TRANSACTION BONUS PLAN
Exhibit 10.7
WHEREAS, on August 28, 2005, Xxxxx Pet Care Enterprises, Inc. (the “Company”) and its
wholly owned subsidiary, Xxxxx Pet Care Company (“Doane”) entered into an Agreement and
Plan of Merger (the “Merger Agreement”) with DPC Newco, Inc. (“Newco”), a Delaware
corporation formed by Ontario Teachers’ Pension Plan Board (“OTPP”);
NOW, THEREFORE, this Transaction Bonus Plan (the “Plan”) sets forth the terms and
conditions of the Bonuses approved by the Board.
1. | Amount of Bonus Pool. The aggregate dollar amount of the Bonuses awarded under the Plan shall be $14,750,000. All Bonuses awarded under the Plan are intended to be transaction bonuses as contemplated under Section 5.1(e)(ii)(B) of the Merger Agreement. | |
2. | Individual Bonus Awards. Bonuses under the Plan are hereby awarded to the Participants in the respective amounts indicated on such Exhibit A. | |
3. | Conditions to Payment. The payment of the Bonuses is subject to the following conditions: (i) the consummation of the Transaction, (ii) the Participant either (A) remaining continuously employed with Doane through the consummation of the Transaction or (B) terminating employment with Doane prior to the consummation of the Transaction as a result of the Participant’s death or disability. For purposes of the Plan, “disability” shall have the meaning given in each Participant’s employment agreement with Doane (or an affiliate of Doane). |
4. | Form of Payment. Bonuses awarded to Participants shall be paid either in cash (“Cash Awards”) or in a contractual right to receive shares of the Company’s Class A common stock, par value $0.01 per share, as the same shall be authorized under the certificate of incorporation of the Company following the consummation of the Transaction (“Common Stock”), as specified on Exhibit A attached hereto (“Deferred Shares”). Cash Awards shall be paid as soon as reasonably practicable following consummation of the Transaction. Any award of Deferred Shares shall be evidenced by a deferred share agreement to be entered into by the Company, Doane, and the Participant (a “Deferred Share Agreement”) in substantially the form attached as Exhibit B hereto. | |
5. | Tax Withholding. Doane or the Company, as applicable, shall have the power to withhold, or require a Participant to remit to the applicable entity promptly upon notification of the amount due, an amount (in cash or, in the discretion of the Board or a committee thereof, in shares of Common Stock otherwise deliverable to a Participant) sufficient to satisfy the statutory minimum federal, state, local, and foreign withholding tax requirements with respect to the award of any Bonuses awarded under the Plan. The withholding of taxes payable upon or with respect to an award of Deferred Shares shall be governed by the terms of the Deferred Share Agreement. | |
6. | Termination. If the Merger Agreement is terminated pursuant to Section 7.1 thereof, this Plan shall be immediately terminated, and neither the Company nor Doane shall have any liability to any Participant hereunder or under any Deferred Share Agreement. | |
7. | Unsecured Creditor. To the extent that any Participant acquires a right to receive any payment from the Company pursuant to this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. | |
8. | Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included. | |
9. | Effective Date. The Plan is a new compensation arrangement for Participants that shall become effective as of October 21, 2005. |
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EXHIBIT A
To Transaction Bonus Plan
To Transaction Bonus Plan
Total Bonus | Deferred Share | Cash Bonus | ||||||||||
Name | Amount | Amount | Amount | |||||||||
Xxxxxxx X. Xxxxxx |
$ | 6,750,000 | $ | 1,720,204 | * | $ | 5,029,796 | * | ||||
Xxxxx X. Xxxxxx |
$ | 2,000,000 | $ | 593,000 | $ | 1,407,000 | ||||||
Xxxxxxx X. Xxxx |
$ | 1,500,000 | $ | 506,000 | $ | 994,000 | ||||||
Xxxxxx X. Xxxxxx |
$ | 2,000,000 | $ | 522,000 | $ | 1,478,000 | ||||||
Xxxxxx X. Xxxxxxxx |
$ | 2,500,000 | $ | 703,500 | $ | 1,796,500 |
* | Approximate amounts, based on merger consideration equal to $2.75 per share; these amounts may be adjusted upon the final determination of the merger consideration. |
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EXHIBIT B
To Transaction Bonus Plan
To Transaction Bonus Plan
DEFERRED SHARE AGREEMENT
DEFERRED SHARE AGREEMENT (this “Agreement”), dated as of ___, 2005, is made
between Xxxxx Pet Care Enterprises, Inc. (the “Company”) and the individual whose name
appears on the signature page hereof (the “Employee”) pursuant to the terms of the
Company’s Transaction Bonus Plan (the “Plan”). Capitalized terms used in this Agreement
and not otherwise defined herein shall have the meaning given such terms in the Plan.
1. Grant of Deferred Shares. Effective as of the date hereof, the Company hereby
evidences and confirms its award to the Employee, on the terms and conditions of this Agreement and
the Plan, of the number of Deferred Shares set forth on the signature page hereof, which represent
the Company’s contractual obligation to deliver shares of Common Stock to the Employee upon the
terms and conditions set forth herein and in the Plan.
2. Delivery of Shares Underlying Deferred Shares. Any shares of Common Stock
delivered or to be delivered in respect of Deferred Shares under this Section 2 are hereinafter
referred to as “Shares.”
(a) Unless the Employee shall elect to defer such distribution (a “Deferral Election”)
by written notice to the Company in accordance with the procedures and conditions provided under
Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively,
“Section 409A”), upon the occurrence of a Trigger Event, the Company shall issue to the
Employee, without payment of any consideration by the Employee, one share of Common Stock in
settlement of each Deferred Share that he then holds.
(b) If a Trigger Event shall not have occurred prior to the dates specified below, and unless
the Employee shall make a Deferral Election, the Company shall issue to the Employee on such dates,
without payment of any consideration by the Employee, one share of Common Stock in settlement of
each Deferred Share to be settled on such dates, as follows: (i) on October 31, 2009, one-third of
the total number of Deferred Shares that he holds on such date; (ii) on October 31, 2010, one-half
of the Deferred Shares that he holds on such date (other than any such
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Deferred Shares that he may have elected to defer receiving on October 31, 2009, as provided
herein); and (iii) on October 31, 2011, the balance of any Deferred Shares that he holds on that
date (other than any such Deferred Shares that he may have elected to defer receiving on October
31, 2009, or October 31, 2010, as provided herein). In like manner, any Deferred Shares that are
the subject of a Deferral Election shall be settled by the issuance of a like number of Shares on
the expiration of the applicable deferral period, unless the same are subject to a subsequent
Deferral Election.
As a condition to the delivery of any Shares in respect of Deferred Shares, the holder of such
Deferred Shares shall become a party to (and such Shares shall become subject to) the Stockholders
Agreement being entered into between the Company and a majority of its stockholders as of the date
of this Agreement, as the same may be modified or amended from time to time. In the case of any
Shares delivered in connection with a Change in Control, such Shares shall be deemed to be subject
to the Stockholders Agreement effective as of immediately prior to the Change in Control.
For the purposes of this Agreement, the following definitions shall apply:
“Trigger Event” means the first to occur of the following: (1) a Change in Control;
(2) the date of a termination of the Employee’s employment with the Company or an affiliate of the
Company, if such termination occurs at any time between January 1 and May 31 in a particular year;
or (3) the first March 15th following the date of a termination of the Employee’s
employment with the Company or an affiliate of the Company, if such termination occurs at any time
between June 1 and December 31 in a particular year. For purposes of this definition, a
termination of the Employee’s employment with the Company shall constitute a Trigger Event only if
such termination constitutes a “separation of service” under Section 409A.
“Change in Control” means a transaction or series of related transactions occurring
after the closing of the Transaction that:
(i) involves the acquisition of Common Stock or Class B Common Stock of the Company
representing more than 50% of the total fair market value of the Common Stock and Class B Common
Stock of the Company or any successor by any one person or group (other than Ontario Teachers’
Pension Plan Board, an entity without share capital organized under the laws of Ontario, Canada
(“OTPP”), or an affiliate of OTPP or the Company;
(ii) involves the acquisition of Common Stock or Class B Common Stock of the Company
representing 35% or more of the total voting power of the Common Stock and Class B Common Stock of
the Company or any successor by any one person or group (other than OTPP or an affiliate of the
Company or OTPP);
(iii) involves a majority of the members of the Company’s board of directors being replaced
during any 12-month period by directors whose appointment or election is not endorsed by a majority
of the members of the Company’s board of directors before the date of the appointment or election;
(iv) involves the acquisition by any one person or group (other than OTPP or an affiliate of
the Company or OTPP) of assets of the Company that have a total gross fair market
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value equal to or more than 50% of the total gross fair market value of all of the assets of
the Company immediately before such acquisition.
For purposes of this definition, a Public Offering shall not be a Change in Control unless, in
connection with such Public Offering, one or more of criteria described in items (i) through (iii)
above is satisfied. The term “Change in Control” shall be interpreted in a manner consistent with
the Change in Control Event provisions of Section 409A.
“Public Offering” means a public offering pursuant to an effective registration
statement filed with the Securities and Exchange Commission (the “Commission”) that covers
shares of Common Stock of the Company or any successor that, after the closing of such public
offering, will be traded on the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers Automated Quotation System or similar non-U.S. exchange
or quotation system.
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holding the Deferred Shares and Shares for an indefinite period and (ii) the Employee
can afford to suffer the complete loss of the Employee’s investment in the Deferred Shares and
Shares.
4. Miscellaneous.
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stockholder of the Company with respect to any Shares corresponding to the Deferred Shares
granted hereby unless and until such Shares are issued in respect thereof.
(A) | If to the Company, to: | |||
Xxxxx Pet Care Enterprises, Inc. | ||||
000 Xxxxxxxx Xxxxx Xxxxx | ||||
Suite 400 | ||||
Brentwood, Tennessee 37027 | ||||
Attn: President | ||||
Fax Number: (000) 000-0000 | ||||
Attn: General Counsel | ||||
Fax Number: (000) 000-0000 |
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with copies to: | ||||
Ontario Teachers’ Pension Plan Board | ||||
0000 Xxxxx Xxxxxx | ||||
Toronto, Ontario M2M 4H5 Canada | ||||
Attn: General Counsel | ||||
Fax Number: [(000) 000-0000] | ||||
Attn: Xxxx Xxxxxxx | ||||
Fax Number: (000) 000-0000 | ||||
Xxxxxx, Xxxxxx, Xxxxxx & Xxxxxx llp | ||||
00 Xxxxx Xxxx Xxxxxx | ||||
Columbus, Ohio 43215 | ||||
Attn: Xxxxxxx X. Xxxxx, Esq. | ||||
Fax Number: (000) 000-0000 | ||||
and | ||||
Debevoise & Xxxxxxxx LLP | ||||
000 Xxxxx Xxxxxx | ||||
New York, New York 10022 | ||||
Attn: Xxxxxxxx X. Xxxxxxxxx, Esq. | ||||
Fax Number: (000) 000-0000 | ||||
(B) | If to the Employee, to the Employee’s last known home address; or | |||
(C) | to such other person or address as any party shall specify by notice in writing to the other party. |
All such notices, requests, demands, letters, waivers and other communications shall be deemed
to have been received (w) if by personal delivery, on the day after such delivery,
(x) if by certified or registered mail, on the fifth business day after the mailing
thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, or
(z) if by fax, on the day delivered, provided that such delivery is confirmed.
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be deemed to constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained herein. The waiver by either party
hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver
of any preceding or succeeding breach and no failure by either party to exercise any right or
privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or
shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or
times hereunder.
(m) Applicable Law. This Agreement shall be governed by and construed in accordance
with the law of the State of Delaware, regardless of the law that might be applied under principles
of conflict of laws.
(p) FOR FLORIDA PURCHASERS. PURCHASERS OF SECURITIES THAT ARE EXEMPTED FROM REGISTRATION BY
SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT HAVE THE RIGHT TO VOID
THEIR PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION UNLESS SALES ARE MADE
TO FEWER THAN FIVE (5) PURCHASERS IN FLORIDA (NOT COUNTING INSTITUTIONAL INVESTORS DESCRIBED IN
SECTION 517.061(7)).
XXXXX PET CARE ENTERPRISES, INC. | ||||
By: | ||||
Name: | ||||
Title: |
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THE EMPLOYEE: | ||
«Name» | ||
By: | ||
Address of the Employee | ||
«Address» |
Number of Deferred Shares:
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