AMENDED AND RESTATED SENIOR EXECUTIVE TERMINATION BENEFITS AGREEMENT
EXHIBIT
10.02
AMENDED
AND RESTATED
SENIOR
EXECUTIVE
TERMINATION
BENEFITS AGREEMENT
This Amended and Restated Senior
Executive Termination Benefits Agreement (the “Agreement”), dated as of January
15, 2009 (the “Effective Date”), by
and between Darling International Inc., a Delaware corporation (the “Company”), and Xxxx
X. Xxxx (the “Executive”).
W
I T N E S S E T H:
WHEREAS, the Executive and the Company
previously entered into that certain Senior Executive Termination Benefits
Agreement, dated as of December 31, 2007, as amended by that First Addendum to
Senior Executive Termination Benefits Agreement dated as of December 9, 2008
(collectively, the “Prior Agreement”); and
WHEREAS,
the Executive has made and, if he continues to be employed by the Company, will
continue to make valuable contributions to the productivity and profitability of
the Company; and
WHEREAS, the Company considers that
providing severance benefits will operate as an incentive for the Executive to
remain employed by the Company; and
WHEREAS, this Agreement amends,
restates and supersedes the Prior Agreement in its entirety;
NOW, THEREFORE, to induce the Executive
to remain employed by the Company, and to acknowledge the “At Will” status of
the Executive’s employment by the Company, and for other good and valuable
consideration, the Company and the Executive agree as follows:
1. Circumstances
Triggering Receipt of Severance Benefits.
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Subject
to the Executive’s execution of a general release (on the Company’s
standard form) in favor of the Company pursuant to which the Executive
waives, effective as of the Termination Date (as hereinafter defined), any
and all claims, known or unknown, relating to the Executive’s employment
by the Company or the termination thereof, the Company shall provide the
Executive with the benefits set forth in Section 3 upon any termination of
the Executive’s employment for any reason except the
following:
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(a)
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Termination by reason
of the Executive’s “voluntary termination” other than a Change in Control
Termination (as hereinafter defined). For the purposes of this
Agreement, “voluntary
termination” shall mean the voluntary resignation by the Executive
of his employment with the Company;
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(b)
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“Termination with
Cause.” For the purposes hereof, “Cause” shall
mean termination of employment of the Executive by the Company following
(1) failure of the Executive to render services to the Company in
accordance with the reasonable directions of the Company’s Chief Executive
Officer or Board of Directors, which failure shall continue after written
notice from the Company, (2) the commission by the Executive of an act of
fraud or dishonesty or of an act which he knew to be in material violation
of his duties to the Company (including the unauthorized disclosure of
confidential information) or (3) following a felony conviction of the
Executive; or
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(c)
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Termination upon the
Executive’s normal retirement. For the purposes of this
Agreement, “normal retirement” shall mean the termination of employment of
the Executive by the Company or the Executive in accordance with the
Company’s retirement policy (including early retirement, if included in
such policy and elected by the Executive in writing) generally applicable
to its senior executive employees, or in accordance with any other
retirement agreement entered into by and between the Executive and the
Company.
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For
the purpose of this Agreement, the placement of the Executive on permanent
or long-term disability status as defined by the Company’s long-term
disability policy covering the Executive and the death of the Executive
shall not be deemed a termination and shall not qualify the Executive for
the benefits set forth in this
Agreement.
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2. No
Entitlement of Employment and Acknowledgment of “At Will” Status.
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This
Agreement shall not be construed as and does not constitute a promise or
guaranty of continued employment. In consideration of this Agreement, the
Executive acknowledges and agrees that his employment with the Company is
“At Will”. The Executive understands that his employment with the Company
is not for a specified term and is at the mutual consent of the Executive
and the Company and, therefore, the Company can terminate the employment
relationship at will, with or without
Cause.
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3. Termination
Benefits.
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Subject
to the conditions set forth in Section 1, and subject to the mitigation
provisions contained in Section 5, the following benefits (subject to any
changes in benefit programs that may occur in the future and any
applicable payroll or other taxes required to be withheld) shall be
provided to the Executive:
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(a)
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Compensation.
Commencing on the Termination Date (as defined below), the Executive shall
be paid periodically, according to his unit’s wage practices, the amount
of his periodic base salary until he has been paid one and one-half (1.5)
times his annual base salary (“Termination Pay
Amount”) at the highest rate in effect in the preceding twelve (12)
months. Each such periodic termination payment is hereby
designated a separate payment for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”). Notwithstanding
the foregoing, if a Change in Control (as hereinafter defined) of the
Company occurs and if either the Company terminates the Executive’s
employment without Cause within twelve (12) months following such Change
in Control or the Executive resigns within ninety (90) days following such
Change in Control (either such event being referred to herein as a “Change in Control
Termination”) then in lieu of the Termination Pay Amount, and not
in addition thereto, the Executive shall receive a lump sum payment within
thirty (30) days of the date of termination or resignation, as the case
may be, equal to three (3) times the Executive’s annual base salary at the
highest rate in effect in the preceding twelve (12) months (the “Change in Control
Termination Payment”).
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(b)
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Vacation Pay.
Any accrued vacation pay due but not yet taken at the Termination Date
shall be paid to the Executive on the date his employment with the Company
is terminated (the “Termination
Date”).
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(c)
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Welfare Benefits,
etc. The Executive’s participation (including dependent coverage)
in any life, disability, health and dental plans, and any other similar
fringe benefits of the Company (except business accident insurance and
continued contributions to qualified retirement plans) in effect
immediately prior to the Termination Date shall be continued, or
equivalent benefits provided by the Company, for a period of eighteen (18)
months from the Termination Date, or thirty-six (36) months in the case of
a Change in Control Termination, to the extent allowed under the policies
or agreements pursuant to which the Company obtains and provides such
benefits.
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(d)
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Bonus and Retirement
Benefits. The Executive shall not be entitled to any
bonus under the Company’s executive bonus plan for the year in which his
termination occurs. The Agreement shall not affect the Executive’s
entitlement to benefits under the Company’s retirement plan accrued as of
his termination.
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(e)
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Executive Outplacement
Counseling. The Company shall engage an outplacement
counseling service of national reputation, at its own expense provided
that such expense shall not exceed Ten Thousand Dollars ($10,000), to
assist the Executive in obtaining employment, until the earliest of (i)
two years from the Termination Date, (ii) such date as the Executive has
obtained employment, or (iii) until such time the Company’s expenses equal
Ten Thousand Dollars ($10,000).
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For
purposes of the Agreement, “Change in Control”
means the occurrence of any of the following events:
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(1) Any
Person, as defined in the Company’s 2004 Omnibus Incentive Plan (the “Omnibus Plan”),
becomes the Beneficial Owner (as defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934) of thirty-five percent
(35%) or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of its
Directors (the “Outstanding Employer Voting
Securities”); provided, however, that the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company, including without limitation, a public
offering of securities; (ii) any acquisition by the Company or any of its
Subsidiaries (as defined in the Omnibus Plan); (iii) any acquisition by an
employee benefit plan or related trust sponsored or maintained by the Company or
any of its Subsidiaries; or (iv) any acquisition by any Person pursuant to a
transaction which complies with clauses (i), (ii), and (iii) of clause (3) of
this definition below;
(2) Individuals
who constitute the Board of Directors as of the Effective Date (the
“Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board of Directors; provided, however, that any
individual becoming a Director subsequent to the Effective Date whose election
to the Board of Directors, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the Directors
then comprising the Incumbent Board, shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election or
removal of the Directors of the Company or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board of Directors;
(3) Consummation
of a reorganization, merger, or consolidation to which the Company is a party or
a sale or other disposition of all or substantially all of the assets of the
Company (a “Business
Combination”), unless, following such Business Combination: (i) all or
substantially all of the individuals and entities who were the Beneficial Owners
of Outstanding Voting Securities immediately prior to such Business Combination
are the Beneficial Owners, directly or indirectly, of more than fifty percent
(50%) of the combined voting power of the outstanding voting securities entitled
to vote generally in the election of directors (or election of members of a
comparable governing body) of the entity resulting from the Business Combination
(including, without limitation, an entity which as a result of such transaction
owns all or substantially all of the Company or all or substantially all of the
Company’s assets either directly or indirectly or through one or more
Subsidiaries) (the “Successor Entity”) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Employer Voting Securities; (ii) no
Person (excluding any Successor Entity or any employee benefit plan or related
trust of the Company, such Successor Entity, or any of their Subsidiaries) is
the Beneficial Owner, directly or indirectly, of thirty-five percent (35%) or
more of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors (or comparable governing
body) of the Successor Entity, except to the extent that such ownership existed
prior to the Business Combination; and (iii) at least a majority of the members
of the board of directors (or comparable governing body) of the Successor Entity
were members of the Incumbent Board (including persons deemed to be members of
the Incumbent Board by reason of the proviso of clause 2 of this definition at
the time of the execution of the initial agreement or of the action of the Board
of Directors providing for such Business Combination; or
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(4) Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
4. Entirety.
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This
Agreement constitutes the entire agreement between the parties pertaining
to the subject matter contained herein and supersedes all prior and
contemporaneous agreements, representations and understandings of the
parties. No supplement, modification or amendment of this Agreement shall
be binding unless referring specifically to this Agreement and executed in
writing by the parties hereto. In no event will the Executive
be entitled to severance under both this Agreement and the Company’s
severance policy, if any, as it is the intent of the parties hereto that
the severance provided for in this Agreement shall be in lieu of, and not
in addition to, the severance that the Executive would otherwise be
entitled to under the Company’s severance policy, if
any.
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5. Mitigation.
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The
Executive is required to mitigate the Termination Pay Amount by seeking
other comparable employment as promptly as practicable after the
Termination Date and amounts due hereunder shall be offset against or
reduced by any amount earned from such other employment. The benefits
provided for in Section 3(c) shall terminate upon the Executive’s
obtaining such other employment. The Executive hereby agrees to notify the
Company promptly upon obtaining
employment.
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6. Certain
Obligations of Executive.
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In
order to induce the Company to enter into this Agreement, the Executive
hereby agrees to the following obligations, which obligations of the
Executive shall be in addition to, and shall not limit, any other
obligation of the Executive to the Company with respect to the matters set
forth herein or otherwise:
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(a)
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Nondisclosure. The
Executive hereby agrees that all documents, records, techniques, business
secrets, price and route information, business strategy and other
information, whether in electronic form, hardcopy or other format, which
have come into his possession from time to time during his employment by
the Company or which may come into his possession during his employment,
shall be deemed to be confidential and proprietary to the Company and the
Executive further agrees to retain in confidence any confidential
information known to him concerning the Company and its affiliates and
their respective businesses, unless such information (i) is publicly
disclosed by the Company or (ii) is required to be disclosed by valid
legal process; provided, however, that prior to any such disclosure, if
reasonably practicable, the Executive must first notify the Company and
cooperate with the Company (at the Company’s expense) in seeking a
protective order.
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(b)
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Return of
Property. The Executive agrees that, upon termination of
the Executive’s employment with the Company for any reason, the Executive
will return to the Company, in good condition, all property of the Company
and any of its affiliates, including without limitation, keys; building
access cards; computers; cellular telephones; automobiles; the originals
and all copies (in whatever format) of all management, training,
marketing, pricing, strategic, routing and selling materials; promotional
materials; other training and instructional materials; financial
information; vendor, owner, manager and product information; customer
lists; other customer information; and all other selling, service and
trade information and equipment. If such items are not
returned, the Company will have the right to charge the Executive for all
reasonable damages, costs, attorneys’ fees and other expenses incurred in
searching for, taking, removing and/or recovering such
property.
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(c)
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Nonsolicitation. During
the period of employment with the Company and for a period of 12 months
thereafter, the Executive will not, on the Executive’s own behalf or on
behalf of any other person, partnership, association, corporation or other
entity, or otherwise act indirectly to hire or solicit or in any manner
attempt to influence or induce any employee of the Company or its
affiliates to leave the employment of the Company or its affiliates, nor
will the Executive use or disclose to any person, partnership,
association, corporation or other entity any information obtained while an
employee of the Company concerning the names and addresses of the
employees of the Company or its
affiliates.
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(d)
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Nondisparagement. The
Executive shall not, either during the term of this Agreement or at any
time thereafter, make statements, whether orally or in writing, concerning
the Company, any of its directors, officers, employees or affiliates or
any of its business strategies, policies or practices, that shall be in
any way disparaging, derogatory or critical, or in any way harmful to the
reputation of the Company, any such persons or entities or business
strategies, policies or practices.
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(e)
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Cooperation. The
Executive agrees to cooperate, at the request and expense of the Company,
in the prosecution and/or defense of any claim or litigation in which the
Company or any affiliate is involved on the Termination Date or thereafter
that includes subject matter as to which the Executive has knowledge
and/or expertise.
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(f)
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Damages. Notwithstanding
anything in this Agreement to the contrary, if the Executive breaches the
covenants contained in this Section 6, the Company will have no further
obligations to the Executive pursuant to this Agreement or otherwise and
may recover from the Executive all such damages to which it may be
entitled at law or in equity. In addition, the Executive
acknowledges that any such breach may result in immediate and irreparable
harm to the Company for which money damages are likely to be
inadequate. Accordingly, the Company may seek whatever relief
it determines to be appropriate to protect the Company’s rights under this
Agreement, including, without limitation, an injunction to prevent the
Executive from disclosing any trade secrets or confidential or proprietary
information concerning the Company to any person or entity, to prevent any
person or entity from receiving from the Executive or using any such trade
secrets or confidential or proprietary information and/or to prevent any
person or entity from retaining or seeking to retain any other employees
of the Company. The Executive acknowledges good and sufficient
consideration for the covenants of this Section
6.
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7. Successors.
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The
Company will require 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 to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession has
taken place.
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8. Governing
Law.
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The
validity, interpretation, construction and performance of this Agreement
shall be governed by the internal laws of the State of
Texas.
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9. Termination.
This Agreement shall terminate on
December 31, 2009.
10. Certain
Additional Payments.
(a) Anything
in this Agreement to the contrary notwithstanding, if prior to the second
anniversary of the change in ownership or effective control of the Company (as
those events are determined for purposes of Section 280G of the Code) it shall
be determined that any payment, benefit or distribution by the Company to or for
the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise), including
but not limited to for such determination acceleration of vesting and benefits
as determined in regulations promulgated pursuant to Section 280G of the Code,
but determined without regard to any additional payments required under this
Section 10 (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Code or any successor
provision, or any interest or penalties are incurred by the Executive with
respect to any such excise tax (such excise taxes, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in
an amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
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(b) Subject
to the provisions of Section 10(c), all determinations required to be made under
this Section10, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by a nationally recognized
certified public accounting firm as may be designated by the Company (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and the
Executive within forty-five (45) business days of the receipt of notice from
Executive to the Company that there has or may have been a Payment (a “Payment Notice”), or
such earlier time as is requested by the Company; provided that for purposes of
determining the amount of any Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the actual rates applicable to individuals in the
calendar year in which any such Gross-Up Payment is to be made and deemed to pay
state and local income taxes at the rates applicable to individuals in the state
or locality of the Executive’s residence or place of employment in the calendar
year in which any such Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes that can be obtained from deduction of such
state and local taxes, taking into account limitations applicable to individuals
subject to federal income tax at the actual rates. All fees and
expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this
Section10, shall be paid by the Company to the Executive (or directly to the
Internal Revenue Service or other appropriate taxing authority for the benefit
of the Executive), on or prior to the later of (i) the due date for the payment
of any Excise Tax, income tax or other amount comprising the Gross-Up Payment to
the relevant taxing authority, and (ii) the forty-fifth (45th) day
following the Company’s receipt of the Payment Notice, but in no event later
than the end of Executive’s taxable year following the year in which any Excise
Tax, income tax or other amount comprising the Gross-Up Payment was remitted to
the relevant taxing authority. Subject to the following provisions of
this Section 10 to the contrary, any determination by the Accounting Firm shall
be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (“Underpayment”), or
that additional amounts were paid to the Executive (“Overpayment”)
consistent with the calculations required to be made hereunder. In
the event that the Company exhausts its remedies pursuant to Section 10(c) and
the Executive thereafter is required to make a payment of any Excise Tax, or
there has been an Overpayment, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive, or the Executive
shall return to the Company the amount of such Overpayment, as the case may
be. Without extending any time period set forth in this Section 10
for any Gross-Up Payment or Underpayment due hereunder, such amount shall be
paid no later than the end of the calendar year following the calendar year in
which the Executive pays the related tax, except as stated in Section
11.
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(c) The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment or would require a re-calculation of amounts as set forth
in Section10(a). Such notification shall be given as soon as
practicable but no later than five (5) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim unless directed to do so
by the Company. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
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(i)
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give
the Company any information reasonably requested by the Company relating
to such claim;
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(ii)
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take
such action in connection with contesting such claim as the Company shall
request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;
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(iii)
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cooperate
with the Company in good faith in order effectively to contest such claim;
and
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(iv)
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permit
the Company to participate in any proceedings relating to such
claim;
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provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest and
penalties) reasonably incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. The Company shall control all proceedings taken in
connection with such contest, and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
pay the tax claimed to the appropriate taxing authority on behalf of the
Executive and direct the Executive to xxx for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which the Gross-Up Payment would be payable
hereunder, and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
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(d) If,
after the receipt by the Executive of a payment by the Company of an amount on
the Executive’s behalf pursuant to Section 10(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company’s complying with the requirements of Section10(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after payment
by the Company of an amount on the Executive’s behalf pursuant to Section 10(c),
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim, the Executive shall so notify the Company, and the
Executive shall co-operate with the Company, at the Company’s request, to
contest such denial of refund.
(e) The
parties intend that this Section 10 shall be in compliance with the
Xxxxxxxx-Xxxxx Act of 2002 (“SOX”). If
any provision of this Section 10 is inconsistent with SOX, the parties agree to
reform this Section 10 to comply therewith.
11. Compliance
with Code Section 409A.
To the
extent applicable, this Agreement shall be interpreted in accordance with
Section 409A of the Code and Department of Treasury regulations and other
interpretive guidance issued thereunder. Notwithstanding any
provision of this Agreement to the contrary, and if and only to the extent it
becomes necessary to prevent any accelerated or additional tax under Section
409A of the Code, if the Executive is a “specified employee” as defined in
Section 409A of the Code, any severance pay or benefits constituting deferred
compensation to which Section 409A applies and payable by reason of the
Executive’s termination of employment (severance pay and benefits up to $450,000
are not subject to Section 409A) shall be deferred (without any adjustment to
the amount of such payments or benefits ultimately paid or provided to the
Executive) until the date that is six (6) months following such termination (or
the earliest date as is permitted under Section 409A of the Code).
IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed and delivered as of the day
and year first above set forth.
| DARLING INTERNATIONAL INC. | |||
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By:
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/s/ Xxxxxxx X. Xxxxxx | ||
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Xxxxxxx X. Xxxxxx | ||
| Chief Executive Officer |
| EXECUTIVE | |||
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By:
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/s/ Xxxx X. Xxxx | ||
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Xxxx X. Xxxx | ||
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