CHANGE IN CONTROL AGREEMENT
Exhibit 10.1
This Agreement between Xxxxxx X. Xxxxx (“Executive”) and Xxx Xxxxx Farms, Inc., a Delaware
corporation (the “Corporation”), is effective May 1, 2006 (“Effective Date”).
1.00 PURPOSE
The Corporation believes that [1] a sound and stable management team is essential to promoting the
best interests of the Group and the Corporation’s stockholders, [2] as is the case with many
publicly held corporations, a Change in Control may materially alter the Group’s structure and
adversely affect managers’ employment security, [3] appropriate steps should be taken to enable
certain managers, including the Executive, to devote their full and continued attention to the
Group’s business affairs during the crucial (and often tumultuous) period preceding and immediately
following a Change in Control and [4] subject to the terms of this Agreement, these objectives can
best be met by providing the Executive with the severance payments described in this Agreement.
2.00 DEFINITIONS
When used in this Agreement, the following terms will have the meanings given to them in this
section unless another meaning is expressly provided elsewhere in this Agreement. When applying
these definitions, the form of any term or word will include any of its other forms.
2.01 Board. The Corporation’s board of directors.
2.02 Cause. The Executive’s [1] willful and continued refusal to substantially perform assigned
duties (other than any refusal resulting from incapacity due to physical or mental illness), [2]
willful engagement in gross misconduct materially and demonstrably injurious to any Group Member or
[3] breach of any term of this Agreement. However, [4] Cause will not arise [a] solely because the
Executive is absent from active employment during periods of vacation, consistent with the
Employer’s applicable vacation policy, or other period of absence initiated by the Executive and
approved by the Employer or [b] due to any event that constitutes Good Reason.
2.03 Change in Control.
[1] Subject to the rules of application described in Section 2.03[2], the date on which the
earliest of the following events occurs:
[a] After the Effective Date, an event that would be required to be reported as a
change in control for purposes of the Exchange Act.
[b] During any 12-consecutive-calendar-month period ending after the Effective Date,
there is a change in a majority of the Incumbent Directors for any reason other than
death or disability as reasonably established by the Corporation on the basis of
medical and other information known (or made available) to it.
[c] After the Effective Date, any entity or “person,” [including a “group” as
contemplated by Exchange Acts §§13(d)(3) and 14(d)(2)] is or becomes the “beneficial
owner” [as defined in Rule 13d-3 under the Exchange Act], through a tender offer or
otherwise, of Common Shares representing 50 percent or more of the combined voting
power of the Corporation’s then outstanding Common Shares.
[d] During any 12-consecutive-calendar-month period ending after the Effective Date,
any entity or “person,” [including a “group” as contemplated by Exchange Act
§§13(d)(3) and 14(d)(2)] acquires, either directly or as a “beneficial owner” [as
defined in Rule 13d-3 under the Exchange Act], through a tender offer or otherwise,
Common Shares representing more than 20 percent of the combined voting power of the
Corporation’s then outstanding Common Shares. However, this element of this
definition will be applied without regard to the effect of any redemption of Common
Shares by the Corporation or the acquisition of Common Shares by any Group Member
and after ignoring any Common Shares acquired:
[i] Before the beginning of any 12-consecutive-calendar-month measurement
period;
[ii] By or through an employee benefit plan [whether or not intended to
comply with Code §401(a) and whether or not the Executive participates in
that plan] maintained by any Group Member;
[iii] Directly, through an equity compensation plan maintained by any Group
Member;
[iv] Directly, through inheritance, gift, bequest or by operation of law on
the death of an individual; or
[v] By any entity or “person” [including a “group” as contemplated by
Exchange Act §§13(d)(3) and 14(d)(2)] with respect to which that acquirer
has filed SEC Schedule 13G indicating that the Common Shares were not
acquired and are not held for the purpose of or with the effect of changing
or influencing, directly or indirectly, the Corporation’s management or
policies, unless and until that entity or person indicates that its intent
has changed by filing SEC Schedule 13D.
[e] After the Effective Date, the Corporation’s stockholders approve a definitive
agreement to merge or combine the Corporation with or into another entity, a
majority of the directors of which were not Incumbent Directors immediately before
the merger and in which the Corporation’s stockholders will hold less than 50
percent of the voting power of the surviving entity. When applying this element of
this definition:
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[i] Stockholders will be determined immediately before and immediately after
the merger or combination; and
[ii] The Common Shares owned before the transaction by the entity with which
the Corporation merges or combines will be disregarded for all purposes.
[f] Within any 12-consecutive-calendar-month period ending after the Effective Date,
any entity or “person” [including a “group” as contemplated by Exchange Act
§§13(d)(3) and 14(d)(2) and Code §280G] acquires, either directly or as a
“beneficial owner” [as defined in Rule 13d-3 under the Exchange Act] of another
entity or person, Group assets having a total gross fair market value equal to or
greater than 50 percent of the book value of the Group’s assets. For purposes of
this definition, “book value” will be established on the basis of the latest
consolidated financial statement the Corporation filed with the Securities and
Exchange Commission before the date any 12-consecutive calendar month measurement
period began.. However, except as otherwise provided in this section, this element
of this definition will be applied after ignoring:
[i] Any transfer of assets to a stockholder of the Corporation (determined
immediately before the asset transfer), but only to the extent exchanged for
or with respect to the Corporation’s stock;
[ii] Any transfer of assets to an entity, 50 percent or more of the total
value or voting power of which is owned by one or more Group Members;
[iii] Any transfer of assets to any entity or “person” [including a “group”
as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] that, immediately
before the transfer, owns, directly or as a “beneficial owner” [as defined
in Rule 13d-3 under the Exchange Act], 50 percent or more of the total value
or voting power of the Corporation’s outstanding securities; or
[iv] Any transfer of assets to an entity, at least 50 percent or more of the
total value or voting power of which, immediately before the transfer, is
owned, directly or indirectly, by a person described in Section 2.03[1][c]
of this definition.
[2] The following rules of application will be applied to this definition:
[a] For purposes of applying all parts of this definition, [i] Common Shares owned
or acquired by the Executive or by any other entity or “person” [including a “group”
as contemplated by Exchange Act §§13(d)(3) and 14(d)(2)] acting in concert with the
Executive will be disregarded, [ii] any transfer of assets to the Executive or to
any other entity or “person” [including a “group” as contemplated by Exchange Act
§§13(d)(3) and 14(d)(2)] acting in concert with the Executive
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will be disregarded and [iii] the constructive ownership rules of Code §318(a) will
be applied to determine stock ownership;
[b] For purposes of applying Section 2.03[1][f], an entity’s or a person’s status
(unless specifically indicated otherwise) will be determined immediately after the
transfer of assets; and
[c] Any transfer of assets disregarded under Section 2.03[1][f][i] will not be
ignored when applying that subsection if that transaction is part of a larger
transaction or series of transactions that also involve the transfer of assets for
cash or consideration other than Common Shares.
2.04 Code. The Internal Revenue Code of 1986, as amended, or any successor statute.
2.05 Common Shares. The Corporation’s shares of Common Stock or any security issued in
substitution, exchange or in place of the Corporation’s Common Stock.
2.06 Confidential Information. Any and all information (other than information in the public
domain) related to the Group’s business or that of any Group Member, including all processes,
inventions, trade secrets, computer programs, engineering or technical data, drawings or designs,
manufacturing techniques, information concerning pricing and pricing policies, marketing
techniques, plans and forecasts, new product information, information concerning suppliers, methods
and manner of operations, and information relating to the identity and location of all past,
present and prospective customers.
2.07 Date of Termination. Except as otherwise provided in Section 4.00:
[1] If the Executive is Terminated because of Retirement or for Cause, the date specified in
the Notice of Termination;
[2] If the Executive is Terminated because of Disability, the date determined under Section
4.04[1];
[3] If the Executive dies, the date of death;
[4] If the Executive is Terminated for Good Reason, the date specified in the Notice of
Termination;
[5] If the Executive is Terminated for any reason other than Retirement, Cause, Disability,
death or Good Reason, the date on which a Notice of Termination is given; or
[6] If the Employer Terminates the Executive without giving a Notice of Termination, the
date on which that Termination is effective.
However, if either Party utilizes the procedures described in Section 7.03 to dispute the basis on
which the Executive’s employment is being terminated, the Date of Termination will be no later
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than the last day of the Executive’s active employment as a common law employee of all Group
Members.
2.08 Disability. An incapacity due to physical or mental illness that has prevented the Executive
from discharging assigned duties on a full-time basis for at least the lesser of [1] 26 consecutive
weeks or [2] the period between the date the incapacity arose and the last day but one of the
Effective Period.
2.09 Effective Period. The 36 consecutive calendar months beginning after a Change in Control
occurring during the Term, even if that period extends beyond the Term.
2.10 Employer. The Group Member by which the Executive is directly employed on the date of any
event, act or occurrence described in this Agreement, including execution of this Agreement. If,
without incurring a Termination, the Executive becomes a common law employee of a Group Member
other than the Employer, that Group Member will automatically become the Executive’s “Employer”
under this Agreement and will be fully liable, as the Executive’s Employer, for all obligations
arising under this Agreement during the period of that employment relationship, including the
payment of any amount described in Section 5.00 that becomes due during the course of that
employment relationship.
2.11 Exchange Act. The Securities Exchange Act of 1934, as amended, or any successor statute.
2.12 Good Reason. For purposes of Section 4.06, any of the following to which the Executive has
not consented in writing:
[1] At any time after a Change in Control, any breach of this Agreement of any nature
whatsoever by or in behalf of the Group or any Group Member;
[2] At any time after a Change in Control, a reduction in the Executive’s title, duties,
responsibilities or status, as compared to either [a] the Executive’s title, duties,
responsibilities or status immediately before a Change in Control or [b] any enhanced or
increased title, duties, responsibilities or status to which the Executive accedes after the
Change in Control;
[3] At any time after a Change in Control, the assignment to the Executive of duties that
are inconsistent with [a] the Executive’s office immediately before the date of a Change in
Control or [b] any more senior office to which the Executive is promoted after a Change in
Control;
[4] During any calendar year ending after a Change in Control, a 10 percent (or larger)
reduction (other than a reduction attributable to any Termination for death, Disability or
Cause or for any period the Executive is temporarily absent from active employment) in the
highest of [a] the Executive’s total cash compensation for the preceding calendar year or,
if higher, [b] the Executive’s total cash compensation for the
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last calendar year ending before the Change in Control but [c] in both cases, determined
without regard to any amounts described in this Agreement;
[5] At any time after a Change in Control, a requirement that the Executive relocate to a
principal office or worksite (or accept indefinite assignment) to a location more than 50
miles distant from [a] the principal office or worksite to which the Executive was assigned
immediately before a Change in Control or [b] any location to which the Executive agreed to
be assigned after a Change in Control;
[6] At any time after a Change in Control, the imposition on the Executive of business
travel obligations substantially greater than the Executive’s business travel obligations
during the 12-consecutive-calendar-month period ending before the Change in Control but
determined without regard to any special business travel obligations associated with
activities relating to the Change in Control;
[7] At any time after a Change in Control, the Employer’s [a] failure to continue in effect
any material fringe benefit or compensation plan, retirement or deferred compensation plan,
life insurance plan, health and accident plan or disability plan in which the Executive is
participating at the time of a Change in Control, [b] modification of any of the plans or
programs just described that adversely affects the value of the Executive’s benefits under
those plans, or [c] failure to provide the Executive, after a Change in Control, with the
same number of paid vacation days to which the Executive is or becomes entitled at or
anytime on or after a Change in Control under the terms of the Employer’s vacation policy or
program. However, Good Reason will not arise under this subsection solely because [d] the
Corporation or the Employer terminates or modifies any program after a Change in Control
solely to comply with applicable law but only to the extent of the change required or [e] a
plan or benefit program expires under self-executing terms contained in that plan or benefit
program before the Change in Control; or
[8] The Employer fails to deliver a Notice of Termination to the Executive within 30 days
after the Executive becomes Disabled.
2.13 Group. The Employer, the Corporation and any other entity to which either is related through
common ownership as defined in Code §1504.
2.14 Group Member. Each entity that is a member of the Group.
2.15 Incumbent Director. Each person who was a member of the Board on the Effective Date and,
after the Effective Date, each director whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the then Incumbent Directors.
2.16 Notice of Payment. The written notice by which the Corporation apprises the Executive of [1]
the amount of any payment due under this Agreement, [2] the reason that amount is payable and [3]
the basis on which that payment was calculated.
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2.17 Notice of Termination. A written notice that describes in reasonable detail the facts and
circumstances claimed to provide a basis for Termination.
2.18 Parties. The Corporation and the Executive.
2.19 Retirement. The Executive’s Termination in accordance with [1] the Employer’s normal
retirement policy in effect on the date of a Change in Control and which is generally applicable to
its salaried employees or [2] in accordance with any individual retirement arrangement agreed upon
by the Parties.
2.20 Retirement Age. The normal or mandatory retirement age specified in any of the policies or
arrangements described in Section 2.19.
2.21 Term. Initially, the period beginning on the Effective Date and ending midnight, April 30,
2007 (“Termination Date”). Subject to Section 6.00, the Term will automatically be extended for
successive one-year periods beginning on the Termination Date and anniversaries of each Termination
Date.
2.22 Termination. Termination of the common law employee-employer relationship between the
Executive and all Group Members for any reason, whether or not the Executive subsequently becomes a
consultant or adviser to any Group Member or serves as a member of the board of directors of any
Group Member. However, a Termination will not be deemed to have occurred [1] solely because the
Executive’s Employer ceases to be a Group Member and the Executive continues to be employed by that
former Group Member or [2] subject to Section 4.06, if the Executive’s common law employment
relationship is transferred between Group Members without interruption.
3.00 EXECUTIVE’S OBLIGATIONS
3.01 Services During Certain Events. If any “person” (as used in Section 2.03[1][c]) initiates a
tender or exchange offer, distributes proxy materials to the Corporation’s stockholders or takes
other steps to effect, or that may result in, a Change in Control, the Executive agrees not to
Terminate voluntarily during the pendency of that activity other than by reason of Retirement and
to continue to serve as a full-time employee of the Employer until those efforts are abandoned,
that activity is terminated or until a Change in Control has occurred.
3.02 Confidential Information. Except as otherwise required by applicable law, Executive expressly
agrees to keep and maintain Confidential Information confidential and not, at any time during or
subsequent to the Executive’s employment with any Group Member, to use any Confidential Information
for Executive’s own benefit or to divulge, disclose or communicate any Confidential Information to
any person or entity in any manner except [1] to employees or agents of the Employer or of the
Corporation that need the Confidential Information to perform their duties on behalf of any Group
Member or [2] in the performance of Executive’s duties to the Employer. Executive also agrees to
notify the Corporation promptly of any circumstance Executive believes may legally compel the
disclosure of Confidential Information and to give this notice before disclosing any Confidential
Information.
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3.03 Effect of Breach of Obligations. If the Executive breaches any obligation described in this
Agreement:
[1] If that breach occurs before a Change in Control, this Agreement will terminate as of
the date of the breach, even if the fact of the breach becomes apparent at a later date;
[2] If that breach occurs after a Change in Control but before the Executive has Terminated,
this Agreement will terminate as of the date of the breach, even if the fact of the breach
becomes apparent at a later date and no amounts will be due under this Agreement; or
[3] If that breach occurs after a Change in Control and after the Executive Terminates, the
Executive will repay any amounts paid under this Agreement plus interest calculated at the
prime interest rate quoted in the Wall Street Journal, over the period beginning on the date
of the payment to the Executive (or any beneficiary under this Agreement and ending on the
date of repayment.
4.00 COMPENSATION PAID IF EXECUTIVE TERMINATES AFTER A CHANGE IN CONTROL
4.01 Termination For Cause.
[1] The Employer may Terminate the Executive for Cause at any time by delivering to the
Executive a Notice of Termination specifying the effective date of the Termination (which
may not be earlier than the date the Notice of Termination is given) and the basis upon
which the Employer believes that it has Cause to Terminate the Executive.
[2] As of the Date of Termination specified in the Notice of Termination, [a] the
Executive’s employment will end, [b] this Agreement will terminate and [c] no amounts will
be paid or due under this Agreement at any time.
4.02 Termination Because of Death. Subject to Section 8.03, if the Executive dies, this Agreement
will terminate as of the date the Executive dies and no amounts will be paid or due under this
Agreement at any time.
4.03 Termination After Retirement Age. If the Executive Terminates after Retirement Age for any
reason, this Agreement will terminate as of the date specified in the Notice of Termination (which
may not be earlier than the Executive’s Retirement Age) and no amounts will be paid or due under
this Agreement at any time.
4.04 Termination Because of Disability.
[1] The Employer may Terminate the Executive at any time after the Executive has become
Disabled but only if it delivers to the Executive a Notice of Termination specifying the
effective Date of Termination, which may be [a] no earlier than 30 days after this Notice of
Termination is delivered or [b] no later than the last day but one of the Effective Period
during which the Disability began.
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[2] If the Executive does not return to full-time active employment before the Date of
Termination specified in the Notice of Termination and if the specified Date of Termination
is within an Effective Period (whether or not the Executive’s absence began before or after
the Effective Period began) or if the Executive Terminates for Good Reason (as defined in
Section 2.12[8]), [a] the Executive’s employment will Terminate as of the Date of
Termination specified in the Notice of Termination, [b] this Agreement will terminate and
[c] the Executive will receive an amount equal to:
[i] The amount described in Section 5.00, calculated on the basis of the
compensation paid to the Executive before the absence began or, if higher, the
amount the Executive was receiving during the period of absence; minus
[ii] The value of:
[A] One half of the disability benefit payable under the Social Security
Act;
[B] The amount by which the Executive’s employer-funded benefit under any
retirement or deferred compensation plan [whether or not intended to comply
with Code §401(a)] is enhanced by the Disability; and
[C] The value of any employer-funded disability income or other benefits the
Executive is entitled to receive from any disability plan or program.
The value of these reductions:
[D] Will be calculated by applying the factors described in Section 5.02[5];
and
[E]Will be applied before application of Section 5.02[1] or [2].
4.05 Termination Without Cause.
[1] The Employer may Terminate the Executive without Cause for any reason by delivering to
the Executive a Notice of Termination that specifies the Date of Termination, which may not
be earlier than the date the Notice of Termination is given.
[2] If [a] the Date of Termination specified in the Notice of Termination is within the
period beginning six months before the beginning of an Effective Period and ending on the
last day of the same Effective Period and [b] the Executive’s employment is not being
Terminated due to death, Disability or Cause, [c] the Corporation will pay (or cause the
Employer to pay) to the Executive the amount described in Section 5.00. After those amounts
have been paid, this Agreement will terminate and no further amounts will be paid or due
under this Agreement.
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4.06 Termination for Good Reason.
[1] The Executive may Terminate for Good Reason after a Change in Control by delivering to
the Corporation a Notice of Termination for Good Reason (other than Good Reason as defined
in Section 2.12[8]) specifying the Date of Termination (which may not be earlier than the
date the Notice of Termination is given) and the basis upon which the Executive believes
that Good Reason has arisen.
[2] If [a] the Date of Termination specified in the Notice of Termination is within the
period beginning six months before the beginning of an Effective Period and ending on the
last day of the same Effective Period and [b] within 30 days after the Date of Termination,
the Employer does not cure the Good Reason event described in the Notice of Termination, [c]
the Corporation will pay (or cause the Employer to pay) to the Executive the amount
described in Section 5.00. After those amounts have been paid, this Agreement will
terminate and no further amounts will be paid or due under this Agreement.
5.00 CHANGE IN CONTROL PAYMENTS
5.01 Calculation of Change in Control Payments. Subject to the terms of this Agreement, if the
Executive is Terminated under Section 4.04, 4.05 or 4.06, the Corporation (or the Employer) will:
[1] Continue to pay the Executive’s compensation and other benefits through the Date of
Termination and also will pay the Executive the value of any unused vacation and
compensation days determined under the Employer’s personnel policy. These amounts will be
paid no later than 30 days after the Executive’s Date of Termination and will be based on
the rate of compensation and value of benefits in effect before the Notice of Termination
was delivered.
[2] Pay the Executive a lump sum equal to the amount described in this subsection. This
payment will be accompanied by a Notice of Payment and, subject to Section 5.02, made no
more than 30 days after the Executive’s Date of Termination. The amount payable under this
subsection will be the sum of:
[a] 299 percent of the Executive’s “base amount” as defined under Code §280G
[whether or not the Change in Control generating benefits under this Agreement is a
“change in control” as defined under Code §280G]; plus
[b] An additional amount equal to:
[i] The cash bonus paid to the Executive by all Group Members averaged over
the three full fiscal years ending before the Date of Termination (or, if
shorter, over the full period of the Executive’s employment by all Group
Members); multiplied by
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[ii] The number of days between the Executive’s Date of Termination and the
last day of the Corporation’s last complete fiscal year ending before that
Date of Termination; and divided by
[iii] 365 days.
[c] Any other change in control benefit to which the Executive is entitled under any
other plan, program or agreement with any Group Member.
[3] For 36 months after the Executive’s Date of Termination, the Corporation also will
maintain (or cause the Employer to maintain) in full force and effect, for the Executive’s
continued benefit (and that of all family members and other dependents who were enrolled in
the programs on the Executive’s Date of Termination) all life, medical and dental insurance
programs in which the Executive (or members of the Executive’s family or other dependents)
was participating or was covered immediately before the Executive’s Date of Termination. If
the terms of any of the programs just described do not allow the continued participation
described in the preceding sentence, the Corporation (or the Employer) will [a] provide
benefits that are substantially similar (including eligibility conditions, conditions on
benefits, the value of benefits and the scope of coverage) to those provided by the life,
medical and dental insurance programs in which the Executive, members of the Executive’s
family and dependents were participating immediately before the Executive’s Date of
Termination and [b] ensure that any eligibility or other conditions on benefits under these
programs, including deductibles and copayments, will be administered by applying the
Executive’s experience under any predecessor program in which the Executive (or members of
the Executive’s family and dependents) were participating before Termination.
5.02 Effect of Code §280G. If the sum of the amounts described in Section 5.01 and those promised
under any other plan, program or agreement between the Executive and any Group Member constitute
“excess parachute payments” as defined in Code §280G(b)(1), the Corporation (or the Employer) will
either:
[1] Reimburse the Executive for the amount of any excise tax due under Code §4999, if this
procedure provides the Executive with an after-tax amount that is larger than the after-tax
amount produced under Section 5.02[2]; or
[2] Reduce the Executive’s payments under this Agreement so that the Executive’s total
“parachute payment” as defined in Code §280G(b)(2)(A) under this and any all other
agreements will be $1.00 less than the amount that would be an “excess parachute payment” if
this procedure provides the Executive with an after-tax amount that is larger than the
after-tax amount produced under Section 5.02[1].
[3] If Section 5.02[2] is to be applied, the Executive may designate the payments or type of
payments that will be reduced (and the order in which that reduction will be applied) to
ensure that the total amounts paid will not be an “excess parachute payment.” This
information must be returned, in writing, within 30 days of the date of the Notice of
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Payment. If the Corporation does not receive written instructions within that 30-day
period, all payments will be reduced prorata. All payments under this Agreement that are
subject to Section 5.02[2] will be deferred for [a] 30 days after the Executive notifies the
Corporation of the payments or types of payments to be reduced or [b] 30 days after the
expiration of the period during which the Executive may notify the Corporation of the
payments or types of payments to be reduced.
[4] If the Internal Revenue Service or any court of competent jurisdiction subsequently and
conclusively decides that the Corporation has miscalculated the amount of any “excess
parachute payment” and if that decision, had it been made initially:
[a] Would have resulted in a larger payment than initially calculated, the
Corporation will reapply Section 5.02 based on the revised calculation to identify
the Executive’s revised parachute payment and immediately pay that additional amount
to the Executive; but
[b] If, after that reapplication, the Executive is entitled to a smaller amount
under this Agreement than initially calculated, the Executive will repay the amount
of any overpayment to the Corporation within 30 days of the date of that decision,
together with interest on that amount at the prime rate of interest quoted in the
Wall Street Journal, as of the date of that final decision, calculated over the
period beginning on the date the excess amount was paid and ending on the date the
excess amount is repaid.
[5] The value of all amounts due under this Agreement will be established by the
Corporation’s independent auditors applying principles, assumptions and procedures
consistent with Code §280G. These principles, assumptions and procedures will be explained
to the Executive in the Notice of Payment.
5.03 Conditions Affecting Payments.
[1] Except as expressly provided in this Agreement, the Executive’s right to receive the
payments described in this Agreement will not decrease the amount of, or otherwise adversely
affect, any other benefits payable to the Executive under any plan, agreement or arrangement
between the Executive and any Group Member.
[2] The Executive is not required to mitigate the amount of any payment described in this
Agreement by seeking other employment or otherwise, nor will the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation the Executive earns in
any capacity after Termination or, except as provided in Section 4.04, by reason of the
Executive’s receipt of or right to receive any retirement or other benefits on or after
Termination.
[3] The amount of any payment made under this Agreement will be reduced by amounts the
Employer is required to withhold in payment (or in anticipation of payment) of any income,
wage or employment taxes imposed on the payment.
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5.04 Limit on Number of Changes in Control. Regardless of any provision of this Agreement, if more
than one Change in Control (whether or not related) occurs during the Term, the total amount
payable under this Agreement will be the largest amount (after application of Section 5.02[1] or
[2]) calculated with respect to any single change in control occurring during the Effective Period.
6.00 AMENDMENT AND TERMINATION
6.01 Amendment. This Agreement may be amended at any time by written agreement between the
Executive and the Corporation.
6.02 Termination. This Agreement will terminate on the earliest of the following to occur:
[1] Except to the extent necessary to implement the eligibility provisions of Sections
4.05[2][a] and 4.06[2][a] (dealing with a Termination without Cause or a termination for
Good Reason within the period beginning six months before a Change in Control), the
Executive’s employment with all Group Members is Terminated before a Change in Control;
[2] Before a Change in Control, the Executive is reassigned to a more junior position,
unless the Corporation decides that the new position is sufficiently senior to justify
continuation of this Agreement;
[3] The Corporation and the Executive mutually agree, in writing, to terminate this
Agreement, whether or not it is replaced with a similar agreement;
[4] The Corporation notifies the Executive, in writing, that the Agreement is to terminate
at the end of its then current Term. To be effective, however, this written notice [a] must
be given no later than midnight of the February 28 preceding the end of the then current
Term but [b] may never be effective [i] during an Effective Period or [ii] at any time after
the Corporation learns that activities have begun that, if completed, would cause a Change
in Control, although the notice may be given if those activities end without generating a
Change in Control;
[5]
All payments due under this Agreement have been fully paid; or
[6]
As provided in Section 4.00.
7.00 EQUITABLE RELIEF/DISPUTE RESOLUTION
7.01 Uniqueness of Obligations. The Executive’s obligations described in this Agreement are of a
special and unique character which gives them a peculiar value to the Group and the Group cannot be
reasonably or adequately compensated in damages in an action at law if Executive breaches those
obligations. Executive therefore expressly agrees that, in addition to any other rights or
remedies that the Corporation, the Employer or the Group may have, the Corporation, the Employer
and the Group will be entitled to injunctive and other equitable relief
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in the form of preliminary and permanent injunctions without bond or other security if the
Executive actually breaches (or threatens to breach) any obligation under this Agreement.
7.02 Initial Resolution of Disputes Affecting Payment Amount.
[1] The Executive may request the Corporation to recalculate the amount of payments due
under this Agreement. That request must [a] be filed in writing no later than 30 days after
the Executive receives the Notice of Payment and [b] specify the basis upon which the
Executive believes that an additional amount is due. Any request for recalculation that
does not comply with both requirements will be ineffective.
[2] Within 30 days of receiving a request that complies with Section 7.02[1], the
Corporation will notify the Executive of any changes to its calculations and the effect of
any changes on the amount payable to the Executive. If the Corporation does not deliver
this information to the Executive within this 30-day period, the Executive may regard the
request as having been denied.
[3] The Executive expressly waives any right to proceed under Section 7.03 to dispute the
calculation of the amount payable under this Agreement unless and until the administrative
remedies described in this Section 7.02 are fully exhausted.
7.03 Arbitration Any [a] disagreement concerning the calculation of any payment due under this
Agreement that is not resolved after utilizing the procedures described in Section 7.02, [b] breach
of any term of this Agreement or [c] other dispute or controversy arising out of or relating to
this Agreement, including the basis on which the Executive is Terminated, will be resolved by
arbitration in accordance with the rules of the American Arbitration Association. The award of the
arbitrator will be final, conclusive and nonappealable and judgment upon the award rendered by the
arbitrator may be entered in any court having competent jurisdiction. The arbitrator must be an
arbitrator qualified to serve in accordance with the rules of the American Arbitration Association
and one who is approved by the Corporation and the Executive. If the Executive and the Corporation
fail to agree on an arbitrator, each must designate a person qualified to serve as an arbitrator in
accordance with the rules of the American Arbitration Association and these persons will select the
arbitrator from among those persons qualified to serve in accordance with the rules of the American
Arbitration Association. Any arbitration relating to this Agreement will be held in the city in
which the Executive’s last principal place of employment with a Group Member before the Executive’s
Date of Termination is or was located or another place the Parties mutually select immediately
before the arbitration.
7.04 Costs. The Corporation will bear all reasonable costs associated with any dispute arising
under this Agreement, including reasonable accounting and legal fees incurred by the Executive
through any proceeding described in Section 7.02 or 7.03. However, no amounts will be paid under
this subsection to the extent that those payments are “excess parachute payments.”
7.05 Payment During Dispute Resolution Period. If otherwise due, the Corporation may not defer (or
cause the Employer to defer) payment of any amount that is not being contested under Section 7.02
or 7.03.
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7.06 Payment of Additional Amounts. If the arbitrators decide, at the conclusion of the
arbitration proceedings described in Section 7.03, that the Corporation has understated the amount
due under this Agreement, the Corporation will pay the additional amount to the Executive within
30 days after the date of the award along with interest calculated at the prime rate quoted in the
Wall Street Journal, for the period beginning on the Executive’s Date of Termination and ending on
the date of payment. However, no amounts will be paid under this subsection to the extent that
those payments are “excess parachute payments.”
8.00 MISCELLANEOUS
8.01 Security. At any time during the Term, the Corporation may provide (or cause the Employer to
provide) security for payment of the amounts and benefits described in Section 5.00. This security
may include one or more of [1] a stand-by letter of credit issued by a reputable financial
institution, [2] an irrevocable grantor trust (the “Trust”) established on terms the Corporation
believes to be appropriate, including a ruling from the Internal Revenue Service, (or opinion of
counsel satisfactory to the Corporation), to the effect that any funds held by the Trust will be
includible in the Executive’s gross income only for the taxable year or years paid to the Executive
under the terms of the Trust’s related trust agreement or [3] any other form of security the
Corporation believes is appropriate.
8.02 Nonassignment. The right of an Executive or any other person to receive any amount under this
Agreement may not be assigned, transferred, pledged or encumbered except by will or by applicable
laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber any amount
that is or may be receivable under this Agreement will be null and void and of no legal effect.
8.03 Successors to the Executive. Subject to Section 8.02, this Agreement inures to the benefit of
and may be enforced by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
8.04 Transfers.
[1] If, either before or after a Change in Control, the Executive’s common law employment
relationship shifts within the Group and there has been no intervening Termination, this
Agreement will remain in full force and effect and for all purposes of this Agreement, the
Executive’s new Employer will be substituted for the Executive’s prior Employer.
[2] If the Employer is no longer a Group Member, whether or not as part of a transaction
that constitutes a Change in Control, this Agreement will remain in full force and effect as
described in Section 8.02. However, the Executive will not be entitled to any amount under
this Agreement on account of a Change in Control that [a] solely affects the Group after
that transfer and [b] is not part of the same transaction through which the Employer left
the Group.
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8.05 Effect of Employment Agreement. If, at any time during the period beginning six months before
any Effective Period and ending on the last day of the same Effective Period, the Executive is
employed by an Employer pursuant to an employment agreement (“Employment Agreement”), the following
rules of application will be applied:
[1] Subject to Section 8.05[2], if a term is defined in this Agreement and in the
Employment Agreement and those definitions are not identical, [a] the definition contained
in this Agreement will supercede the definition contained in the Employment Agreement for
purposes of applying that term under this Agreement and [b] the definition contained in the
Employment Agreement will supercede the definition contained in this Agreement for purposes
of applying that term under the Employment Agreement;
[2] If the Executive’s employment with all Group Members is Terminated by the Employer
without Cause (as defined in this Agreement) or if the Executive Terminates with Good Reason
(as defined in this Agreement) within the period beginning six months before the beginning
of an Effective Period, this Agreement will not Terminate until six months after the
Executive’s Termination. If a Change in Control does not occur during this six-month
period, this Agreement will terminate at the end of that six-month period and no amount will
be due under it (although amounts due under the Employment Agreement on account of that
termination of employment will be unaffected by the termination of this Agreement). If a
Change in Control does occur during this six-month period, the Corporation will pay (or
cause the Employer to pay) to the Executive the amount described in Section 5.00 (adjusted
as provided in Section 8.05[3]). After those amounts have been paid, this Agreement will
terminate and no further amounts will be paid or due under this Agreement; and
[3] If an event or a series of related events entitle the Executive to payments under both
the Employment Agreement and this Agreement, the Executive will be entitled to the payments
due under this Agreement reduced by the amounts (if any) received under the Employment
Agreement before the payments become due under this Agreement and no further payments will
be due under the Employment Agreement.
8.06 Notices. All notices and other communications provided for in this Agreement must be written
and will be deemed to have been given when deposited with a reputable delivery service or in United
States registered mail, return receipt requested, postage prepaid. Also,:
[1] All notices must be directed to the address shown on the last page of this Agreement;
[2] Notices and other communications to the Corporation and the Employer will not be deemed
to have been given unless they are directed to the attention of the Corporation’s Chief
Executive Officer and copies are sent to the Corporation’s Secretary.
[3] Neither Party will be required to use any address other than that shown on the last page
of this Agreement unless notified of a change in the other Party’s address. Any
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change in either Party’s address must be given in writing to the other Party and will be
effective only upon receipt.
8.07 Complete Agreement. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter of this Agreement have been made by either Party that are not
set forth expressly in this Agreement.
8.08 Applicable Law. The validity, interpretation, construction and performance of this Agreement
will be governed by the laws (but not the law of conflicts of laws) of the State of Ohio.
8.09 Validity. The invalidity or unenforceability of any provisions of this Agreement will not
affect the validity or enforceability of any other provisions of this Agreement, which will remain
in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be effective as of the date
and year first above written.
| XXX XXXXX FARMS, INC. | ||||
| By: | /s/ Xxxxxx X. Xxxxxxxx | |||
| Title: | Chief Financial Officer, Treasurer and Secretary | |||
| Address: | ||||
| 0000 Xxxxx Xxxx Xxxxxx | ||||
| Xxxxxxxx, Xxxx 00000 | ||||
| XXXXXX X. XXXXX | ||||
| /s/ Xxxxxx X. Xxxxx | ||||
| Address: | ||||
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