EXHIBIT 10.18
XXXXXXXXX FARMS, INC.
FORM OF PHANTOM STOCK AGREEMENT
THIS PHANTOM STOCK AGREEMENT ("Phantom Stock Agreement"), dated as of
the ____th day of _____, 200__ (the "Date of Grant"), is delivered by Xxxxxxxxx
Farms, Inc., and its subsidiaries and affiliates (collectively referred to as
"SFI") to _________________________ (the "Holder"), who is an executive officer
or key employee of SFI.
WHEREAS, the Board of Directors of Xxxxxxxxx Farms, Inc. (the "Board")
has approved the grant of phantom stock to certain executive officers or key
employees of SFI;
WHEREAS, the Board considers the Holder to be a person who is eligible
for grant of phantom stock, and has determined that it would be in the best
interest of SFI to grant the phantom stock documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant of Phantom Stock.
(a) Subject to the terms and conditions hereinafter set forth, SFI,
with the approval and at the direction of the Board, hereby grants to the
Holder, as of the Date of Grant, ______ shares of Phantom Common Stock of SFI
("Phantom Stock" or the "Award" as the case may be) at an award value of
$__________ per share ("Award Value"), which value per share is at or above the
present fair market value of SFI common stock ("Common Stock").
(b) The Date of Grant is ___________, 200__.
2. Reference to Stock Option Plan.
This Phantom Stock Agreement is intended to correspond to the extent
practical to the Xxxxxxxxx Farms, Inc. and Affiliates Stock Option Plan, as
amended and restated to the date hereof ("Plan"). The terms of the Plan, to the
extent not inconsistent with this Phantom Stock Agreement, are incorporated
herein by reference where indicated. Capitalized terms used in this Phantom
Stock Agreement shall have the same meanings ascribed to such terms in the Plan.
3. Term and Exercise.
The Phantom Stock may be converted to cash or Common Stock during a
period beginning one year after and ending ten years after the Date of Grant
(the "Award Term") in accordance with the following vesting schedule. Except in
the event of a change described in Section 6 of this Agreement or, unless a
shorter period is provided by the Board, the Phantom Stock shall be converted in
accordance with this Section 3. The first year of the Award Term begins one year
after the Date of Grant and ends 12 months later. During the first year of the
Award Term, no more than 25% of the initial total number of shares of Phantom
Stock may be converted to cash or Common Stock by the Holder. During the second
year of the Award Term, no more than 50% of the initial total number of shares
of Phantom Stock may be converted to cash or Common Stock by the Holder, such
percentage to include the percentage, by number of shares, converted in the
previous year of the Award Term. During the third year of the Award Term, no
more than 75% of the initial total number of shares of Phantom Stock may be
exercised and purchased by the Holder, such percentage to include the
percentages, by number of shares, previously purchased in earlier years of the
Award Term on a cumulative basis. During the fourth year of the Award Term and
until the end of the Award Term, 100% of the initial total number of shares of
Phantom Stock may be exercised and purchased by the Holder, such percentage to
include the percentages, by number of shares, previously purchased in earlier
years of the Award Term on a cumulative basis. No fractional shares may be
converted. No Phantom Stock shall be converted after the expiration of its Award
Term.
4. Termination and Forfeiture of Phantom Stock.
(a) Except as provided in Sections 4(b), 4(c) and 4(d) of this Phantom
Stock Agreement, upon termination of the Holder's employment, the Phantom Stock,
to the extent not previously converted, shall terminate and be forfeited
immediately upon such termination of employment.
(b) Upon termination of the Holder's employment by reason of death of
the Holder, the Phantom Stock may be converted, but only to the extent
convertible on the date of such death, within one (1) year from and after the
date of the Holder's death. The Phantom Stock may be converted by the executor
or administrator of the deceased Holder's estate or by a person receiving the
Phantom Stock by will or under the laws of descent and distribution of the state
in which the Holder resided.
(c) Upon termination of the Holder's employment by reason of permanent
and total disability as defined under Section 22(e)(3) of the Internal Revenue
Code, the Phantom Stock may be converted, but only to the extent convertible on
the date of such permanent and total disability, during the one (1) year period
following the date of such termination of the Holder's employment.
(d) Upon termination of the Holder's employment by reason of retirement
or disability other than as defined by Section 4(c) of this Agreement, the
Phantom Stock may be converted, but only to the extent convertible on the date
of such retirement or disability, during the three (3) month period following
the date of such termination of the Holder's employment.
(e) A transfer of the Holder's employment from one affiliate of SFI to
another shall not be deemed to be a termination of the Holder's employment.
(f) Notwithstanding any other provisions set forth herein or in the
Plan, if the Holder shall (i) commit any act of malfeasance or wrongdoing
affecting SFI, (ii) breach any covenant not to compete or employment contract
with SFI, or (iii) engage in conduct that would warrant the Holder's discharge
for cause (excluding general dissatisfaction with the performance of the
Holder's duties, but including any act of disloyalty or any conduct clearly
tending to bring discredit upon SFI), then any portion of the Phantom Stock not
already converted shall immediately terminate and be forfeited and void.
(g) Notwithstanding any other provisions set forth herein or in the
Plan, if during the period that the Holder is employed by SFI or during the two
year period following the Holder's voluntary termination of employment or his
termination by SFI for cause (excluding general dissatisfaction with the
performance of the Holder's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon SFI) the Holder shall, without
the prior written consent of the Board, directly or indirectly, as employee,
agent, consultant, stockholder, director, co-partner or in any other individual
or representative capacity, own, operate, manage, control, engage in, invest in
or participate in any manner in, act as a consultant or advisor to, render
services for, or otherwise assist any person or entity that directly or
indirectly engages in, the business of producing, marketing, distributing or
selling poultry products anywhere that SFI is then doing business (such
activities being hereinafter referred to as "Competition"), then: (i) any
unexercised portion of the Phantom Stock shall immediately terminate and be
void; and (ii) the Holder shall be required, and hereby agrees, upon thirty (30)
days' written notice from SFI, to return to SFI in immediately available funds
the difference between the exercise price and the fair market value on the date
of exercise of the exercised portion of the Phantom Stock. The provisions of
this Section 2.06(f) shall not apply, however, to the passive investment by the
Holder in publicly traded common equity of any entity that is engaged in the
business of producing marketing, distributing or selling poultry products so
long as such investment does not exceed two percent of the outstanding common
equity of such entity.
The determination of whether the Holder has voluntarily terminated his
employment, has been terminated for cause or has engaged in Competition shall be
determined by the Board (or, if applicable, a committee thereof appointed
pursuant to Section 1.02(d) of the Plan) in good faith and in its sole
discretion, and any such determinations by such body shall be final and binding
on the Holder.
5. Conversion of Phantom Stock.
(a) Vested shares of Phantom Stock may be converted by a Holder into
cash, Common Stock, or both, only in accordance with this Section 5. To convert
vested, convertible shares of Phantom Stock, a Holder must deliver or mail to
the Treasurer a written notice of conversion substantially in the form attached
hereto as Exhibit "A" stating the number of shares of the Holder's Phantom Stock
to be converted. Such conversion shall be effective on the date of receipt by
the Treasurer (the "Conversion Date").
(b) Upon receipt by the Treasurer of a proper written notice of
conversion by a Holder in accordance with the terms of this Phantom Stock
Agreement, the Holder shall be entitled to receive an amount of cash equal to:
(i) the aggregate Fair Market Value of the shares converted on the Conversion
Date less (ii) the aggregate Award Value of the number of shares of Common Stock
equal to the number of shares converted (the "Conversion Gain"). In the
discretion of the Treasurer, the Company may satisfy its obligation upon
conversion of shares of Phantom Stock by the distribution of that number of
shares of Common Stock having an aggregate Fair Market Value (as of the
Conversion Date) equal to the amount of cash otherwise payable to the Holder,
with a cash settlement to be made for any fractional share interests, or the
Company may settle such obligation in part with shares of Common Stock and in
part with cash.
(c) The Conversion Gain shall be paid by the Company to a Holder
subject to such conditions as are deemed advisable by the Treasurer to permit
compliance by the Company with the federal and state withholding provisions
applicable to employers.
(d) Payment shall also be subject to compliance by the Holder with any
written agreement between the Holder and the Company, including an employment
agreement or other agreement relating to confidential information; if the Holder
breaches any such agreement or engages in any conduct that would entitle SFI to
terminate the Phantom Stock pursuant to Section 4(f) of this Phantom Stock
Agreement, then the Holder shall immediately forfeit his right to receive any
unpaid amounts under this Phantom Stock Agreement, and no further payments shall
be made to the Holder hereunder.
6. Adjustment of and Changes in Stock of SFI.
In the event of a reorganization, recapitalization, change of shares,
stock split, spinoff, stock dividend, reclassification, subdivision or
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of capital stock of SFI, the Board
(or, if applicable, a committee thereof appointed pursuant to Section 1.02(d) of
the Plan) shall make such adjustment as it deems appropriate to the Award in
order to preserve, but not increase, the benefits to the Holder; provided,
however, that subject to any required action of the stockholders, if SFI shall
not be the surviving corporation in any merger, consolidation, or
reorganization, then each Holder shall have the right immediately prior to such
merger, consolidation or reorganization to exercise his or her outstanding
Award, notwithstanding that such option(s) or right(s) may not be fully vested
at such time.
7. Fair Market Value.
"Fair Market Value" as of any date and in respect of any share of
Common Stock means the closing price on such date or on the next business day,
if such date is not a business day, of a share of Common Stock reflected in the
NASDAQ National Market System traded under the Symbol SAFM, provided that, if
shares of Common Stock shall not have been traded on NASDAQ for more than 10
days immediately preceding such date or if deemed appropriate by the Board (or,
if applicable, a committee thereof appointed pursuant to Section 1.02(d) of the
Plan) for any other reason, the Fair Market Value of shares of Common Stock
shall be as determined by the Board (or, if applicable, a committee thereof
appointed pursuant to Section 1.02(d) of the Plan) in such other manner as it
may deem appropriate. In no event shall the Fair Market Value of any share of
Common Stock be less than its par value.
8. No Rights as a Stockholder.
Neither the Holder nor any personal representative shall be, or shall
have any of the rights and privileges of, a stockholder of SFI with respect to
any shares of Common Stock purchasable or issuable upon the exercise of this
Award, in whole or in part, prior to the issuance of certificates for shares of
Common Stock to said person.
9. Xxxxxxx Xxxxxxx Short-Swing Profit Liability Exemption Requirements.
Notwithstanding any other provision of this Agreement to the contrary,
the Phantom Stock granted under this Agreement shall be transferable (i) by the
Holder only by will or under the laws of descent and distribution of the state
in which the Holder resided on the date of his death, and (ii) by the Company
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the Rules thereunder.
10. No Rights of Employment.
Neither the granting of this Phantom Stock nor its exercise shall be
construed as granting to the Holder any right with respect to continuance of
employment with SFI. Except as may otherwise be limited by a written agreement
between SFI and the Holder, and acknowledged by the Holder, the right of SFI to
terminate at will the Holder's employment with it at any time (whether by
dismissal, discharge, retirement or otherwise) is specifically reserved by SFI.
11. Amendment of Phantom Stock Agreement.
The Board (or, if applicable, a committee thereof appointed pursuant to
Section 1.02(d) of the Plan) may, without the consent of or further
consideration from the Holder, amend, condition or modify this Phantom Stock
Agreement in response to changes in securities or other laws or rules,
regulations or regulatory interpretations thereof applicable to the Phantom
Stock, the Award or the Phantom Stock Agreement or to comply with stock exchange
rules or requirements. The Board (or, if applicable, a committee thereof
appointed pursuant to Section 1.02(d) of the Plan) may amend this Phantom Stock
Agreement otherwise with the written consent of the Holder.
12. Notice.
Any notice to SFI provided for in this instrument shall be addressed to
it in care of its Treasurer at its executive offices at Xxxx Xxxxxx Xxx 000,
Xxxxxx, Xxxxxxxxxxx 00000, and any notice to the Holder shall be addressed to
the Holder at the current address shown on the payroll records of SFI. Any
notice shall be deemed to be duly given if and when properly addressed and
posted by registered or certified mail, postage prepaid.
13. Interpretation.
Pursuant to Section 2 of this Phantom Stock Agreement, the terms of the
Plan are incorporated herein by reference, and the Phantom Stock shall in all
respects be interpreted in accordance with the Plan, where applicable. The Board
(or, if applicable, a committee thereof appointed pursuant to Section 1.02(d) of
the Plan) shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding on the
parties hereto and any other person claiming an interest hereunder, with respect
to any issue arising hereunder or thereunder.
14. Governing law.
The validity, construction, interpretation and effect of this
instrument shall exclusively be governed by and determined in accordance with
the laws of the State of Mississippi, except to the extent preempted by federal
law, which shall to that extent govern.
15. Compliance with Other Laws and Regulations.
Notwithstanding anything contained herein to the contrary, SFI shall
not be required to sell or issue shares of Common Stock under any Award if the
issuance thereof would constitute a violation by the Holder or SFI of any
provisions of any law or regulation of any governmental authority or any
national securities exchange or other forum in which shares of Common Stock are
traded (including Xxxxxxx 00 xx xxx 0000 Xxx); and, as a condition of any sale
or issuance of shares of Common Stock under an Award, the Treasurer may require
such agreements or undertakings, if any, as the Treasurer may deem necessary or
advisable to assure compliance with any such law or regulation. The Plan, the
grant and conversion of Phantom Stock hereunder, and the delivery of shares of
Common Stock, shall be subject to all applicable federal and state laws, rules
and regulations and to such approvals by any government or regulatory agency as
may be required.
16. Tax Requirements.
SFI shall have the right to deduct from all amounts hereunder paid in
cash or other form, any Federal, state, or local taxes required by law to be
withheld with respect to such payments. The Holder receiving shares of Common
Stock issued upon redemption of Phantom Stock shall be required to pay SFI the
amount of any taxes which SFI is required to withhold with respect to such
shares of Common Stock. Such payments shall be required to be made prior to the
delivery of any certificate representing such shares of Common Stock. Such
payment may be made in cash, by check, or through the delivery of shares of
Common Stock owned by the Holder (which may be effected by the actual delivery
of shares of Common Stock by the Holder or by SFI's withholding a number of
shares to be issued upon the redemption of the Phantom Stock), which shares have
an aggregate Fair Market Value equal to the required withholding payment, or any
combination thereof.
IN WITNESS WHEREOF, SFI has caused its duly authorized officers to
execute and attest this Phantom Stock Agreement, and to apply the corporate seal
hereto, and the Holder has placed his or her signature hereon, effective as of
the Date of Grant.
XXXXXXXXX FARMS, INC.
ATTEST:
By:
Name:
Title:
ACCEPTED AND AGREED TO:
Holder
EXHIBIT A
NOTICE OF EXERCISE OF PHANTOM STOCK
XXXXXXXXX FARMS, INC.
ATTENTION: Treasurer
Gentlemen:
Notice is hereby given of the undersigned's intent to exercise the
Phantom Stock granted to the undersigned pursuant to the Phantom Stock Agreement
dated _______________, ______ entered into by and between the undersigned and
Xxxxxxxxx Farms, Inc. The conversion shall be exercised with respect to
________________________ (_____) shares of the Phantom Stock of Xxxxxxxxx Farms,
Inc.
Dated: ________________, ______
