Document:

secondamendment.htm

SECOND AMENDMENT

TO

RIGHTS AGREEMENT

 

THIS SECOND AMENDMENT TO RIGHTS AGREEMENT (this “Amendment”), dated as of May 7, 2014, by and between ALCO STORES, INC., a Kansas corporation (the “Company”), and COMPUTERSHARE TRUST COMPANY, N.A., a national banking association (the “Rights Agent”), amends the Rights Agreement, dated as of May 3, 2013, and as amended as of July 25, 2013 (the “Rights Agreement”), by and between the Company and the Rights Agent.  Capitalized terms not defined herein shall have the meanings given to them in the Rights Agreement.

 

WHEREAS, Section 27 of the Rights Agreement provides that, at any time when the Rights are redeemable, the Company may from time to time, in its sole and absolute discretion, supplement or amend any provision of the Rights Agreement in any respect without the approval of any holders of the Rights;

 

WHEREAS, as of the date of this Amendment, the Rights are redeemable pursuant to Section 23 of the Rights Agreement;

 

WHEREAS, the Board has determined to amend the Rights Agreement in certain respects; and

 

WHEREAS, the Company has delivered to the Rights Agent a certificate stating that this Amendment complies with Section 27 of the Rights Agreement and has directed the Rights Agent to amend the Rights Agreement as set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in the Rights Agreement and this Amendment, the parties hereto agree as follows:

 

	
1.  

	
Amendment of the Definition of Acquiring Person.  Section 1(a) of the Rights Agreement is hereby amended and restated in its entirety with the following (words bolded solely for purposes of illustrating the changes):

 

“(a)           “Acquiring Person” shall mean any Person (other than a Company Entity) who or that shall be or become the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding.  Notwithstanding the foregoing:

 

(i) a Person who or that becomes the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding as the result of an acquisition of Common Stock by a Company Entity (which, by reducing the number of shares then outstanding, increases the proportion of the shares of Common Stock then outstanding that are Beneficially Owned by such Person) shall not be an “Acquiring Person” for purposes of this Agreement (such that, for the avoidance of doubt, no Shares Acquisition Time, Redemption Deadline or Distribution Time shall occur as a result thereof and no adjustment pursuant to Section 11(a)(ii) or Section 13 shall be made in respect thereof); provided, however, that if, at any time after such acquisition of Common Stock by a Company Entity, such Person becomes the Beneficial Owner of one or more additional shares of Common Stock (other than pursuant to a dividend or distribution paid in shares of Common Stock or pursuant to a split or subdivision of the outstanding Common Stock) and, upon becoming the Beneficial Owner of such additional share or shares of Common Stock, such Person is the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding, then such Person shall, as of such time, become an “Acquiring Person” (subject to the applicability of Section 1(a)(ii));

 

(ii) if (A) the Board determines in good faith that a Person who or that has satisfied the conditions for being or becoming an “Acquiring Person” pursuant to the other provisions of this Section 1(a) did so inadvertently (including, without limitation, because (1) such Person was unaware that such Person was or had become the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding or (2) such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and without any intention of changing or influencing control of the Company, (B) such Person (and/or its Affiliates and Associates) divests Beneficial Ownership of a sufficient number of shares of Common Stock (including, in the case solely of Derivative Common Shares (as defined in Section 1(e)(iv)), by terminating one or more subject derivative transactions or disposing of a sufficient number of subject derivative securities) so that such Person would no longer satisfy the conditions for being an “Acquiring Person” pursuant to the other provisions of this Section 1(a), and (C) such determination by the Board is made and such divestment by such Person (and/or its Affiliates and Associates) is completed prior to the time when any Right is first distributed by the Rights Agent pursuant to Section 3(e), then such Person shall not be an “Acquiring Person” and shall be deemed to have not previously been an “Acquiring Person” for purposes of this Agreement (such that, for the avoidance of doubt, no Shares Acquisition Time, Redemption Deadline or Distribution Time shall occur, or be deemed to have occurred, as a result thereof and no adjustment pursuant to Section 11(a)(ii) or Section 13 shall be made in respect thereof); provided, however, that if, at any time after such determination and divestment, such Person becomes the Beneficial Owner of one or more additional shares of Common Stock (other than pursuant to a dividend or distribution paid in shares of Common Stock or pursuant to a split or subdivision of the outstanding Common Stock) and, upon becoming the Beneficial Owner of such additional share or shares of Common Stock, such Person is the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding, then such Person shall, as of such time, become an “Acquiring Person” (unless a subsequent determination and divestment is made pursuant to this Section 1(a)(ii)); and

 

(iii) a Person who or that, at the time of the first public announcement of the adoption of this Agreement, is the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding shall not be an “Acquiring Person” and shall be deemed to have not previously been an “Acquiring Person” for purposes of this Agreement (such that, for the avoidance of doubt, no Shares Acquisition Time, Redemption Deadline or Distribution Time shall occur, or be deemed to have occurred, as a result thereof and no adjustment pursuant to Section 11(a)(ii) or Section 13 shall be made in respect thereof); provided, however, that if, at any time after the first public announcement of the adoption of this Agreement, such Person becomes the Beneficial Owner of one or more additional shares of Common Stock (other than pursuant to a dividend or distribution paid in shares of Common Stock or pursuant to a split or subdivision of the outstanding Common Stock) and, upon becoming the Beneficial Owner of such additional share or shares of Common Stock, such Person is the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding, then such Person shall, as of such time, become an “Acquiring Person” (subject to the applicability of Section 1(a)(ii)).”

 

	
2.  

	
Amendment of the Definition of Associate.  Section 1(d)(ii) of the Rights Agreement is hereby amended and restated in its entirety with the following (words bolded solely for purposes of illustrating the changes):

 

“(ii) any firm, corporation, limited liability company, partnership, joint venture, bank, trust or other entity of which such Person is, directly or indirectly, the Beneficial Owner of 10% or more of any class of equity securities; provided, however, that any such firm, corporation, limited liability company, partnership, joint venture, bank, trust or other entity shall not be an “Associate” of a Person if, and only for so long as, such Person (A) satisfies the criteria set forth in both Rule 13d-1(b)(1)(i) and Rule 13d-1(b)(1)(ii) of the General Rules and Regulations under the Exchange Act, (B) has reported Beneficial Ownership of the equity securities of such firm, corporation, limited liability company, partnership, joint venture, bank, trust or other entity on Schedule 13G under the Exchange Act and is not required to report its ownership of such equity securities on Schedule 13D under the Exchange Act, (C) is the Beneficial Owner of less than 20% of the shares of Common Stock then outstanding (including any such shares that are beneficially owned by such Person’s Affiliates and Associates after giving effect to this proviso) and (D) has not reported and is not required to report its ownership of Common Stock on Schedule 13D under the Exchange Act;”

 

	
3.  

	
Addition of the Definition of Definitive Acquisition Agreement.  The Rights Agreement is hereby amended by adding the following as new Section 1(o) of the Rights Agreement (such addition also having the effect of appropriately renumbering all subsections to Section 1 including and subsequent to Section 1(o) of the Rights Agreement as set forth prior to the effectiveness of this Amendment, including any reference thereto elsewhere in the Rights Agreement):

 

“(o)           “Definitive Acquisition Agreement” shall mean any agreement entered into by the Company that is conditioned on the approval by the holders of not less than a majority of the outstanding shares of Common Stock at a meeting of stockholders with respect to (i) a merger, consolidation, recapitalization, reorganization, share exchange, business combination or similar transaction involving the Company or (ii) the acquisition in any manner, directly or indirectly, of more than 50% of the consolidated total assets (including, without limitation, equity securities of its subsidiaries) of the Company.”

 

	
4.  

	
Addition of the Definition of Outside Meeting Date.  The Rights Agreement is hereby amended by adding the following as new Section 1(u) of the Rights Agreement (such addition also having the effect of appropriately renumbering all subsections to Section 1 including and subsequent to Section 1(t) of the Rights Agreement as set forth prior to the effectiveness of this Amendment, including any reference thereto elsewhere in the Rights Agreement):

 

“(u)           “Outside Meeting Date” shall have the meaning set forth in Section 23(b).”

 

	
5.  

	
Addition of the Definition of Qualified Offer.  The Rights Agreement is hereby amended by adding the following as new Section 1(z) of the Rights Agreement (such addition also having the effect of appropriately renumbering all subsections to Section 1 including and subsequent to Section 1(x) of the Rights Agreement as set forth prior to the effectiveness of this Amendment, including any reference thereto elsewhere in the Rights Agreement):

 

“(z)           “Qualified Offer” shall mean an offer determined by a majority of the Board to have each of the following characteristics:

 

(i) a fully financed, all-cash tender offer, or an exchange offer offering shares of common stock of the offeror, or a combination thereof, in each such case for all of the outstanding shares of Common Stock at the same per-share consideration;

 

(ii) an offer that has commenced within the meaning of Rule 14d-2(a) under the Exchange Act;

 

(iii) an offer the per-share offer price of which exceeds the greatest of (A) the highest reported market price per share of the Common Stock during the 24 months immediately preceding the commencement of the offer (within the meaning of Rule 14d-2(a) under the Exchange Act), (B) the highest price per share of the Common Stock paid by the Person making the offer (or any of such Person’s Affiliates) during the 24 months immediately preceding the commencement of the offer (within the meaning of Rule 14d-2(a) under the Exchange Act) or prior to the expiration of the offer, (C) an amount that is 25% higher than the 12-month moving average per share price of the Common Stock (determined as of the Trading Day immediately preceding the date of commencement of the offer (within the meaning of Rule 14d-2(a) under the Exchange Act)), (D) an amount that is 25% higher than the current market price per share (as “current market price per share” is determined pursuant to Section 11(d)) of the Common Stock on the Trading Day immediately preceding the commencement of the offer (within the meaning of Rule 14d-2(a) under the Exchange Act) and (E) if, at the time that the offer is commenced (within the meaning of Rule 14d-2(a) under the Exchange Act), any other offer that is a Qualified Offer has been commenced and remains open, the price per share of the Common Stock offered in such earlier Qualified Offer; provided, however, that, to the extent that an offer that includes common stock of the offeror, such per-share offer price of the offer will be determined by valuing such common stock of the offeror at the lowest reported market price for such common stock of the offeror during the five (5) trading days immediately preceding and the five (5) trading days immediately following the commencement of the offer (within the meaning of Rule 14d-2(a) under the Exchange Act);

 

(iv) an offer that, within twenty (20) Business Days after the commencement date of the offer (or within ten (10) Business Days after any increase in the offer consideration), does not result in a nationally recognized investment banking firm retained by the Board rendering an opinion to the Board that the consideration being offered to the stockholders of the Company is either unfair or inadequate;

 

(v) if the offer includes shares of common stock of the offeror, an offer pursuant to which (A) the offeror shall permit representatives of the Company (including a nationally-recognized investment banking firm retained by the Board and legal counsel and an accounting firm designated by the Company) to have access to such offeror’s books, records, management, accountants, financial advisors, counsel and other appropriate outside advisors for the purposes of permitting such representatives to conduct a due diligence review of the offeror in order to permit the Board to evaluate the offer and make an informed decision and, if requested by the Board, to permit such investment banking firm (relying as appropriate on the advice of such legal counsel) to be able to render an opinion to the Board with respect to whether the consideration being offered to the stockholders of the Company is fair from a financial point of view and (B) within ten (10) Business Days after such representatives of the Company (including a nationally-recognized investment banking firm retained by the Board and legal counsel and an accounting firm designated by the Company) shall have notified the Company and the offeror that it had completed such due diligence review to its satisfaction (or, following completion of such due diligence review, within ten (10) Business Days after any increase in the consideration being offered), such investment banking firm does not render an opinion to the Board that the consideration being offered to the stockholders of the Company is either unfair or inadequate and such investment banking firm does not, after the expiration of such ten (10) Business Day period, render an opinion to the Board that the consideration being offered to the stockholders of the Company has become either unfair or inadequate based on a subsequent disclosure or discovery of a development or developments that have had or are reasonably likely to have a material adverse effect on the value of the common stock of the offeror;

 

(vi) an offer that is subject to only the minimum tender condition described below in Section 1(z)(ix) and other customary terms and conditions (the “Customary Conditions”), which Customary Conditions may include a condition based upon the occurrence of a material adverse event, but which Customary Conditions shall not include any financing, funding or similar conditions or any requirements with respect to the offeror or its agents being permitted any due diligence with respect to the books, records, management, accountants or other outside advisors of the Company;

 

(vii) an offer pursuant to which the Company has received an irrevocable, legally binding written commitment of the offeror that, subject to the Customary Conditions, the offer will remain open for at least ninety (90) days and, if a Special Meeting is duly requested in accordance with Section 23(b), for at least ten (10) Business Days after the date of the Special Meeting or, if no Special Meeting is held within sixty (60) days following receipt of the Special Meeting Notice in accordance with Section 23(b), for at least ten (10) Business Days following such sixty (60) day period;

 

(viii) an offer pursuant to which the Company has received an irrevocable, legally binding written commitment of the offeror, subject to the Customary Conditions, that, in addition to the minimum time periods specified above in Section 1(z)(vii), the offer, if it is otherwise to expire prior thereto, will be extended for at least twenty (20) Business Days after any increase in the consideration being offered or after any bona fide alternative offer is commenced within the meaning of Rule 14d-2(a) under the Exchange Act; provided, however, that such offer need not remain open, as a result of Section 1(z)(vii) and this Section 1(z)(viii), beyond (A) the time that any other offer satisfying the criteria for a Qualified Offer is then required to be kept open under such Section 1(z)(vii) and this Section 1(z)(viii) or (B) the expiration date, as such date may be extended by public announcement (with prompt written notice to the Rights Agent) in compliance with Rule 14e–1 under the Exchange Act, of any other tender offer for the Common Stock with respect to which the Board has agreed to redeem the Rights immediately prior to acceptance for payment of Common Stock thereunder (unless such other offer is terminated prior to its expiration without any Common Stock having been purchased thereunder) or (C) one (1) Business Day after the stockholder vote with respect to approval of any Definitive Acquisition Agreement has been officially determined and certified by the inspectors of elections;

 

(ix) an offer that is conditioned on a minimum of at least two-thirds of the outstanding shares of the Common Stock not held by the Person making such offer (and such Person’s Affiliates and Associates) being tendered and not withdrawn as of the offer’s expiration date, which condition shall not be waivable;

 

(x) an offer pursuant to which the Company has received an irrevocable, legally binding written commitment of the offeror to consummate, as promptly as practicable upon successful completion of the offer, a second step transaction whereby all shares of the Common Stock not tendered into the offer will be acquired at the same consideration per share actually paid pursuant to the offer, subject to stockholders’ statutory appraisal rights, if any;

 

(xi) an offer pursuant to which the Company and its stockholders have received an irrevocable, legally binding written commitment of the offeror, subject to the Customary Conditions, that no amendments will be made to the offer to reduce the consideration being offered or to otherwise change the terms of the offer in a way that is adverse to a tendering stockholder;

 

(xii) an offer (other than an offer consisting solely of cash consideration) pursuant to which the Company has received the written representation and certification of the offeror and the written representations and certifications of the offeror’s Chief Executive Officer and Chief Financial Officer, acting in such capacities, that (A) all facts about the offeror that would be material to making an investor’s decision to accept the offer have been fully and accurately disclosed as of the date of the commencement of the offer within the meaning of Rule 14d-2(a) under the Exchange Act, (B) all such new facts will be fully and accurately disclosed on a prompt basis during the entire period during which the offer remains open, and (C) all required Exchange Act reports will be filed by the offeror in a timely manner during such period; and

 

(xiii) if the offer includes non-cash consideration, (A) the non-cash portion of the consideration offered must consist solely of common stock of a Person that is a publicly-owned United States corporation, (B) such common stock must be freely tradable and listed or admitted to trading on either the New York Stock Exchange or the NASDAQ National Market System, (C) no stockholder approval of the issuer of such common stock is required to issue such common stock, or, if such approval is required, such approval has already been obtained, (D) no Person (including such Person’s Affiliates and Associates) beneficially owns 20% or more of the voting stock of the issuer of such common stock at the time of commencement of the offer or at any time during the term of the offer, (E) no other class of voting stock or other voting securities of the issuer of such common stock is outstanding and (F) the issuer of such common stock meets the registrant eligibility requirements for use of Form S-3 for registering securities under the Securities Act, including the filing of all required Exchange Act reports in a timely manner during the twelve calendar months prior to the date of commencement of such offer.

 

For the purposes of this Section 1(z), “fully financed” shall mean that the offeror has sufficient funds for the offer and related expenses which shall be evidenced by (1) firm, unqualified, legally binding written commitments from responsible financial institutions having the necessary financial capacity, accepted by the offeror, to provide funds for such offer subject only to customary terms and conditions (for the avoidance of doubt it being understood that a provision relating to the sharing with a financing source of any break-up or termination fee shall be considered customary), (2) cash or cash equivalents then available to the offeror, set apart and maintained solely for the purpose of funding the offer with an irrevocable, legally binding written commitment being provided by the offeror to the Board, subject to the Customary Conditions, to maintain such availability until the offer is consummated or withdrawn or (3) a combination of the foregoing; which evidence has been provided to the Company prior to, or upon, commencement of the offer.  If an offer becomes a Qualified Offer in accordance with this Section 1(z), but subsequently ceases to be a Qualified Offer as a result of the failure at a later date of such offer to continue to satisfy any of the requirements of this Section 1(z), such offer shall cease to be a Qualified Offer and the provisions of Section 23(b) shall no longer be applicable to such offer, provided that the actual redemption of the Rights pursuant to Section 23(b) shall not have already occurred.”

 

	
6.  

	
Addition of the Definition of Redemption Resolution.  The Rights Agreement is hereby amended by adding the following as new Section 1(dd) of the Rights Agreement (such addition also having the effect of appropriately renumbering all subsections to Section 1 including and subsequent to Section 1(aa) of the Rights Agreement as set forth prior to the effectiveness of this Amendment, including any reference thereto elsewhere in the Rights Agreement):

 

“(dd)           “Redemption Resolution” shall have the meaning set forth in Section 23(b).”

 

	
7.  

	
Addition of the Definition of Special Meeting.  The Rights Agreement is hereby amended by adding the following as new Section 1(ll) of the Rights Agreement (such addition also having the effect of appropriately renumbering all subsections to Section 1 including and subsequent to Section 1(hh) of the Rights Agreement as set forth prior to the effectiveness of this Amendment, including any reference thereto elsewhere in the Rights Agreement):

 

“(ll)           “Special Meeting” shall have the meaning set forth in Section 23(b).”

 

	
8.  

	
Addition of the Definition of Special Meeting Notice.  The Rights Agreement is hereby amended by adding the following as new Section 1(mm) of the Rights Agreement (such addition also having the effect of appropriately renumbering all subsections to Section 1 including and subsequent to Section 1(hh) of the Rights Agreement as set forth prior to the effectiveness of this Amendment, including any reference thereto elsewhere in the Rights Agreement):

 

“(mm)           “Special Meeting Notice” shall have the meaning set forth in Section 23(b).”

 

	
9.  

	
Addition of the Definition of Special Meeting Period.  The Rights Agreement is hereby amended by adding the following as new Section 1(nn) of the Rights Agreement (such addition also having the effect of appropriately renumbering all subsections to Section 1 including and subsequent to Section 1(hh) of the Rights Agreement as set forth prior to the effectiveness of this Amendment, including any reference thereto elsewhere in the Rights Agreement):

 

“(nn)           “Special Meeting Period” shall have the meaning set forth in Section 23(b).”

 

	
10.  

	
Qualifying Offer Redemption.  Section 23 of the Rights Agreement is hereby amended and restated in its entirety with the following (words bolded solely for purposes of illustrating the changes):

 

“Section 23.  Redemption.

 

(a)  The Board may, at its option, at any time prior to the Redemption Deadline (or as otherwise provided in Section 31), redeem all but not less than all of the then outstanding Rights at a redemption price of $0.0001 per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date of this Agreement (such redemption price being hereinafter referred to as the “Redemption Price”).  The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.  The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the current market price per share of the Common Stock at the time of redemption as determined pursuant to Section 11(d)) or any other form of consideration deemed appropriate by the Board, or any combination thereof.

 

(b)  If the Company receives a Qualified Offer and the Board has not redeemed the outstanding Rights or exempted such Qualified Offer from the terms of this Agreement or called a special meeting of stockholders for the purpose of voting on whether or not to exempt such Qualified Offer from the terms of this Agreement, in each case by the end of sixty (60) days following the commencement of such Qualified Offer, and if the Company receives, not earlier than sixty (60) days nor later than ninety (90) days following the commencement of such Qualified Offer, a written notice complying with the terms of this Section 23(b) (the “Special Meeting Notice”), properly executed by the holders of record (or their duly authorized proxy) of 10% or more of the shares of Common Stock then outstanding (excluding shares of Common Stock beneficially owned by the Person making the Qualified Offer and such Person’s Affiliates and Associates), directing the Board to submit to a vote of stockholders at a special meeting of the stockholders of the Company (a “Special Meeting”) a resolution authorizing the redemption of all, but not less than all, of the then outstanding Rights at the Redemption Price (the “Redemption Resolution”), then the Board shall take such actions as are necessary or desirable to cause the Redemption Resolution to be submitted to a vote of stockholders within sixty (60) Business Days following receipt by the Company of the Special Meeting Notice (the “Special Meeting Period”), including by including a proposal relating to adoption of the Redemption Resolution in the proxy materials of the Company for the Special Meeting; provided, however, that if the Company, at any time during the Special Meeting Period and prior to a vote on the Redemption Resolution, enters into a Definitive Acquisition Agreement, the Special Meeting Period may be extended (and any Special Meeting called in connection therewith may be cancelled) if the Redemption Resolution will be separately submitted to a vote at the same meeting as the Definitive Acquisition Agreement.  For purposes of a Special Meeting Notice, the record date for determining eligible holders of record of the Common Stock shall be the sixtieth (60th) day following the commencement of a Qualified Offer.  Any Special Meeting Notice must be delivered to the Secretary of the Company at the principal executive offices of the Company and must set forth, as to the stockholders of record executing such Special Meeting Notice, (i) the name and address of such stockholders, as they appear on the Company’s books and records, (ii) the number of shares of Common Stock that are owned of record by each of such stockholders and (iii) in the case of Common Stock that is owned beneficially by another Person, an executed certification by the holder of record that such holder has executed such Special Meeting Notice only after obtaining instructions to do so from such beneficial owner.  Subject to the requirements of applicable law, the Board may take a position in favor of or opposed to the adoption of the Redemption Resolution, or no position with respect to the Redemption Resolution, as it determines to be appropriate in the exercise of its fiduciary duties.  In the event that (A) no Person has become an Acquiring Person prior to the effective date of redemption referred to below in this sentence, (B) the Qualified Offer continues to be a Qualified Offer prior to the last day of the Special Meeting Period (the “Outside Meeting Date”) and (C) either (1) the Special Meeting is not held on or prior to the Outside Meeting Date or (2) at the Special Meeting at which a quorum is present, the holders of a majority of the shares of Common Stock outstanding as of the record date for the Special Meeting selected by the Board (excluding shares of Common Stock beneficially owned by the Person making the Qualified Offer and such Person’s Affiliates and Associates) vote in favor of the Redemption Resolution, then all of the Rights shall be deemed redeemed at the Redemption Price by such failure to hold the Special Meeting or as a result of the adoption of the Redemption Resolution by the stockholders of the Company (or the Board shall take such other action as may be necessary to prevent the existence of the Rights from interfering with the consummation of the Qualified Offer), such redemption to be effective, as the case may be, (x) as of the close of business on the Outside Meeting Date if a Special Meeting is not held on or prior to such date or (y) if a Special Meeting is held on or prior to the Outside Meeting Date, as of the date on which the results of the vote adopting the Redemption Resolution at the Special Meeting are certified as official by the appointed inspectors of election for the Special Meeting.

 

(c)  Immediately upon the action of the Board ordering the redemption of the Rights pursuant to Section 23(a) or the effectiveness of a redemption of the Rights pursuant to Section 23(b), in either case, without any further action and without any notice, the right to exercise the Rights will terminate and each Right will thereafter represent only the right to receive the Redemption Price.  The Company shall promptly give public notice of any such redemption and, within ten (10) days after such action causing a redemption of the Rights pursuant to Section 23(a) or Section 23(b), the Company shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Time, on the registry books of the transfer agent for the Common Stock.  Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice.  Each such notice of redemption will state the method by which the payment of the Redemption Price will be made.  Notwithstanding the foregoing, the failure to give, or any defect in, any notice required to be made or given pursuant to this Section 23(c) shall not affect the validity of the redemption of the Rights.

 

(d)  Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24, and other than in connection with the repurchase of Common Stock prior to the Distribution Time.”

 

	
11.  

	
Amendment to the Summary of Rights to Purchase Common Stock.  The fourth to last paragraph of the Summary of Rights to Purchase Common Stock, which is attached as Exhibit B to the Rights Agreement, is hereby amended and restated in its entirety with the following (words bolded solely for purposes of illustrating the changes):

 

“At any time prior to the Redemption Deadline, the Board may, but is not required to, redeem the Rights in whole, but not in part, at a price of $0.0001 per Right (subject to adjustment) (the “Redemption Price”). In addition, if a Qualified Offer (as described below) is made, the record holders of 10% or more of the outstanding shares of Common Stock (other than shares held by the offeror and its affiliated and associated persons) may direct the Board to call a special meeting of stockholders to consider a resolution authorizing a redemption of all Rights.  If the special meeting is not held within ninety (90) Business Days of being called or if, at the special meeting, the holders of a majority of the shares of Common Stock outstanding (other than shares held by the offeror and its affiliated and associated persons) vote in favor of the redemption of the Rights, then the Board will redeem the Rights or take such other action as may be necessary to prevent the Rights from interfering with the consummation of the Qualified Offer. The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.  The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock, any other form of consideration or any combination thereof. In addition, if any term, provision, covenant or restriction of the Rights Agreement is held by any court or authority to be invalid, void or unenforceable and the Board determines in good faith that severing the invalid language from the Rights Agreement would adversely affect the purpose or effect of the Rights Agreement, the Board may, but is not required to, redeem the Rights, in whole but not in part, for the Redemption Price until the close of business on the tenth (10th) Business Day following the date of such determination by the Board (even if after the Redemption Deadline).

 

A Qualified Offer is an offer determined by a majority of the Board to be a fully financed offer for all outstanding shares of Common Stock at a per share offer price that exceeds the greatest of certain price thresholds specified in the Rights Agreement and that does not result in a nationally recognized investment banking firm retained by the Board rendering an opinion to the Board that the consideration being offered to the stockholders of the Company is either unfair or inadequate. A Qualified Offer is conditioned upon a minimum of at least two-thirds of the outstanding shares of Common Stock not held by the offeror (and its affiliated and associated persons) being tendered and not withdrawn, with a commitment to acquire all shares of Common Stock not tendered for the same consideration. If the Qualified Offer includes non-cash consideration, such consideration must consist solely of freely-tradeable common stock of a publicly traded company, and the board and its representatives must be given access to conduct a due diligence review of the offeror to determine whether the consideration is fair and adequate.  A Qualified Offer must also remain open for at least one hundred twenty (120) days following commencement.”

 

	
12.  

	
Delivery of Summary of Rights.  Promptly following the date of this Amendment, the Rights Agent, on behalf of the Company and at the Company’s sole cost and expense, if provided with all necessary information and documents, will send a copy of the Summary of Rights to Purchase Preferred Stock as modified pursuant to this Amendment, in substantially the form attached hereto as Annex A, along with an accompanying cover letter, by first class, postage-prepaid mail or other means used by the Company to deliver proxy statements, to each holder of record of the Common Stock as of the close of business on the date of this Amendment at the address of such holder shown on the records of the Company.

 

	
13.  

	
Effect on Agreement.  Upon execution of this Amendment, each reference in the Rights Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import, and each similar reference in any document related thereto, or executed in connection therewith, shall mean and be a reference to the Rights Agreement as amended by this Amendment, and the Rights Agreement and this Amendment shall be read together and construed as one single instrument.  This Amendment is intended to amend the Rights Agreement.  Except as specifically set forth herein, all other terms and conditions of the Rights Agreement shall remain in full force and effect without modification.  All determinations made by the Board herein in good faith shall not prejudice the ability of the Board to make any subsequent determination.

 

	
14.  

	
Severability.  If any term, provision, covenant or restriction of this Amendment is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

	
15.  

	
Governing Law.  This Amendment shall be deemed to be a contract made under the laws of the State of Kansas and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state; except that the rights, duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

 

	
16.  

	
Descriptive Headings.  Descriptive headings of the several sections of this Amendment are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

	
17.  

	
Counterparts.  This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.  A signature to this Amendment transmitted electronically shall have the same authority, effect, and enforceability as an original signature.

 

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to Rights Agreement to be duly executed as of the day and year first above written.

 

	
  

	
ALCO STORES, INC.

 

By:             /s/ Royce Winsten

Name:             Royce Winsten

Title:             Chairman of the Board

 

	
  

	
COMPUTERSHARE TRUST COMPANY, N.A.

 

By:             /s/ Robert A. Buckley, Jr.

Name:             Robert A. Buckley, Jr.

Title:             Senior Vice President

 

[Signature Page to Second Amendment to Rights Agreement]

  

  

  

ANNEX A

 

 

SUMMARY OF RIGHTS

 

ALCO STORES, INC.

SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK

On May 3, 2013, the Board of Directors (the “Board”) of ALCO Stores, Inc. (the “Company”) declared a dividend distribution of one common stock purchase right (a “Right”) for each outstanding share of common stock, $0.0001 par value, of the Company (the “Common Stock”).  The distribution was payable on May 13, 2013 to the stockholders of record at the close of business on May 13, 2013.  Each Right entitles the registered holder to purchase from the Company one share of Common Stock at a price of $36.00 per share (the “Purchase Price”), subject to adjustment.  The description and terms of the Rights are set forth in a Rights Agreement dated May 3, 2013 (the “Rights Agreement”), between the Company and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agent”).

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form 8-A dated May 3, 2013.  Copies of the Rights Agreement are available free of charge from the Rights Agent.  The following summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference.

Until the Distribution Time (as defined below), the Rights will be evidenced by the certificates for the Common Stock registered in the names of the holders thereof (if the Common Stock is certificated) or the registration of shares of Common Stock in the book entry ownership records of the transfer agent for the Common Stock (if the Common Stock is uncertificated).  Until the Distribution Time, the Rights will be transferable only in connection with the transfer of the Common Stock and the transfer of any shares of Common Stock will also constitute the transfer of the Rights associated with such shares of Common Stock.

The “Distribution Time” will be the close of business on the tenth (10th) business day after the Redemption Deadline.  The “Redemption Deadline” will be the earlier to occur of (i) the first public announcement (by the Company or an Acquiring Person) that a person or entity has become an Acquiring Person and (ii) the time when a majority of the members of the Board then in office has actual knowledge that a person or entity has become an Acquiring Person.  An “Acquiring Person” is a person or entity that has acquired beneficial ownership (which includes stock held by such party’s affiliates and associates and stock referenced in derivative transactions and securities) of 20% or more of the outstanding shares of the Common Stock.  A person or entity that, at the time of the first public announcement of the Rights Agreement, was already the beneficial owner of 20% or more of the outstanding Common Stock, will not be considered an Acquiring Person unless that person or entity acquires one additional shares of Common Stock after that time (subject to specified exceptions).

As soon as practicable following the Distribution Time, separate certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Time and, following the Distribution Time, such separate Right Certificates alone will evidence the Rights.

 

The Rights are not exercisable until the Distribution Time.  The Rights will expire on May 3, 2016, unless such date is extended or unless the Rights are earlier redeemed or exchanged by the Company, in each case as described below.

The Purchase Price payable, and the number of shares of the Common Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Common Stock, (ii) upon the grant to holders of the Common Stock of certain rights or warrants to subscribe for shares of the Common Stock or convertible securities at less than the current market price per share of the Common Stock or (iii) upon the distribution to holders of the Common Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends out of earnings or retained earnings at a rate not in excess of 125% of the rate of the last cash dividend theretofore paid or dividends payable in the Common Stock) or of subscription rights or warrants (other than those referred to above).

From and after the time when any party first becomes an Acquiring Person (the “Shares Acquisition Time”), any Rights that are acquired or beneficially owned by any Acquiring Person (or any affiliate or associate of any Acquiring Person) shall be null and void without any further action and any holder of such Rights (including any successor holder thereof) shall thereafter have no right to exercise such Rights or receive any consideration therefor under any provision of the Rights Agreement (including any cash, securities or other property delivered by the Company upon the redemption or exchange of the Rights).

From and after the Shares Acquisition Time, each holder of a Right will thereafter have the right to receive, upon exercise of a Right and payment of the Purchase Price, a number of shares of the Common Stock equal to the Purchase Price divided by 50% of the current market price for a shares of Common Stock (that is, Common Stock having a market value of two times the Purchase Price).

If, after the Shares Acquisition Time, the Company is party to a merger or consolidation in which the Company does not survive or in which its Common Stock is exchanged for cash or the securities of another entity or the Company sells assets aggregating 50% or more of the assets or earning power of the Company and its subsidiaries (taken as a whole) (a “Section 13 Transaction”), proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the Purchase Price, a number of shares of the senior voting stock of the principal acquiring party equal to the Purchase Price divided by 50% of the market price (as of the date of the Section 13 Transaction) for a share of such senior voting stock (that is, such senior voting stock having a market value of two times the Purchase Price).

With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price.  No fractional shares of Common Stock (or other securities for which a Right may be exercisable) will be issued upon the exercise of any Right or Rights and, in lieu thereof, a cash payment will be made based on the market price of the Common Stock or such other securities, as applicable, on the last trading date prior to the date of exercise.

 

At any time prior to the Redemption Deadline, the Board may, but is not required to, redeem the Rights in whole, but not in part, at a price of $0.0001 per Right (subject to adjustment) (the “Redemption Price”). In addition, if a Qualified Offer (as described below) is made, the record holders of 10% or more of the outstanding shares of Common Stock (other than shares held by the offeror and its affiliated and associated persons) may direct the Board to call a special meeting of stockholders to consider a resolution authorizing a redemption of all Rights.  If the special meeting is not held within ninety (90) Business Days of being called or if, at the special meeting, the holders of a majority of the shares of Common Stock outstanding (other than shares held by the offeror and its affiliated and associated persons) vote in favor of the redemption of the Rights, then the Board will redeem the Rights or take such other action as may be necessary to prevent the Rights from interfering with the consummation of the Qualified Offer. The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.  The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock, any other form of consideration or any combination thereof. In addition, if any term, provision, covenant or restriction of the Rights Agreement is held by any court or authority to be invalid, void or unenforceable and the Board determines in good faith that severing the invalid language from the Rights Agreement would adversely affect the purpose or effect of the Rights Agreement, the Board may, but is not required to, redeem the Rights, in whole but not in part, for the Redemption Price until the close of business on the tenth (10th) Business Day following the date of such determination by the Board (even if after the Redemption Deadline).

A Qualified Offer is an offer determined by a majority of the Board to be a fully financed offer for all outstanding shares of Common Stock at a per share offer price that exceeds the greatest of certain price thresholds specified in the Rights Agreement and that does not result in a nationally recognized investment banking firm retained by the Board rendering an opinion to the Board that the consideration being offered to the stockholders of the Company is either unfair or inadequate. A Qualified Offer is conditioned upon a minimum of at least two-thirds of the outstanding shares of Common Stock not held by the offeror (and its affiliated and associated persons) being tendered and not withdrawn, subject to other customary terms and conditions, with a commitment to acquire all shares of Common Stock not tendered for the same consideration. If the Qualified Offer includes non-cash consideration, such consideration must consist solely of freely-tradeable common stock of a publicly traded company, and the board and its representatives must be given access to conduct a due diligence review of the offeror to determine whether the consideration is fair and adequate.  A Qualified Offer must also remain open for at least one hundred twenty (120) days following commencement.

At any time after the Redemption Deadline, the Board may, at its option, exchange the Rights, in whole or in part, for shares of Common Stock at an exchange ratio of one share of Common Stock per Right (subject to adjustment), or for shares of other stock having an equivalent value.  The Board’s exchange right may not be exercised after an Acquiring Person becomes the beneficial owner of 50% or more of the voting power of the shares of Common Stock then outstanding or after a Section 13 Transaction.

Immediately upon the action of the Board to redeem or exchange the Rights, the Company shall make announcement thereof, and upon such action, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price, or the shares of Common Stock (or other consideration) exchangeable for the Rights, as applicable.

Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.EX10.1-2014.03.29

EXHIBIT 10.1

EMPLOYMENT AGREEMENT
THE UNDERSIGNED:
		
	1.
	The limited liability company Darling International Netherlands BV, established under the laws of the Netherlands, having its statutory place of business in Amsterdam and holding office at Prins Bernhardplein 200, (1097 JB) Amsterdam (herein, “Darling BV”), and

		
	2.
	Mr. D. Kloosterboer, residing in Sint-Oedenrode, at Oranje-Nassaulaan 277, 5491 HH, (hereafter: “Executive”).

WHEREAS:
		
	(A)
	Executive has been employed by the VION Ingredients Group and/or its legal predecessors since 1 August 1984;

		
	(B)
	The VION Ingredients Group was acquired by Darling International Inc. (“Darling International”) as per 7 January 2014 (the “Acquisition”);

		
	(C)
	Following the Acquisition, the parties wish to continue the employment of Executive with Darling BV as the employer and to record the terms and conditions applicable to the continued employment of Executive agreed between them in writing in this agreement (the “Employment Agreement”); and

		
	(D)
	Following the Acquisition, it is further anticipated that Executive will be appointed by Darling BV's general meeting of shareholders as a Managing Director (statutair directeur) of Darling BV.

HEREBY RESOLVE:
		
	1.
	Function

1.1.    Offices

		
	(a)
	Executive shall continue to be employed by Darling BV as the company's Managing Director and Chief Executive Officer. Executive shall also serve as the Chief Operating Officer of Darling International and serve in such other (corporate) positions as requested by Darling BV's general meeting of shareholders or Darling International.

		
	(b)
	Executive shall also serve as a member of the Executive Committee of Darling International, which is a committee appointed by the Board of Directors of Darling International and reporting to the Chief Executive Officer of Darling International, who shall chair the Executive Committee.

		
	(c)
	It is acknowledged and agreed that Executive shall not be responsible for the business and activities of Darling International Canada Inc., but will have joint responsibility for the business and activities of the former VION Ingredients Group, including, without limitation, VION Ingredients International (Holding) BV and Rousselot Inc. and their respective subsidiaries.

Page 1

 

1.2.    Board of Directors

		
	(a)
	Executive shall serve as a member of the Board of Directors of Darling International from the time of the closing of the Acquisition to the next annual meeting of the shareholders of Darling International, as applicable, and until his successor is duly elected and qualified, or if earlier until his death, resignation or removal.  Executive shall receive no additional compensation for his service as a Managing Director or member of the Board of Directors.

  
		
	(b)
	Executive shall again be nominated for membership on the Board of Directors of Darling International at the next annual meeting of shareholders of Darling International, subject to the customary review of each nominee for election to the Board of Directors by the Nominating Committee of the Board of Directors (herein, the “Nominating Committee”), as required pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (herein, the “SEC”) and the New York Stock Exchange (herein, “NYSE”), as such rules and regulations may hereafter be amended.  Executive hereby consents to the disclosure in Darling International’s filings with the SEC and the NYSE (and any additional or successor stock exchange upon which the securities of Darling International may hereafter be listed) of all personal information regarding Executive, including without limitation age, compensation and each component thereof, summary background, and acquisition and disposition of shares of common stock, derivatives and other securities of Darling International that is required by either or both of the SEC and/or such exchange.

		
	(c)
	Darling International shall review Darling International’s Board of Directors configuration for compliance with applicable laws, rules and regulations (including applicable stock exchange rules) from time to time in accordance with its customary practices and the foregoing rights shall be suspended to the extent necessary to be in compliance with such rules and regulations.

		
	1.3.
	Executive is obligated to do and refrain from everything that an officer and director ought to do and refrain from, and shall devote his full working time, energy and skills to the success of Darling International and any other companies affiliated to Darling BV (together “Darling Group”). Executive acknowledges that under U.S. federal law and the applicable laws of the State of Delaware, Executive will, in both his roles as officer and as director of Darling International, have fiduciary duties to both Darling International and its shareholders.  Executive will be subject to and shall observe all policies of Darling International applicable to its employees, executives, officers and directors.

		
	1.4.
	In his capacity as Chief Executive Officer of Darling BV and Chief Operating Officer of Darling International, Executive will report to the Chief Executive Officer of Darling International.

 
		
	1.5.
	Executive shall not perform any paid or unpaid side activities for or in relation to third parties or otherwise without the prior written approval of the Chief Executive Officer of Darling International.

		
	2.
	Term

		
	2.1.
	This Employment Agreement has started with effect from 1 February 1984 for an indefinite period of time. This Employment Agreement will in any event terminate automatically 

Page 2

 

    

(without any compensation being due) on the last day of the month during which Executive reaches the retirement date under the Executive's pension scheme (as applicable from time to time), but in any event no later than the date on which Executive will be eligible for state old-age pension benefits (AOW).

		
	2.2.
	This Employment Agreement is based on a 40- hour workweek. Executive is expected to work additional hours as part of this Employment Agreement as is required for the adequate fulfillment and execution of his position without being entitled to any additional remuneration.

		
	2.3.
	This Employment Agreement may be terminated in writing as per the last day of any calendar month, observing a notice period of three months for Executive and a notice period of six months for Darling BV. Darling BV will be entitled to release Executive from active duty during the notice period, whereby Executive will remain available for a proper handover of responsibilities to a successor.

		
	2.4.
	If this Employment Agreement terminates by the death of Executive, salary payments will be continued to the surviving relatives from the day of death up to and including the last day of the third month after the month of death of Executive. In addition, any accrued (and vested) entitlements under the Incentive Programs referenced in Section 4 hereto until the day of death will be paid to the surviving relatives in the customary manner and time and subject to the terms of the agreements governing such programs.

		
	3.
	Salary

 
		
	3.1.
	The remuneration of Executive is recorded in a remuneration package determined by the Compensation Committee of the Darling International Board of Directors (the “Compensation Committee”), after consultation with the Chief Executive Officer of Darling International.  The remuneration may be adjusted by the Compensation Committee annually. The annual fixed income, including holiday allowance, amounts to EUR 655,849 gross (the “Annual Fixed Salary”) for the year 2014. Ultimately in December of each year, the parties will consult with each other with regard to the possible increase of the annual salary with effect from 1 January of the subsequent year.

		
	3.2.
	The Annual Fixed Salary, excluding holiday allowance, will be paid in 12 equal monthly installments after deduction of the mandatory statutory and agreed deductions.

 
		
	3.3.
	The holiday allowance will be paid in the month of May of the relevant year. For the calculation of the holiday allowance, a year is deemed to start on 1 May and to end on 30 April of the following year (the “Holiday Year”). In the event this Employment Agreement starts or terminates during the Holiday Year, the holiday allowance will be calculated on a pro rata basis.

 
		
	4.
	Incentive Programs

		
	4.1.
	Darling International Inc. Incentive Plan

 
		
	(a)
	Executive shall be entitled to participate in the executive bonus program maintained by Darling International as in effect from time to time (the “Bonus Program”). Specifics of the Bonus Program will be determined annually by the Compensation Committee of Darling International’s Board of Directors.

Page 3

 

 
		
	(b)
	It is agreed and acknowledged that the bonus opportunity of Executive for each of the fiscal years 2014, 2015 and 2016 under the Bonus Program shall be no less than the opportunity under Executive's 2013 long term and short term incentive arrangements (i.e. 50% of the Annual Fixed Salary under the long term incentive arrangement and 40% of the Annual Fixed Salary under the short term incentive arrangement).  The specifics of the Bonus Program for 2014 will be communicated to Executive soonest after execution of this Employment Agreement.

 
		
	(c)
	Participation levels and performance measures for the Bonus Program are determined annually by the Compensation Committee and are subject to change at the discretion of the Compensation Committee or Darling International’s Board of Directors.  Bonuses are not earned until the date they are paid, and participants must be employed on the date of payment to receive a bonus, subject to the discretion of the Compensation Committee or Darling International’s Board of Directors to waive this requirement based on the circumstances of a participant’s departure (e.g., retirement).  Payment of any bonus in a year does not entitle Executive to payment of a bonus in any preceding or subsequent year. 

		
	(d)
	All equity based awards made to Executive under the Bonus Program shall be evidenced by an award agreement executed by Darling International and Executive and will be subject to all applicable legal requirements and restrictions imposed on the Bonus Program pursuant to United States and other applicable law. 

 
		
	4.2.
	Retention and Integration Incentive Plan.  In connection with the acquisition of the VION Ingredients Group by Darling International, Executive shall receive a grant of 150,000 shares of Darling International Inc. common stock in the form of 25% vested shares and 75% performance units (the “Special Incentive Award”).  The Special Incentive Award shall be subject to the terms and conditions of a Performance Unit Award Agreement to be entered into between Executive and Darling International.

  
		
	5.
	Claw Back

		
	5.1.
	It is acknowledged and agreed between the parties that Executive (and Executive's benefits under this Employment Agreement insofar relating to or linked with any of the Darling Group publicly traded  companies) as Chief Operating Officer of Darling International and member of the Board of Directors of Darling International, is subject to US federal and applicable state law as well as the rules and regulations of the exchange on which the securities of such company are listed,  as in force from time to time, including applicable claw back provisions.

 
		
	5.2.
	Parties agree as regards Executive's benefits under this Employment Agreement, insofar relating to or linked with any of the Darling Group companies other than the companies referenced in Section 5.1, that Darling BV and Darling International have the right to unilaterally adjust and/or claw-back any awards made to the Executive (whether bonus or grants under the Incentive Programs referenced in Section 4 hereto) if, and to the extent, an independent auditor (to be appointed by the joint parties and paid for by Darling BV) has confirmed, on request of the relevant company, that such award or grant has been made on the basis of incorrect or incomplete information, or it is established by such auditor in any other way that the performance of Darling BV, Darling International and/or the Executive does not justify such award or grant. 

Page 4

 

		
	5.3.
	The Executive agrees to fully cooperate with the execution of any decision made to adjust and/or claw-back any awards or grants made to him as described in either Section 5.1 and/or Section 5.2.

 
		
	6.
	Expenses

		
	6.1.
	Executive will receive a fixed monthly expense allowance of EUR 5,500 per annum.  In addition, Executive will be entitled to reimbursement of club dues up to a maximum of EUR 7,000 per annum.

		
	7.
	Car and Telephone

		
	7.1.
	For the purposes of performing his job, Darling BV will provide Executive with a car which may be used for private purposes within reasonableness.  Maximum catalogue value including VAT and private motor vehicle and motorcycle tax ( BPM) will be determined on job position and in any event be comparable with current type and brand ( Audi A8 ).

		
	7.2.
	All costs related to this car, including the costs of use for private purposes as mentioned under Section 7.1. shall be borne by Darling BV, except for the following costs which shall be borne by Executive:

		
	(a)
	the costs of fines in relation to traffic violations;

		
	(b)
	the costs associated with additions for tax purposes (fiscale bijtelling);

		
	(c)
	other costs which are not related to the performance of the function (such as toll, vignette, etc.).

		
	7.3.
	Executive is obliged to return the car provided to him to Darling BV, at the first request of Darling BV if there is a legal ground for such return. In the event of suspension, the car may be reclaimed by Darling BV immediately. Executive will in any event need to return the car made available to him to Darling BV as per the day this Employment Agreement terminates. Darling BV is no longer held to reimburse any travel expenses of Executive after the car has been returned.

 
		
	7.4.
	Darling BV will provide Executive with electronic communication tools. Executive may use these electronic communication tools for private purposes, both internally and externally, provided that the use thereof will not interfere with the daily work and is in compliance with further guidelines of Darling BV. The use of electronic communication tools should, however, primarily and essentially relate to the tasks/activities arising from the function.

 
		
	7.5.
	Darling BV may ask Executive to clarify any striking use of the electronic communication tools, and charge on possible costs for private purposes. Any tax consequences arising from the private use will be for the account of Executive.

		
	8.
	Insurances

		
	8.1.1
	If and to the extent Darling BV has taken out a collective health insurance for its employees pursuant to the Dutch Health Insurance Act (Zorgverzekeringswet), Executive can participate to such group scheme. Executive remains, however, responsible for the payment of his nominal premium and any premiums for supplemental packages. 

Page 5

 

		
	8.2.
	Executive can make use of the ANW-Hiaatverzekering (related to shortfall under the Surviving Dependents Act) and the insurance for directors' liability as taken out by Darling BV, in accordance with relevant terms.

 
		
	9.
	Pension

 
		
	9.1.
	Darling BV has arranged for a pension scheme (pensioenvoorziening) for Executive. To this end, Executive has been included in the pension arrangement as meant in the basic pension scheme (basispensioenreglement) and the plus pension scheme (pluspensioenreglement) of Stichting Pensionfonds Son. The rules of the pension scheme, as amended from time to time, will apply to this participation. In accordance with the provisions of the pension scheme, Executive will have to pay a contribution (eigen bijdrage), which contribution will be made through a payroll deduction and remittance by Darling BV to the pension fund. The pension scheme rules have been provided to Executive. The maximum pensionable salary for the year 2014 will be EUR 400,435. This amount will be reviewed annually as part of the Executive's total remuneration package and a yearly indexation will be applied to such amount using the the general increase percentage that applies for employees of Darling Ingredients International ( Holding ) BV. 

 
		
	10.
	Holidays

		
	10.1
	Executive will be entitled to 30 holidays per calendar year, to be taken whilst taking account of the interests of Darling Group.

		
	10.2.
	Given the severity of his position and the recovery function of the holidays, the holidays are expected to be taken within the year that the holidays are granted.  Given his position, Executive is free to determine when he will use his holidays, provided that he takes into account the interests of the Darling Group.

 
		
	11.
	Incapacity for work

		
	11.1.
	Notwithstanding the provisions of article 7:629 paragraph 3 up to and including 5 Dutch Civil Code, Executive will receive in case of incapacity for work during the first year of illness, however ultimately until the end of this Employment Agreement (in case that is earlier), to be calculated from the first day of the incapacity, 100% of the Annual Fixed Salary after deduction of any benefits or payments received by Executive pursuant to relevant state-provided social security or insurance arrangements taken out by Darling BV.

		
	11.2.
	From the 53rd week up to and including the 104th week of the respective period of illness, however ultimately until the end of this Employment Agreement (in case that is earlier), Darling BV will pay 70% of the Annual Fixed Salary, also after deduction of any benefits or payments received by Executive pursuant to relevant state-provided social security or insurance arrangements taken out by Darling BV. 

 
		
	12.
	Confidentiality, documents

 

Page 6

 

		
	12.1
	Executive shall, both during the continuance of his employment and after the termination thereof, keep confidential all information regarding Darling Group, and its clients and relations, whereby confidentiality is imposed on him or of which he knows, or is ought to know, the secret or confidential nature, and he shall not use this information for other purpose than required in connection with the performance of the obligations arising from this Employment Agreement.

 
		
	12.2.
	Executive is prohibited to keep in any manner whatsoever documents, correspondence or copies thereof, that are in his possession in connection with the performance of his activities for the Darling Group, any longer than necessary for the purpose of performance of his activities. In any event Executive is obliged to hand over with immediate effect, even without any request thereto, such documents, correspondence or copies thereof at first request and/or at the termination of the employment, or when he has not performed his duties, for whatever reason, for a period longer than four weeks. 

		
	13.
	 Non-compete/non solicit

		
	13.1.
	During the employment of Executive and during the Restrictive Period (as defined here below), Executive shall not without prior written approval of Darling International be permitted to do any of the following in any jurisdiction where Darling Group is active directly or indirectly in any capacity whatsoever, or has any business interests, at the time of termination of this Employment Agreement:

		
	(a)
	to work for or be involved with, in any manner, directly or indirectly, paid or unpaid, any person, organization, company or enterprise pursuing activities similar to the Darling Group, including the (former) VION Ingredients Group, and/or to have or take any interest in such organization, company or enterprise. This includes, without limitation, companies involved in slaughter by-products or other products or business (directly or indirectly) derived or following from the slaughtering business such as, without limitation, Saria, Gelita, Tessenderloo , Nitta, Ten Kate, Van Hessen.

		
	(b)
	to maintain in any manner whatsoever, directly or indirectly, business contacts with any person, organization, company or enterprise with whom during the last two years preceding the termination of this Employment Agreement Executive has had any business, to the extent Darling Group has a legitimate business interest in Executive refraining from maintaining such business contact;

		
	(c)
	to induce, directly or indirectly, present employees of Darling Group, including but not limited Darling BV, Darling International, Darling USA and Darling Canada, or persons who in the period of two years preceding the termination of this Employment Agreement have been or were employed by such company, to terminate their employment or to hire such employees.

		
	13.2.
	In view of Section 13.1, the restrictive period will be as follows (the “Restrictive Period”):

		
	(a)
	in the event Executive terminates this Employment Agreement through notice or otherwise, the Restrictive Period will be 18 months from the date of termination of this Employment Agreement;

Page 7

 

		
	(b)
	in the event Darling BV terminates this Employment Agreement through notice, the Restrictive Period will be 18 months from the date notice has been served by Darling BV on Executive (and therefore 12 months from the date of termination of this Employment Agreement); provided, however, that in the event that Darling BV does not waive the non-compete clause Executive will be entitled to an additional severance which adequately reflects the imposed restrictions;

		
	(c)
	in the event Darling BV terminates this Employment Agreement with immediate effect for cause (dringende reden), the Restrictive Period will be 18 months from the date of termination of this Employment Agreement;

		
	(d)
	in the event this Employment Agreement is rescinded by a Court at the request of Darling BV for reasons other than cause (dringende reden), the restrictive period will be 12 months from the date of termination of this Employment Agreement.

		
	(e)
	in the event this Employment Agreement is rescinded by a Court at the request of Executive or at the request of Darling BV for cause (dringende reden), the restrictive period will be 18 months from the date of termination of this Employment Agreement.

		
	14.
	Penalty clause

		
	14.1.
	Executive will forfeit to Darling BV for a breach of Sections 12 and 13 hereof immediately, without prior notice or any judicial intervention being required, a penalty of EUR 10,000 per breach plus EUR 500 for each day that such breach continues, without prejudice to Darling BV’s right to claim the actual damages it has suffered through such breach. Section 7:650 subsections 3, 4 and 5 Dutch Civil Code and/or sections 6:92, 6:93 Dutch Civil Code (each time to the extent applicable) are explicitly excluded.

 
		
	14.2.
	It is acknowledged and agreed that reasonable compensation for the restrictions set out in Sections 12 and 13 hereof is included in Executive's remuneration package.

		
	15.
	 Rights of intellectual or industrial property

 
		
	15.1.
	If Executive during, or within a period of two years after termination of this Employment Agreement has invented a certain product/working method (voortbrengsel/werkmethode) which is to be considered as a consequence of, or pursuant to, his activities at Darling Group and which may lead in The Netherlands or elsewhere to the inception of rights, including all rights of industrial or intellectual property and explicitly including: databases, know-how, trademarks, designs, drawings, product specifications, formulas, computer programs, etc., Darling International is entitled to this product/working method and the related rights.

 
		
	15.2.
	Executive does not have the right to mention his name or have his name mentioned in connection with the rights meant in this Section 15.1 of this Employment Agreement, with the exception of the provisions of Section 14 paragraph 1 of the Dutch Patent Act 1995 (Rijksoctrooiwet 1995). Executive hereby waives in relation to the rights as meant in this Section 15.1 his moral rights (persoonlijkheidsrechten) within the meaning of article 25 Dutch Copyright Act 1912 (Auteurswet 1912) and his possible entitlements to a monetary compensation in addition to his salary, all to the extent permitted by law.

Page 8

 

		
	15.3.
	Executive shall promptly and without delay inform Darling International of the inception of any right as meant in this Section and will, to the extent required, make every effort to have Darling International obtain such right.

 
		
	15.4.
	Executive will do his utmost to ensure the maximum protection of a right as meant in Section 15.1 of this Employment Agreement, to the extent that it serves the interests of Darling Group and to the extent that it is in accordance with relevant policies.

		
	15.5.
	Executive acknowledges and agrees that his salary includes compensation for the fact that the rights pursuant to Section 15.1 of this Employment Agreement accrue to Darling International, as well as to his cooperation to ensure that these rights will accrue to Darling International.

 
		
	16.
	Gifts

		
	16.1.
	Executive is prohibited to, in relation to the performance of his duties during the term of his employment, without the prior written consent of Darling International, accept or stipulate from third parties, directly or in any manner indirectly, any commission, favour or compensation in whatever form or manner.

		
	16.2.
	The provisions of Section 16.1 do not apply to the customary business gift of small value, which do not exceed the retail value of EUR 100.

		
	17.
	Final provisions

		
	17.1.
	It is agreed between the parties that Darling BV and Darling International will review the taxation of Executive's earnings under this Employment Agreement.

		
	17.2.
	The considerations (overwegingen) of this Employment Agreement form part of this Employment Agreement.

 
		
	17.3
	This Employment Agreement constitutes the entire employment agreement between the parties and supersedes all (employment) agreements previously made and given by and between the Executive and the VION Ingredients Group and its affiliated companies. Notwithstanding the foregoing:

(a) Executive's entitlements under the VION Ingredients Incentive and Success Fee Plan (VISO) of 18 June 2013; and
(b) Executive's entitlements under paragraph 2 of the Darling Global Holding Inc Governance and Non-Financial Items - Term Sheet (dated September 30, 2013 and sent to Executive by letter of that date by Randall C. Stuwe, Chairman and CEO of Darling International Inc.);
will continue to have effect also after execution of this Employment Agreement.
		
	17.4.
	In this Employment Agreement, all references to Darling International or the affiliated undertakings or companies, means a reference to all companies belonging directly or indirectly to the Darling Group. 

Page 9

 

		
	17.5.
	The invalidity (nietigheid) of one or more provisions of this Employment Agreement shall not result in the invalidity of the remaining provisions of this Employment Agreement. The parties undertake to immediately hold consultations with each other in case any provision is void.

		
	17.6.
	This Employment Agreement shall be governed by the laws of The Netherlands. 

 
		
	17.7.
	Any dispute arising under or in connection with this agreement, including disputes in relation to the existence or validity of this Employment Agreement shall be settled by the competent court in The Netherlands. 

Agreed and executed and signed in twofold in Son, Netherlands on 2/12/14.

/s/ Randall C. Stuewe    /s/ Dirk Kloosterboer
Darling BV        .                Executive
By: Randall C. Stuewe

Page 10

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