UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Delaware 000-24620 36-2495346
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
251 O'CONNOR RIDGE BLVD., SUITE 300, IRVING, TEXAS 75038
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972) 717-0300
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
INTEGRATION SUCCESS INCENTIVE AWARD PLAN
On March 9, 2006, the Compensation Committee of the Board of Directors of Darling International Inc., a Delaware corporation (the "Company"), approved an Integration Success Incentive Award Plan (the "Integration Success Plan") for certain key employees of the Company pursuant to and in accordance with the Company's 2004 Omnibus Incentive Plan (the "2004 Omnibus Plan") in consideration of and conditioned upon the closing ("Closing") of the acquisition of substantially all of the assets (the "Transaction") of National By-Products, LLC, an Iowa limited liability company ("NBP"), by Darling National LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company ("Darling National"). The Transaction is governed by that certain Asset Purchase Agreement (the "Purchase Agreement"), dated December 19, 2005, by and among the Company, Darling National and NBP.
Closing Cash Payment
Under the Integration Success Plan, certain key employees of the Company will receive a cash payment promptly following Closing, provided the applicable employee's employment with the Company has not terminated, voluntarily or involuntarily, prior to Closing.
Additional Stock-Based Compensation
Under the Integration Success Plan, certain key employees of the Company and certain key employees of NBP who become an employee of the Company or Darling National at Closing will be entitled to receive a predetermined number of shares of Darling common stock if the average of the per share closing price of Darling common stock on the American Stock Exchange (as adjusted for any stock split, stock dividend, combination or recapitalization) for each of the trading days included in the 90 prior consecutive calendar days ending with the calendar day immediately preceding the last day of the 13th full consecutive month following Closing (the "True-up Market Price") is equal to or greater than the Target Share Price (as such term is defined in the Purchase Agreement), provided the applicable employee's employment with the Company or Darling National has not terminated, voluntarily or involuntarily, prior to the determination of the True-up Market Price. The Target Share Price will be approximately $4.303, but the actual Target Share Price will not be known until Closing.
The summary of the Integration Success Plan in this Current Report on Form 8-K is qualified in its entirety by reference to the full text of the Integration Success Plan attached hereto as Exhibit 10.1.
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK AWARD PLAN
On March 9, 2006, the Company's Board of Directors approved a Non-Employee Director Restricted Stock Award Plan (the "Director Restricted Stock Plan") pursuant to and in accordance with the 2004 Omnibus Plan in order to attract and retain highly qualified persons to serve as non-employee directors and to more closely align such directors' interests with the interests of the stockholders of the Company by providing a portion of their compensation in the form of Company common stock.
Under the Director Restricted Stock Plan, $20,000 in restricted Company common stock (the "Restricted Stock") will be awarded to each non-employee director on the third business day after the Company releases its earnings for its prior completed fiscal year, beginning with the earnings release for fiscal 2005 (the "Date of Award"). The Restricted Stock will be subject to a right of repurchase at $.01 per share upon termination of the holder as a member of the Company's Board of Directors for cause and will not be transferable. These restrictions will lapse with respect to 100% of the Restricted Stock upon the earliest to occur of (i) ten years after the Date of Award, (ii) a Change of Control (as defined in the 2004 Omnibus Plan) and (iii) termination of the non-employee director's service with the Company, other than for "cause" (as defined in the Director Restricted Stock Plan).
The summary of the Director Restricted Stock Plan in this Current Report on Form 8-K is qualified in its entirety by reference to the full text of the Director Restricted Stock Plan attached hereto as Exhibit 10.2. The 2004 Omnibus Plan, which is incorporated herein by reference, is attached as Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 11, 2005.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
10.1 Integration Success Incentive Award Plan.
10.2 Non-Employee Director Restricted Stock Award Plan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DARLING INTERNATIONAL INC.
Date: March 15, 2006 By: /s/ John O. Muse
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John O. Muse
Executive Vice President
Finance and Administration
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EXHIBIT LIST
10.1 Integration Success Incentive Award Plan.
10.2 Non-Employee Director Restricted Stock Award Plan.
Exhibit 10.1
Pursuant to the Darling International Inc. 2004 Omnibus Incentive Plan (the "Plan") and in consideration of and conditioned upon the closing ("Closing") of the acquisition of substantially all of the assets of National By-Products, LLC, an Iowa limited liability company ("NBP"), by Darling International Inc. (the "Company") pursuant to that certain Asset Purchase Agreement (the "Purchase Agreement") by and among the Company, Darling National LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company, and NBP, the Employees of the Company listed below in the Closing Cash Payment schedule shall receive a cash payment promptly following Closing as a Cash-Based Award (the "Closing Cash Payment"), which is intended to be treated as Performance-Based Compensation; provided, however, that in no event shall the Closing Cash Payment be paid with respect to any Participant until the Company's Compensation Committee certifies in writing that the performance goals and any other material terms applicable to such performance period have been satisfied; provided, further, that in no event shall the Closing Cash Payment be paid to any Employee of the Company listed below in the Closing Cash Payment schedule if the employment of such Employee is terminated, voluntarily or involuntarily, prior to Closing.
The Employees (which shall include Mark Myers and certain other current employees of NBP to the extent each such individual becomes an Employee at Closing) listed in the Additional Stock Based Compensation schedule below shall, subject to and conditioned upon achievement of the goals set forth in the schedule, receive an additional stock-based compensation Award depending on the Share price following Closing as more fully described below, which is intended to be treated as Performance-Based Compensation. Such additional stock-based compensation shall be awarded promptly following the determination that the conditions to receive such compensation have been fulfilled; provided, however, that in no event shall any such Award be awarded with respect to any Participant (which shall include Mark Myers and certain other current employees of NBP to the extent each such individual becomes an Employee at Closing) until the Company's Compensation Committee certifies in writing that the performance goals and any other material terms applicable to such performance period have been satisfied; provided, further, that in no event shall any such Award be awarded to any Employee (which shall include Mark Myers and certain other current employees of NBP to the extent each such individual becomes an Employee at Closing) listed below in the Additional Stock Based Compensation schedule if the employment of such Employee is terminated, voluntarily or involuntarily, prior to the determination that the conditions to receive such compensation have been fulfilled.
Capitalized terms used, but not defined, herein shall have the meaning given them in the Plan.
Closing Cash Payment: The Closing Cash Payment shall not exceed $600,000 in the aggregate. The Closing Cash Payment will require an additional estimated $50,000 to cover FICA payable related to such Closing Cash Payment. The Participants listed below shall receive promptly following Closing the Closing Cash Payment listed to the right of his or her name, provided such Participant's employment with the Company has not terminated, voluntarily or involuntarily, prior to Closing:
CLOSING CASH PAYMENT
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PARTICIPANT CLOSING CASH PAYMENT
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Randy Stuewe $250,000
John Muse 150,000
Neil Katchen 50,000
Other Non-Named Executive 150,000
Officers
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Additional Stock-Based Compensation: If the True-Up Market Price is equal to or greater than the Target Share Price (as such terms are defined in the Purchase Agreement), each Participant (which shall include Mark Myers and certain other current employees of NBP to the extent each such individual becomes an Employee at Closing) listed in the table below shall be entitled to receive the number of Shares listed to the right of his or her name, provided such Participant's employment with the Company or Darling National LLC has not terminated, voluntarily or involuntarily, prior to the determination of the True-Up Market Price.
PARTICIPANT SHARES ----------- ------- Randy Stuewe 100,000 John Muse 66,500 Neil Katchen 25,000 Mark Myers 25,000 Mitch Kilanowski 10,000 Other Non-Named 70,000 Executive Officers |
Exhibit 10.2
Pursuant to the Darling International Inc. 2004 Omnibus Incentive Plan (the "Plan"), each Non-Employee Director of Darling International Inc. (the "Company") shall receive an annual grant of $20,000 in Restricted Stock with the following terms and such other terms consistent with the foregoing as the Board of Directors of the Company shall provide in the Award Agreement. Capitalized terms used, but not defined, herein shall have the meaning given them in the Plan.
Each Award Agreement evidencing a Restricted Stock grant according to this Non-Employee Director Restricted Stock Award Plan shall specify the terms of the period of restriction and the number of Shares of Restricted Stock granted in accordance with the following:
Date of Award: The third business day after the Company releases its earnings for its last completed fiscal year, beginning with the earnings release for fiscal 2005.
Number of Shares Granted: $20,000 divided by the Fair Market Value per Share on the second business day after the Company releases its earnings for its last completed fiscal year; provided, however, that if the maximum aggregate Share limit for issuance to Non-Employee Directors under the Plan is exceeded on the Date of Award, each Non-Employee Director shall receive his pro-rata share of the then-remaining Shares issuable under the Plan.
Restrictions: Shares subject to this Award shall be subject to a right of repurchase at $.01 per Share upon termination of the holder for cause and shall not be transferable. Both of the Restrictions shall lapse with respect to 100% of the Shares upon the earliest to occur of (i) ten years after the Date of Award, (ii) a Change of Control and (iii) termination of the Non-Employee Director's service with the Company, other than for "cause." For this purpose, "cause" shall mean the Non-Employee Director (i) committed or engaged in an act of fraud, embezzlement, sexual harassment, dishonesty or theft in connection with his service for the Company, (ii) breached any non-disclosure agreement or policy of the Company or (iii) is convicted of, or pleas nolo contendere with respect to, an act of criminal misconduct.
Rights during Restriction Period: The Non-Employee Directors holding Shares of Restricted Stock pursuant to the foregoing shall have the right to exercise full voting rights with respect to those Shares during the period of restriction. In addition, the Non-Employee Directors holding Shares of Restricted Stock pursuant to the foregoing shall have the right to receive Dividend Equivalents equal to any dividends declared on Shares between the Date of Grant and the end of the period of restriction. The Dividend Equivalents shall vest in the holder at the time of lapse of Restrictions on the Restricted Stock. At such time, Dividend Equivalents will be paid to the holder of underlying Shares in securities, property or cash, and in the amount that would have been paid on the underlying Shares had the holder owned such Shares without restriction at the time of the dividend.