment Term, be eligible to participate in all Benefit
Plans on terms no less favorable than those in effect on the date of this Agreement, to the extent
that the Employee is eligible under and complies with the terms of those plans, but the allocation
of benefits under any plan that provides that allocations thereunder shall be in the discretion of
the CEO or the Board shall be as determined from time to time solely by the CEO or the Board in the
CEO’s or the Board’s discretion. Additionally, the Employee shall be entitled to the specific
benefits and perquisites described on Exhibit B attached hereto. (All benefits and
perquisites provided to the Employee under the Benefit Plans and otherwise are hereinafter referred
to as the “Employee Benefits.”)
(c) The Employee shall also participate in the Company’s paid vacation plan but in no event
shall the Employee’s annual entitlement be less than four weeks per year. The number of vacation
days shall be determined and accounted for on an annual basis commencing on the date of hire of the
Employee (a “Vacation Period”). Vacation not used by the end of one Vacation Period shall
be forfeited and shall not be eligible to be carried over to the next Vacation Period or eligible
for reimbursement except as otherwise provided herein or otherwise by Company policies.
6. Non-Competition Covenants. Throughout the Employment Term and continuing thereafter
until the second anniversary of the date on which the Employee ceases to be employed by the Company
for any reason whatsoever (the “Non-Compete Period”), the Employee will not:
(1) directly or indirectly assist in, engage in, have any financial interest in, or
participate in any way in, as an owner, partner, employee, agent, board member, or
shareholder, any business that involves, in whole or in part, the design, manufacture,
distribution, or sale of pet foods, including without limitation dry, wet, semi-moist, soft
dry, treats, or biscuits, or any other business in which the DPC Entities may engage or
begin preparations to engage during the Employment Term, or make preparations with any
Person to do any of the foregoing; provided, however, that the Employee may own, solely as
an investment, up to 1.0% of any class of securities of any Person that would otherwise
violate the foregoing provisions of this clause (1) if such securities are listed on any
national or regional securities exchange;
(2) call upon or have any contact with any Person or any successor in interest to any
Person who was at any time during the Employee’s last three (3) years of employment with the
Company, a customer of any of the DPC Entities, or call upon or have any contact with any
Person or any successor in interest to any Person who is a prospective customer of the DPC
Entities, and with whom the Employee dealt, or on whose account the Employee worked, at any
time during the Employee’s last three years of employment with the Company, for the purpose
of (A) diverting any business of such
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Person from the DPC Entities, or (B) selling or
offering to sell to any such customer any product or service that is of the same general
type or that performs similar functions as any product or service which has been sold,
provided or offered for sale by the DPC Entities at any time during the Employee’s last
three years of employment with the Company; or
(3) without the prior written consent of the CEO or the Board, acquire or discuss the
acquisition of any ownership interest in or warrant or right to acquire any such
interest, or acquire any employment or other pecuniary benefit from any Person that, at
the time, is a prospective candidate for or was a party to a Change in Control transaction.
The Employee acknowledges and agrees that the consideration and benefits to be provided to the
Employee under this Agreement have been bargained and negotiated in exchange for, and in
consideration of, the Employee’s agreement to abide by the terms and provisions of this Section 6
and of Section 7 hereof. The Employee acknowledges and agrees that all of the Employee’s duties
and obligations under this Section 6 shall survive the expiration or termination of the Employee’s
employment with the Company, regardless of the causes therefor.
7. Confidentiality and Proprietary Information.
(a) In addition to any common-law restrictions upon the Employee’s use, disclosure or
exploitation of confidential, proprietary or secret information of the DPC Entities, the Employee
covenants and agrees that, without prior written consent of the Company, the Employee will not at
any time during or after the Employment Term use for the Employee’s benefit or disclose to or use
for any other Person, directly or indirectly, any secret, confidential, or proprietary information
of the DPC Entities, including, without limitation, the DPC Entities’ trade secrets, processes,
formulas, techniques, customer identities, pricing, preferences, requirements, reports, and other
sensitive customer information, servicing methods, profit margins, analyses, employee, vendor, and
supplier information, business or marketing plans or strategies, financial data and presentation or
sales materials, technologies, computer programs, software, designs and inventions (collectively,
the “Confidential Information”); provided, however, that the term Confidential Information
does not include or refer to any information that is in the public domain (other than by a breach
of this Agreement). The Employee acknowledges that the Confidential Information is vital,
sensitive, confidential, and proprietary to the DPC Entities. The Employee covenants and agrees
that all files, reports, lists, materials, records, documents, notes, memoranda, specifications,
product or other formulas, equipment, and other items, and any originals, copies, recordings,
abstracts, or notes thereof, relating to the Confidential Information or the DPC Entities’ business
that the Employee prepared, used, or acquired during the Employee’s employment with the Company
(either before or during the Employment Term), are and shall remain the sole and exclusive property
of the Company and shall be immediately returned to the Company at any time upon demand and, in all
events, immediately at the end of the Employment Term.
(b) All information, ideas, concepts, improvements, discoveries, and inventions (collectively
“Inventions”), whether patentable or not, which are or have been
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conceived, made, or
acquired by the Employee, individually or in conjunction with others, during the Employee’s
employment by the Company (whether during business hours or otherwise and whether on the Company’s
premises or otherwise) which relate to the DPC Entities’ businesses, products, or services
(including, without limitation, all such information relating to production, product ideas, and
development, research, testing, marketing and merchandising techniques) have been or shall be
disclosed to the Company and are and shall be the sole and exclusive property of the Company, and
the Employee hereby agrees to assign, and by these presents does assign, to the Company, all of the
Employee’s worldwide right, title, and interest in and to such Inventions. Moreover, all drawings,
specifications, memoranda, notes, records, files, correspondence, drawings, manuals, models,
computer programs, and all other writings and
materials of any type embodying any of such Inventions (collectively “Writings”) are
and shall be the sole and exclusive property of the Company, and the Employee hereby agrees to
assign, and by these presents does assign, to the Company, all of the Employee’s worldwide right,
title, and interest in and to such Writings.
(c) If, during the Employment Term, the Employee creates any original work of authorship fixed
in any tangible medium of expression which is the subject matter of copyright (such as written
presentations, computer programs, operating manuals, drawings, or the like) relating to the DPC
Entities’ businesses, products, or services, whether such work is created solely by the Employee or
jointly with others (whether during business hours or otherwise and whether on the Company’s
premises or otherwise), the Employee shall disclose such work to the Company. The Company shall be
deemed the author of such work if the work is prepared by the Employee in the scope of the
Employee’s employment; or, if the work is not prepared by the Employee within the scope of the
Employee’s employment but is specially ordered by the DPC Entities as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work shall be
considered to be work made for hire and the Company shall be considered the author of the work. If
such work is neither prepared by the Employee within the scope of the Employee’s employment nor a
work specially ordered and is deemed not to be a work made for hire, then the Employee hereby
agrees to assign, and by these presents does assign, to the Company all of the Employee’s worldwide
right, title, and interest in and to such work and all rights of copyright therein.
(d) Both during the Employment Term and thereafter, the Employee shall assist the DPC Entities
or their nominees, at any time, in the protection of the DPC Entities’ worldwide right, title, and
interest in and to Inventions, Writings, and its copyrighted works, including without limitation,
the execution of all formal assignment documents requested by the DPC Entities or their nominees
and the execution of all lawful oaths and applications for applications for patents and
registrations of copyright in the United States and foreign countries.
(e) The Employee acknowledges and agrees that all of the Employee’s duties and obligations
under this Section 7 shall survive the expiration or termination of the Employee’s employment with
the Company, regardless of the cause therefor.
8. Remedies for Breach. The Employee hereby expressly acknowledges that the harm that might
result to the DPC Entities’ goodwill or its relationships with customers in the
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event of the
Employee’s breach of the Employee’s covenant not to compete, or as a result of the disclosure or
use of the confidential information, is largely irreparable. Accordingly, in the event of a breach
or threatened breach of any of the Employee’s duties and obligations under Section 6 or 7 hereof,
the DPC Entities, shall be entitled, individually or collectively, in addition to any other legal
or equitable remedies the DPC Entities may have in that connection (including any right to damages
that the DPC Entities may suffer), to bring an action for a temporary, preliminary, and/or
permanent injunction restraining such breach or threatened breach. The Employee specifically
agrees that, in the event there is a question as to the enforceability of Section 6 or 7 hereof,
the Employee will not engage in any conduct inconsistent with or
contrary to either of such sections until after the question has been resolved by a
non-appealable final judgment.
9. Termination of Employment.
(a) The Employment Term and the Employee’s employment by the Company shall terminate: (i)
upon the death of the Employee; (ii) upon the Disability of the Employee, upon thirty (30) days
prior written notice given by the Company to the Employee; (iii) for Cause, immediately upon the
giving of written notice thereof by the Company to the Employee or at such later time as the notice
may specify; (iv) without Cause, upon not less than thirty (30) days prior written notice given by
the Company to the Employee; (v) voluntarily by the Employee upon not less than thirty (30) days
prior written notice given to the Company by the Employee; and/or (vi) upon the non-extension of
the Employment Term pursuant to Section 2(a) hereof.
(b) Upon the termination of the Employee’s employment under this Agreement, the Employment
Term shall end and all rights of the Employee under this Agreement shall terminate, except as
otherwise provided in Sections 9(c), (d), and (e) and Section 10 hereof.
(c) If a termination of the Employee’s employment under this Agreement occurs by reason of the
death or Disability of the Employee, the Employee (or his estate) shall be entitled to receive the
sum of the Employee’s Base Salary accrued through the date of termination, plus reimbursement for
vacation accrued but not taken during the Vacation Period in which the termination occurs,
determined at the rate of the Employee’s Base Salary at the time of the termination, which amount
shall be payable in a lump sum within five days after the date of the termination if such
termination is on account of the Disability of the Employee and within five days after the Company
has been notified of the appointment of the executor or other representative of the estate of the
deceased Employee if such termination is on account of the death of the Employee. In addition, the
Employee (or his estate) shall be entitled to receive the Prorated Bonus Amount, if any, for the
year in which the termination occurs, which shall be payable at such time as the Annual Bonus for
such year would have been payable to the Employee under Section 4(b) hereof.
(d) If the Company terminates the Employee’s employment under this Agreement without Cause or
if a termination occurs as a result of the Company delivering a Non-Extension Notice or as a result
of an Involuntary Termination, the Employee shall be entitled to receive the benefits specified in
Section 10 hereof and the following amounts:
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(1) the sum of the Employee’s Base Salary accrued through the date of termination, plus
reimbursement for vacation accrued but not taken during the Vacation Period in which the
termination occurs, determined at the rate of the Employee’s Base Salary at the time of the
termination, which amount shall be payable in a lump sum within five days after the date of
the termination;
(2) the Prorated Bonus Amount, if any, for the year in which the termination occurs,
which shall be payable at such time as the Annual Bonus for such year would have been
payable to the Employee under Section 4(b) hereof; plus
(3) the Severance Amount, which shall be payable in 52 equal bi-weekly installments,
without interest and without deduction or withholding, on the regular bi-weekly payroll
dates of the Company, with the first such installment to be due and payable on the first
such regular payroll date after the date of termination and subsequent installments to be
due and payable on such regular payroll dates thereafter; provided, however, that the
Company may at any time elect to pay to the Employee, in full satisfaction of its
obligations under this subparagraph (3), an amount equal to the discounted present value of
the balance of the Severance Amount then remaining unpaid, to be determined based on
bi-weekly payments and an annual interest rate equal to LIBOR plus 3%.
(e) If the Company terminates the Employee’s employment under this Agreement for Cause or if a
termination occurs as a result of the voluntary resignation of the Employee (including without
limitation delivery of a Non-Extension Notice by the Employee to the Company, but specifically
excluding a resignation under circumstances that constitute an Involuntary Termination), the
Employee shall be entitled to receive only the sum of the Employee’s Base Salary accrued through
the date of termination, plus reimbursement for vacation accrued but not taken during the Vacation
Period in which the termination occurs, determined at the rate of the Employee’s Base Salary at the
time of the termination, which amount shall be payable in a lump sum within five days after the
date of the termination. A termination of the Employee’s employment shall not constitute a
termination for Cause unless such a determination is approved (which approval may occur before or
after the date of the Employee’s termination of employment) by at least two-thirds of the members
of the Board after the Employee has been given written notice by the Company of the specific reason
for such termination and an opportunity for the Employee, together with the Employee’s counsel, to
be heard before the Board. The Employee shall be provided with at least ten days’ advance written
notice of any hearing that is required pursuant to this Section (e) and members of the Board may
participate in any such hearing by means of conference telephone or similar communications
equipment by means of which all persons participating in the hearing can hear and speak to each
other; provided, however, that at least one-half of the members of the Board shall attend the
hearing in person. If any termination for Cause is ever ultimately determined by the Board or a
court, agency, or other tribunal to have not constituted a termination for Cause, then the
Company’s sole liability under this Agreement or otherwise at law or in equity shall be (i) to pay
the Employee those amounts that would otherwise been paid or payable to the Employee under Section
9(d) hereof, (ii) to provide the other benefits that would be provided to the Employee under such
Section 9(d) and Section 10 hereof, and (iii) to reimburse the Employee for the
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reasonable attorney’s fees and costs incurred by the Employee in successfully obtaining this determination
from the court, agency, or other tribunal.
10. Additional Benefits Upon Termination. Upon a termination of the Employee’s employment
in accordance with Section 9(d) hereof, the Employee shall be entitled to the following additional
benefits:
(a) To the extent permitted by law and the group insurance plans maintained for the Company’s
employees, and conditioned upon the continued satisfaction of all eligibility requirements for such
coverage and that the Employee makes a timely election of continuation of coverage under COBRA, the
Employee and those of the Employee’s dependents (including the Employee’s spouse) who were covered
under the Benefit Plans at the time of termination of the Employee’s employment shall continue to
be covered under all such plans throughout the two-year period beginning on the date of such
termination (the “Health Insurance Coverage Period”), at a cost to the Employee that is no
greater than the cost of such coverage paid by the Employee immediately prior to such termination;
provided, however, that coverage under a particular Benefit Plan shall immediately end upon the
Employee’s obtaining new employment and coverage under a similar benefit plan maintained by the
Employee’s new employer (with the Employee being obligated hereunder to promptly report such new
coverage to the Company); and provided, further, that (x) if such continued coverage will have
adverse tax consequences to the Employee as compared to the tax consequences associated with
similar coverage provided to an active executive employee of the Company, then the Company shall
provide identical coverage through individual policies that do not have such adverse tax
consequences or otherwise pay to the Employee a cash gross-up payment to make the Employee whole
(on an after-tax basis) for such adverse tax consequences, and (y) if such continued coverage will
have adverse consequences to the Company or the Benefit Plans (or any Affiliate or successor) or is
otherwise not permissible under law or the terms of the applicable plans, then the Company shall
provide identical coverage through individual policies or otherwise pay to the Employee a cash
payment sufficient to allow the Employee (on an after-tax basis) to procure such individual
policies. Upon making the election of continuation of coverage under COBRA, the Employee’s COBRA
coverage period shall run concurrently with the Health Insurance Coverage Period. With respect to
Benefit Plans other than health, disability, and life insurance programs, including, without
limitation, 401(k), stock purchase or stock option agreements, and non-qualified salary
continuation agreements, the Employee’s rights under such benefit programs upon and following the
termination of the Employee’s employment shall be governed by the terms of the applicable benefit
program and/or agreements.
(b) If the Employee receives any payment, deemed payment, or other benefit under or pursuant
to Section 9 or 10(a) hereof (a “Payment”) that would constitute an “excess parachute
payment” under section 280G of the Code in relation to or on account of the Merger (but not in
relation to or on account of any subsequent Change in Control transaction or transactions), and
would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties
(other than interest or penalties that are the result of errors or omissions that are the primary
responsibility of the Employee) with respect to such excise tax (such excise tax, together with any
such interest or penalties, are hereinafter collectively referred to as the “Excise Tax”),
then, notwithstanding anything herein to the contrary, the Company shall promptly pay to
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the Employee an additional payment (a “Gross-up Payment”) in an amount such that after payment
by the Employee of all taxes (including any interest or penalties imposed with respect to such
taxes other than interest or penalties that are the result of errors or omissions that are the
primary responsibility of the Employee), including any Excise Tax imposed on any Gross-up Payment,
the Employee retains an amount of the Gross-up Payment equal to the Excise Tax imposed upon the
Payments. The Company and the Employee shall make an initial determination as to whether a
Gross-up Payment is required and the amount of any such Gross-up Payment. The
Employee shall notify the Company in writing (within five days of the receipt of any claim;
provided that failure to timely notify the Company shall not affect the Employee’s right to receive
a Gross-up Payment unless the delay results in a significant detriment to the Company) of any claim
by the Internal Revenue Service which, if successful, would require the Company to make a Gross-up
Payment (or a Gross-up Payment in excess of that, if any, initially determined by the Company and
the Employee). The Company shall notify the Employee in writing at least ten days prior to the due
date of any response required with respect to such claim if it plans to contest the claim. If the
Company decides to contest such claim, the Employee shall cooperate fully with the Company in such
action; provided, however, the Company shall bear and pay directly or indirectly all costs and
expenses (including additional interest and penalties) incurred in connection with such action and
shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income
tax, including interest and penalties with respect thereto, imposed as a result of the Company’s
action. If, as a result of the Company’s action with respect to a claim, the Employee receives a
refund of any amount paid by the Company with respect to such claim, the Employee shall promptly
pay such refund to the Company. If the Company fails to timely notify Executive whether it will
contest such claim or the Company determines not to contest such claim, then the Company shall
immediately pay to the Employee the portion of such claim, if any, which it has not previously paid
to the Employee.
(c) If the Employee would receive any payment, deemed payment, or other benefit as a result of
the operation of this Agreement that, together with any other payment, deemed payment or other
benefit the Employee may receive under any other plan, program, policy or arrangement, would
constitute an “excess parachute payment” under section 280G of the Code in relation to or on
account of any Change in Control transaction or transactions subsequent to or other than the
Merger, then, notwithstanding anything herein to the contrary, the payments, deemed payments or
other benefits the Employee would otherwise receive under this Agreement shall be reduced to the
extent necessary to eliminate any such excess parachute payment and the Employee shall have no
further rights or claims with respect thereto. If the preceding sentence would result in a
reduction of the payments, deemed payments, or other benefits the Employee would otherwise receive
if legally permitted to do so, the Company will use its best efforts to seek the approval of the
Company’s stockholders in the manner provided for in section 280G(b)(5) of the Code and the
regulations thereunder with respect to such reduced payments or other benefits, so that such
payments would not be treated as “parachute payments” for these purposes (and therefore would cease
to be subject to reduction pursuant to this Section 10(c).
(d) The Employee shall be entitled to receive out-placement services in connection with
obtaining new employment up to a maximum cost of $25,000 (which shall be paid by the Company (or an
Affiliate) directly to the provider of such services).
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(e) If any amount owing by the Company (or an Affiliate) to the Employee under Section 9(c),
(d), or (e) hereof is not paid when due, the Company shall pay to the Employee interest on the
amount payable from the date that such payment should have been made until such payment is made, at
the rate of 12% per annum.
11. Indemnification. During the Employment Term and for a period of six years following a
termination of employment, for any reason, the Company shall (i) indemnify the Employee to the
fullest extent permitted under Delaware law and the Bylaws of the Company, and (ii) designate the
Employee as an insured party on all directors’ and officers’ liability insurance maintained by the
Company.
12. Notice. Any notice required or permitted to be given under this Agreement must be in
writing and is effectively given:
(1) To the Company, when signed by the Employee and delivered in person to the Chairman
of the Board, the CEO, or the Secretary of the Company, or one day after the date sent by
national commercial courier for next day delivery, or two days after the date mailed, by
certified or registered mail, postage prepaid, in either case to the address set forth
below, or at such other address as the Company may designate for this purpose in a notice
given to the Employee.
Attn: Chief Executive Officer
Xxxxx Pet Care Company
000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000 (ZIP Code 37027)
P.O. Box 2487 (ZIP Code 37024-2487)
Xxxxxxxxx, XX 00000
Xxxxx Pet Care Company
000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000 (ZIP Code 37027)
P.O. Box 2487 (ZIP Code 37024-2487)
Xxxxxxxxx, XX 00000
(2) To the Employee, when signed by an officer of the Company and delivered to the
Employee in person, or one day after the date sent by national commercial courier for next
day delivery, or two days after the date mailed, by certified or registered mail, postage
prepaid, in either case to the address set forth under the Employee’s signature at the end
of this Agreement or at such other address as the Employee may designate for this purpose in
a notice given to the Company.
13. Invalidity of Provisions. If any provision of this Agreement is adjudicated to be
invalid or unenforceable under applicable law, the validity or enforceability of the remaining
provisions shall be unaffected. To the extent that any provision of this Agreement is adjudicated
to be invalid or unenforceable because it is over broad, that provision shall not be void but
rather shall be limited only to the extent required by applicable law and enforced as so limited.
14. Entire Agreement; Amendments. This Agreement contains the entire agreement between the
parties and supersedes all prior or contemporaneous representations, promises, understandings, and
agreements between the Employee and the Company as it relates to the Employee’s employment with the
Company. The parties intend that this Agreement be construed in a manner so that it complies with
Section 409A of the Code in order to avoid any
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excise tax to the Employee thereunder. This
Agreement may not be changed except by written and signed agreement of the parties.
15. Governing Law. In light of the Company’s contacts with the state of Tennessee and its
significant interest in insuring that disputes as to the validity and enforceability of this
Agreement including, without limitation, Sections 6 and 7 hereof, are resolved on a uniform basis,
the Employee and the Company agree that any litigation involving noncompliance with or alleged
breach of this Agreement must be filed and conducted in the federal or state courts sitting in
Nashville, Davidson County, Tennessee, and the Employee and the Company consent to the personal
jurisdiction of such courts for purposes of any such litigation. This Agreement shall be governed
by the internal laws of the State of Tennessee without regard to Tennessee conflict of law
principles.
16. Company’s and Employee’s Right to Recover Costs. The Company and the Employee undertake
and agree that, if either party breaches or threatens to breach any provision of this Agreement,
the breaching party shall be liable for reasonable attorneys’ fees and costs incurred by the other
party if such other party prevails in enforcing its rights under this Agreement.
17. Rule of Construction. The rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not be employed in interpreting this Agreement.
18. Tolling. In view of the parties’ recognition and agreement that the Company is entitled
after the expiration or termination of the Employment Term to certain limited protection from
competition by the Employee, the Employee and the Company agree that the running of the period set
forth in Section 6 hereof shall be tolled during any period of time in which the Employee violates
that section.
19. Successors and Assigns. The Company may assign this Agreement to any Person that
hereafter becomes an Affiliate of the Company or to any Person to which the Company sells all or
substantially all of its assets and, in such event, the Company shall, automatically upon the
assignee’s assumption of the Company’s obligations hereunder, be released from any such
obligations. This Agreement shall inure to the benefit of the Company and its successors and
assigns.
20. Nonwaiver of Rights. The Company’s or the Employee’s failure to enforce at any time any
of the provisions of this Agreement or to require at any time performance by the other party of any
of the provisions hereof shall in no way be construed to be a waiver of such provisions or to
affect either the validity of this Agreement, or any part hereof, or the right of the Company or
the Employee thereafter to enforce each and every provision in accordance with the terms of this
Agreement.
21. Definitions. The following terms used in this Agreement shall have the following
definitions:
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(a) “Affiliate” of the Company means any corporation or other legal entity that is
“affiliated” with the Company for purposes of Section 414(b) or (c) of the Code, except that, for
purposes of applying subsections (b) and (c) of Section 414 of the Code to this Agreement, the
phrase “more than 50%” shall be substituted for the phrase “at least 80%” each place that it
appears in Section 1563(a)(1) of the Code. An Affiliate of the Company includes any corporation or
other legal entity (1) in which the Company owns more than 50% of the total voting power or total
value of all classes of its
stock (or, if not a corporation, more than 50% of its profits interests or capital interests),
or (2) as to which the Company has the power to direct or cause the direction of the management or
policies of such corporation or other entity, whether through ownership of voting securities, by
contract, or otherwise.
(b) “Agreement” is defined in the preamble to this Agreement.
(c) “Annual Bonus” is defined in Section 4(b) hereof.
(d) “Base Salary” is defined in Section 4(a) hereof.
(e) “Benefit Plans” means any and all employee welfare and fringe benefit plans and
programs for which executives of the Company are generally eligible, including such things as
401(k), bonus, stock option, life insurance, health insurance, hospitalization and major medical
insurance, dental insurance, accidental death and dismemberment insurance, long-term disability
insurance, and other employee benefit plans of the Company in effect from time to time.
(f) “Board” means the Board of Directors of the Company, as constituted from time to
time.
(g) “Bonus Program” means the Company’s Annual Bonus Program, as the same is described
on Exhibit A attached hereto and as the same may be amended, replaced, or superseded from
time to time.
(h) “Cause” means a determination by the Board, made in accordance with Section 9(e)
hereof, that: (1) the Employee has been charged with the commission of a felony or indicted for or
convicted of a felony; (2) the commission of any act by the Employee constituting financial
dishonesty against the Company (including without limitation fraud or embezzlement); (3) commission
of any other act of dishonesty by the Employee in relation to the Company or the commission of any
other act by the Employee involving moral turpitude or any other acts of gross misconduct which
could cause material injury to, or otherwise negatively impact, the Company’s business, prospects,
customer relations, or reputation; (4) negligence or dereliction in the performance of the
Employee’s duties to the Company or the refusal or failure by the Employee to follow the lawful
directives of the Board or the CEO (other than on account of death or Disability) after the
Employee has been advised by the Board or the CEO in writing of any such negligence, dereliction,
refusal, or failure (whether of the same or similar nature) and has been given an opportunity to
correct the Employee’s performance; or (5) the material breach by the Employee of any material
provisions of this Agreement or the Company’s Code of Business Conduct.
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(i) “CEO” means the Chief Executive Officer of the Company.
(j) A “Change in Control” means (1) any merger, consolidation, or reorganization
involving the Company or Parent in which, immediately after giving effect to such merger,
consolidation, or reorganization, less than 50% of the total voting power of outstanding stock of
the surviving or resulting entity is then “beneficially owned” (within the meaning of Rule 13d-3
under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) in the aggregate by the
stockholders of the Company or Parent, as applicable, immediately prior to such merger,
consolidation, or reorganization, (2) any sale, lease, exchange, or other transfer of all or
substantially all of the assets of the Company or Parent to any other Person or entity (other than
to one or more wholly-owned subsidiaries of the Company or Parent) in one transaction or a series
of related transactions (provided that, in no event shall a sale assets of the Company or Parent
having a total gross fair market value of less than 40% of the total gross fair market value of all
of the assets of the Company or Parent be considered to be a sale of substantially all of such
assets), (3) the dissolution or liquidation of the Company or Parent, (4) when any Person or
entity, including a “group” as contemplated by section 13(d)(3) of the Exchange Act, acquires or
gains ownership or control (including, without limitation, the power to vote) of more than 50% of
the outstanding shares of the Company’s or Parent’s voting stock (based upon voting power), or (5)
as a result of or in connection with a contested election of directors, the persons who were
directors of the Company or Parent before such election shall cease to constitute a majority of the
board of such entity.
(k) A “Change in Terms of Service” means the occurrence of any one or more of the
following (whether at the same time or at different times):
(1) A significant reduction in the nature or scope of the Employee’s authorities or
duties;
(2) A reduction in the Employee’s Base Salary or target opportunity under the Bonus
Program or any other material breach by the Company of the terms of this Agreement relating
to compensation matters, a diminution of the Employee’s eligibility to participate in any
bonus, incentive award, or other compensation plans, or any other reduction in any other
applicable bonus or incentive compensation plan or arrangement or significant detrimental
change in the target opportunity goals or the measurement thereof;
(3) A diminution in the Employee’s Employee Benefits;
(4) A change in the location of the Employee’s principal place of employment by the
Company by more than 50 miles; or
(5) Failure of the Company or Parent to obtain from any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company or Parent an agreement to expressly assume and
agree to perform this Agreement in the same manner and to the
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same extent that the Company
would be required to perform such agreement if no such succession had taken place.
For purposes of determining whether an event constitutes a “Change in Terms of Service,” the
Employee’s authorities, duties, Base Salary, Target Bonus, incentive compensation opportunity,
participation in compensation plans, Employee Benefits, and principal place of employment, as they
existed immediately prior to any change thereof (including any increases or additions to such items
subsequent to the date of this Agreement) shall be compared to those existing immediately after any
such change.
(l) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985.
(m) “Code” means the Internal Revenue Code of 1986, as amended.
(n) “Company” is defined in the preamble to this Agreement.
(o) “Confidential Information” is defined in Section 7(a) hereof.
(p) “Disability” refers to any circumstances in which the Employee is, by reason of
any medically determinable physical or mental impairment which can be expected to result in death
or can be expected to last for a continuous period of not less than 12 months, (i) unable to engage
in any substantial gainful activity, or (ii) receiving income replacement benefits for a period of
not less than three months under an accident, health, or other disability insurance plan covering
employees of the Company.
(q) “DPC Entities” means, collectively, the Company, the Parent, and their respective
Affiliates.
(r) “Employee” is defined in the preamble to this Agreement.
(s) “Employee Benefits” is defined in Section 5(b) hereof.
(t) “Employment Term” is defined in Section 2(b) hereof.
(u) “Excise Tax” is defined in Section 10(b) hereof.
(v) “Gross-up Payment” is defined in Section 10(b) hereof.
(w) “Health Insurance Coverage Period” is defined in Section 10(a) hereof.
(x) “Inventions” is defined in Section 7(b) hereof.
(y) An “Involuntary Termination” means any termination of the Employee’s employment
with the Company which results from a resignation by the Employee on or before the date which is 30
days after the date upon which the Employee receives notice of a Change in Terms of Service.
Notwithstanding the foregoing, the term “Involuntary Termination” shall not include a Termination
for Cause or any termination as a result of death, Disability, or Retirement.
- 15 -
The delivery of
written notice of resignation by the Employee to the Company within such 30-day period shall be
deemed to satisfy the timing requirements of this Section 21(y) even if the actual date of the
termination of the Employee’s employment occurs after the expiration of such period.
(z) “LIBOR” means the rate for three-month deposits in U.S. dollars that appears on
the display on the Dow Xxxxx Telerate Service for the purpose of displaying the London interbank
rates of major banks for U.S. dollars as of 11:00 a.m., London time, on a particular date.
(aa)
“Merger” is defined in Recital C above.
(bb)
“Non-Compete Period” is defined in Section 6 hereof.
(cc)
“Non-Extension Notice” is defined in Section 2(a) hereof.
(dd)
“Original Employment Agreement” is defined in Recital A above.
(ee)
“OTTP” is defined in Recital C above.
(ff)
“Parent” is defined in the preamble to this Agreement.
(gg)
“Payment” is defined in Section 10(b) hereof.
(hh) “Person” includes any individual, trust, estate, business trust, partnership,
corporation, unincorporated association, governmental entity, limited liability company, and any
other juridical person.
(ii) “Prorated Bonus Amount” means the actual amount of the Annual Bonus, if any, that
the Employee would have been entitled to receive for a particular fiscal year of the Company, as if
the Employee had been employed by the Company for such full fiscal year, multiplied by a fraction,
the numerator of which is the number of days in the period for which the Prorated Bonus Amount is
to be determined, and the denominator of which is 365.
(jj) “Retirement” shall mean the Employee’s resignation on or after the date on which
the Employee reaches age sixty-five.
(kk) “Severance Amount” means two times the sum of the Employee’s Base Salary at the
time of a termination of the Employment hereunder, plus the Employee’s Target Bonus for the year in
which such termination occurs.
(ll) The “Target Bonus” means the Annual Bonus to which the Employee would be entitled
for the Company’s fiscal year in which a termination of the Employee’s employment with the Company
occurs, determined as if actual performance for such fiscal year equaled 100% of each corporate and
individual goal established for such year under the Bonus Program.
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(mm)
“Vacation Period” is defined in Section 5(c) hereof.
(nn)
“Writings” is defined in Section 7(b) hereof.
PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EMPLOYEE IS HEREBY CERTIFYING THAT THE EMPLOYEE (A)
RECEIVED A COPY OF THIS AGREEMENT FOR
REVIEW AND STUDY BEFORE EXECUTING IT; (B) READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT; (C) HAD
SUFFICIENT OPPORTUNITY BEFORE SIGNING THIS AGREEMENT TO ASK ANY QUESTIONS THE EMPLOYEE HAD ABOUT
THIS AGREEMENT AND RECEIVED SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; (D) UNDERSTANDS THE
EMPLOYEE’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT; AND (E) EXECUTED AND DELIVERED THIS
AGREEMENT AT THE OFFICES OF THE COMPANY IN BRENTWOOD, TENNESSEE.
Executed And Effective as of the date first written above.
| The Company: | ||||||||
| Witness: | XXXXX PET CARE COMPANY | |||||||
| By: | ||||||||
Printed Name:
|
Xxxxxxx X. Xxxxxx | |||||||
| President & CEO | ||||||||
| Date: October 24, 2005 | Date: October 24, 2005 | |||||||
| Parent: | ||||||||
| Witness: | XXXXX PET CARE ENTERPRISES, INC. | |||||||
| By: | ||||||||
Printed Name:
|
Xxxxxxx X. Xxxxxx | |||||||
| President & CEO | ||||||||
| Date: October 24, 2005 | Date: October 24, 2005 | |||||||
| The Employee: | ||||||||
Witness: |
||||||||
Printed Name:
|
Xxxxxx X. Xxxxxxxx | |||||||
| Date: October 24, 2005 | Date: October 24, 2005 | |||||||
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EXHIBIT A
to Employment Agreement with
XXXXXX X. XXXXXXXX
XXXXXX X. XXXXXXXX
XXXXX PET CARE COMPANY
ANNUAL BONUS PROGRAM
1. For each fiscal year of the Company during the Employment Term, the Board, after taking
into consideration the recommendations of the President of the Company, will establish an EBITDA
Target (“Target”) for the Company, based on the operating budget established for the Company for
each such year. The Target for fiscal year 2005 is set at $102,200,000. For all purposes under
this program, the term “EBITDA” shall mean GAAP cash flows from operating activities, including
income from joint ventures, before interest paid, income taxes paid, changes in working capital and
certain other charges (specifically including SFAS 133 gains and losses and litigation
settlements, as well as charges associated with strategic and financial initiatives, including
acquisitions, divestitures, financing transactions and restructuring efforts such as plant
closings).
2. For purposes of computing the Executive’s annual bonus, the Base Bonus (“Base Bonus”) will
be equal to 75% of his base salary in effect at the end of the fiscal year. The Executive’s annual
bonus will be computed by multiplying the Base Bonus times the Percentage of Bonus Earned
determined in paragraphs (a) – (c) below.
| (a) | Where the actual performance is greater than 99% and less than 101% of the Target for such fiscal year, the Percentage of Bonus Earned will be 100%. | ||
| (b) | When the actual performance equals or exceeds 101% of the Target for such fiscal year, the Percentage of Bonus Earned will be 100%, plus 5% for each full 1% increase in EBITDA over the Target. | ||
| (c) | When the actual performance is 99% of the Target or less, the Percentage of Bonus Earned shall be 100%, less 5% for each full 1% that the actual results are less than the Target. |
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| For illustration purposes, assume the Executive’s Base Salary is $275,000 and his Target Bonus is 75% of Base Salary, or $206,250: | |||
| Bonus Calculation Where Performance is between 99% and 101% of Target |
| Target | Percentage of | Annual | ||||||
| Bonus | Target Bonus Earned | Bonus | ||||||
| $206,250 | X | 100% | = | $206,250 |
Bonus Calculation Where the Actual Performance Equals or Exceeds 101% of
the Target: (Assumed Results: 105% of Target)
| Target | Percentage of | Annual | ||||||
| Bonus | Target Bonus Earned | Bonus | ||||||
| $206,250 | X | 125% | = | $257,812.50 |
Bonus Calculation Where the Actual Performance is Equal to 99% of the
Target or Less: (Assumed Results: 97% of Target)
| Target | Percentage of | Annual | ||||||
| Bonus | Target Bonus Earned | Bonus | ||||||
| $206,250 | X | 85% | = | $175,312.50 |
3. In the event that, after the setting of the Targets for a fiscal year, the Company or any
of its subsidiaries acquires additional assets, entities or subsidiaries that produce the same or
similar products, which acquisition, either singly or together with one or more other acquisitions,
the board determines in good faith may significantly affect the Target for the fiscal year, the
board may, in good faith, either (a) adjust such Target to reflect the projected effect of such
acquisition or acquisitions on the Target or (b) exclude the effects of such acquisition or
acquisitions on the Target for purposes of determining Executive’s annual bonus by calculating the
Target for such fiscal year or a pro forma basis as though such acquisition or acquisitions had not
been consummated. Similarly, in the event that, after setting the Target, the Company is acquired
by another Person (whether by purchase, merger, consolidation or sale of all or substantially all
of the Company’s consolidated assets) and the board determines in good faith that such acquisition
may significantly affect the Target for the fiscal year, the board may, in good faith, either (x)
adjust such Target to reflect the projected effect of such acquisition of the Target or (y) exclude
the effects of such acquisition on the Target for purposes of determining Executive’s annual bonus
by calculating the Target for such fiscal year on a pro forma basis as though such acquisition had
not been consummated.
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4. The annual bonus payable for any fiscal year will be paid within 30 days after the delivery
of the Company’s audited financial statements for such fiscal year. In the event of any dispute
between the Company and Executive as to the amount of the bonus for any fiscal year, such dispute
will be reserved by the Company’s auditors or either of PriceWaterhouseCoopers or Ernst & Young, or
their successors, as selected by the board, by having such accounting firm calculate the amount of
the bonus for such fiscal year utilizing the Company’s audited financial statements for such fiscal
year. The decision of such accounting firm will be final and binding on the Company and Executive.
5. Except as otherwise provided herein, capitalized terms used herein which are not defined
herein have the meanings given to such terms under the Employment Agreement to which this Annual
Bonus Program is attached.
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EXHIBIT B
to Employment Agreement
PERQUISITES
Each executive officer shall receive:
| 1. | a car allowance of $1,770/month (or the equivalent in British pounds for Xxx Xxxx); and | ||
| 2. | a Company issued cell phone, blackberry and laptop computer. |
In addition, Xxx Xxxx shall receive:
| 1. | a housing allowance of £32,200 per year; and | ||
| 2. | Company paid travel to the U.S. and back one time each month. |
