EMPLOYMENT AGREEMENT
EXHIBIT
10.1
This
Employment Agreement is effective the 1st
day of
February, 2008, between South Dakota Soybean Processors, LLC, a South Dakota
limited liability company, and Xxxxxx X. Xxxxxxxxxxxx (“Employee”).
THE
PARTIES AGREE AS FOLLOWS:
1. Definitions.
The
following terms shall have these meanings:
a. “Affiliate”
or “Affiliates” shall mean any Person who controls, is controlled by, or is
under common control with, either directly or indirectly, or through one or
more
intermediaries, the Employer. For purposes of this Agreement, the term Affiliate
shall include Urethane Soy Systems Co.
b. “Base
Salary” shall mean Employee’s annual compensation as
set
forth
in paragraph 6 of this Agreement.
c. “Confidential
Information” shall mean any and all information disclosed by Employer or
Affiliate to Employee, whether prior to or during the term of this Agreement,
relating to those matters not generally known to the public or the industry
in
which Employer and/or an Affiliate is or may become engaged and which pertain
to
the operations, processes, methods, and accumulated experience incidental to
the
manufacture, processing, sale, and distribution of Employer’s and/or an
Affiliate’s Products, regardless of whether Employer and/or an Affiliate
provides such information to Employee in tangible form or the information is
retained in the memory of Employee. Confidential Information includes, for
example, and without limitation: (i) sales records, pricing manuals, training
manuals, selling and pricing procedures, and financing methods, (ii) trade
secrets and other know-how regarding businesses, products and services, (iii)
personnel and salary information, including wages, bonuses, commissions, and
fringe benefits, (iv) production and processing procedures, formulae and
systems, (v) vendor and supplier information, (vi) Customer lists and
Prospective Customer Lists including, without limitation, names of contacts,
products and services purchased, quantities purchased, credit histories, timing
of purchases, payment histories, special demands of particular Customers, and
current and anticipated requirements of Customers generally for products or
services, (vii) marketing information, including without limitation, research,
development, testing and customer surveys, and any specifications of any new
products or services under development, and (viii) business projections,
strategic plans, marketing systems and procedures, and inventory procedures
and
systems.
d. “Control,”
“Controlled by” and “under common control with” shall mean the power, directly
or indirectly, to direct or cause the direction of the management and policies
of a Person whether through the ownership of voting securities or by contract
or
otherwise.
e. “Customer”
shall mean an individual, business or entity with which Employer or an Affiliate
did business during the two (2) year period preceding the termination of
Employee’s employment as provided in this Agreement.
f. “Incentive
Compensation” shall mean compensation paid to Employee as set forth in paragraph
7 of this Agreement.
g. “Person”
means an individual, partnership, limited partnership, limited liability
company, trust, estate, corporation, cooperative, custodian, trustee, executor,
administrator, nominee or entity in a representative capacity.
h. “Products”
shall mean all products manufactured and/or sold by Employer or an Affiliate,
including polyurethane, plastics, resins, soybeans, soybean meal, soybean oil
and other soybean products.
i. “Prospective
Customer” shall mean a potential customer of Employer or an Affiliate, which has
been contacted by Employer or an Affiliate and for which Employer or an
Affiliate has made a financial investment, such as time, travel, equipment
or
material during the two (2) year period preceding the termination of Employee’s
employment as provided in this Agreement.
2. Employment.
Employer agrees to employ Employee and Employee accepts employment upon the
terms and conditions set forth in this Agreement.
3. Duties
and Review.
Employee shall be engaged in full-time employment by Employer as its Chief
Executive Officer and shall devote sufficient time and attention to the business
of Employer, including general management and oversight of Affiliates, as shall
be necessary to complete Employee's obligations. Employer, through its Board
of
Managers, shall have the power to determine the specific duties to be performed
by Employee and the time of performance. Employee shall undergo performance
reviews from time to time during the term of this Agreement at the request
of
Employer’s Board of Managers.
4. Other
Activities.
Employee shall devote substantially all of his working time and efforts during
Employer’s normal business hours to the business of Employer, including the
general management and oversight of Affiliates. Employee shall be free to invest
his assets in a manner that will not require any substantial services by
Employee in the conduct of the business of the entities or in the management
of
the properties in which he invests.
5. Term.
This
Agreement is for a term of four (4) years commencing on the 1st
day of
February, 2008, and terminating on the 31st
day of
January, 2012, unless sooner terminated pursuant to the provisions of this
Agreement.
6. Base
Salary.
For all
services to be rendered by Employee pursuant to this Agreement, Employer agrees
to pay Employee compensation at an annual rate of:
(a)
$300,000.00 until January 31, 2009 (year 1);
(b)
$325,000.00 from February 1, 2009 until January 31, 2010 (year 2); and
(c)
$350,000.00 from February 1, 2010 until January 31, 2012 (year 3 and year 4).
This
Base
Salary shall be paid in periodic installments in accordance with the Employer’s
regular payroll practices. Each installment shall be reduced by deductions
for
the withholding of federal income tax, FICA contributions, and all other
deductions required by law or agreed to by Employee.
7. Incentive
Compensation.
In
addition to the Base Salary, Employee shall be paid a bonus equal to one-half
(1/2) of one percent (1%) of Employer’s net income before taxes and member
distributions on net income from $2,000,000.00 up to $5,000,000.00 If the net
income is $5,000,001.00 to $7,500,000.00, Employee shall be paid a bonus equal
to one percent (1%) of Employer’s net income. If net income is greater than
$7,500,000.00, Employee shall still be paid a bonus equal to one percent (1%)
of
Employer’s net income and will also be paid an additional bonus equal to one
percent (1%) of the amount of the excess of Employer’s net income over
$7,500,000.00. If net income is below $2,000,000.00, no bonus will be paid.
Examples: $1,825,000.00 net income = no bonus; $4,386,000.00 net income x .5%
=
$21,930.00; $6,500,000.00 net income x 1% = $65,000.00; or $8,500,000.00 net
income x 1% = $85,000.00 plus $8,500,000.00 - $7,500,000.00 = $1,000,000.00
x 1%
= $10,000.00 for a total bonus of $95,000.00. This incentive bonus may be paid
directly or deferred at Employee’s option. The calculation of Employer’s net
income shall include the net income of all of Employer’s subsidiaries for which
combined and audited financial statements must be prepared for GAAP (“Generally
Accepted Accounting Principles”) purposes. Net income shall be calculated under
the GAAP method of accounting utilized by Employer for its audited financial
statements and shall exclude any items of income or expense that would be
considered to be extraordinary and not arising in the ordinary course of
business. Such items could include but are not limited to the
following:
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i.
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Capital
gains or losses from the sale of marketable securities or other
investments of Employer.
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ii.
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Gains
or losses on the sales or dispositions of fixed
assets.
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iii.
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Insurance
proceeds received by Employer for the loss of property, capital assets,
or
other assets of Employer.
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iv.
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Investment
income from securities held by Employer, e.g., interest income, dividend
income, etc.
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v.
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Payment
of a legal settlement, or receipt of monies relating to Employer’s
involvement in litigation or other
disputes.
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Such
items shall be determined by Employer’s Financial Audit Committee and
subsequently adjusted out of net income for purposes of the calculation of
this
incentive bonus. The incentive bonus shall be paid in full within thirty (30)
days following completion of Employer’s audited financial statements in the year
following the year for which the net income is calculated.
8. Holidays
and Vacations.
Employee shall be entitled to nine (9) paid holidays: New Year’s Day, Easter,
Memorial Day, Fourth of July, Labor Day, Thanksgiving, the day after
Thanksgiving and Christmas, and a personal floating holiday. Employee shall
be
entitled to
twenty
(20) days paid vacation during each fiscal year of employment. Employee shall
take his vacation at such time or times as shall be approved by Employer’s Board
of Managers. Employee’s vacation time will be administered in accordance with
Employer’s current vacation policies for all employees.
9. Benefits.
Employee shall receive the benefits, including participation in insurance
benefits and retirement plans, that are provided to Employer’s employees,
provided Employee meets the qualification provisions of each plan.
10. Life
Insurance.
Employer may, in its discretion, purchase or renew insurance on the life of
Employee. Employee agrees to submit to reasonable medical examinations and
otherwise reasonably cooperate with Employer in connection with obtaining such
insurance.
11. Expenses.
During
the term of this Agreement, Employee shall be entitled to prompt reimbursement
by Employer of all reasonable travel, entertainment, and other expenses incurred
by Employee in accordance with the policies and procedures established by
Employer’s Board of Managers and in the performance of his duties and
responsibilities under this Agreement; provided, that Employee shall properly
account for such expenses and present receipts as required by IRS
guidelines.
12. Vehicle.
During
the term of this Agreement, Employee shall be provided a vehicle for use for
company business. The type and cost of the vehicle as well as its replacement
date will be determined by Employer’s Board of Managers.
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13.
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Termination
and Severance Pay.
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a. Termination.
This
Agreement shall terminate immediately: (i) upon Employee’s death, (ii) upon
Employee becoming disabled, which determination shall be made by Employer’s
Board of Managers on the basis of medical evidence satisfactory to it, in its
sole discretion, that Employee is so mentally or physically disabled as to
be
unable to fulfill Employee’s duties and responsibilities and that such
disability is likely to be permanent; (iii) upon written notice from Employer
that Employee’s employment is being terminated for “Cause” as defined in
paragraph 13(c) below; (iv) upon written notice from Employer that Employee’s
employment is being terminated without “Cause” as defined in paragraph 13(c)
below; or (v) upon Employee’s resignation of employment. In the event of
Employee’s termination under this paragraph 13(a), he or his estate shall be
entitled to receive the Base Salary and other benefits to which he is entitled
under this Agreement up to the date of termination. Employee or his estate
shall
have no rights pursuant to this Agreement to any benefits or compensation for
any period after the date of termination.
x. Xxxxxxxxx
Pay.
If
Employer terminates the employment of Employee for any reason other than as
provided below in this subparagraph b, Employer shall pay Employee a sum equal
to 1.5 times Employee’s Base Salary (at the annual rate then existing under
paragraph 6) calculated for a one year period. Payment shall be made
in
eighteen
(18) equal monthly installments or as otherwise mutually agreed by the parties
beginning on the first day of the month following termination of employment.
For
example, if Employer terminates Employee’s employment without “Cause” on August
1, 2009, Employee shall be entitled to severance pay of $487,500.00 ($325,000.00
x 1.5) to be paid in 18 equal monthly installments of $27,083.33 each. For
example, if Employer terminates Employee’s employment without “Cause” on
September 1, 2010, Employee shall be entitled to severance pay of $525,000.00
($350,000.00 x 1.5) to be paid in 18 equal monthly installments of $29,166.66
each. Despite anything in this Agreement to the contrary, Employee shall not
be
eligible to receive the severance pay described in this paragraph 13(b) if:
(i)
Employee’s employment is terminated due to Employee’s death; (ii) Employee’s
employment is terminated due to Employee’s disability; (iii) Employee’s
employment is terminated for “Cause”; (iv) Employee voluntarily resigns his
employment with Employer, (v) Employee’s employment is terminated because
Employer has ceased all business activities, become insolvent and/or has filed
a
voluntary petition in bankruptcy, or has had filed against it an involuntary
petition in bankruptcy; (vi) Employee is employed in a similar position by
a
successor company that has purchased substantially all of the assets of
Employer, or (vii) Employer is merged into another company and Employee is
retained by the surviving company in a similar position.
c. For
“Cause” Termination.
Justifications for the Employer to terminate Employee’s employment for “Cause”
shall include: (i) Employee’s confession or conviction of theft, fraud,
embezzlement, or any other crime involving dishonesty with respect to Employer,
or any Affiliate, (ii) Employee’s excessive absenteeism (other than by reason of
physical injury, disease, or mental illness) without reasonable cause, (iii)
Employee's act or omission constituting a material breach of any provision
of
this Agreement or any non-compliance with Employee's obligations under
paragraphs 14, 17 and 18 of this Agreement, (iv) habitual and material
negligence by Employee in the performance of his duties under this Agreement,
(v) abusing, misusing or destroying Employer's property or the property of
Customers or other employees, (vi) making or publishing false, vicious or
malicious statements concerning Employer, its operations, employees or members
of the Board of Managers, (vii) habitually reporting for work under the
influence of intoxicants or drugs, or (viii) Employee’s intentional violation of
any law directly impacting Employer’s business, including any law prohibiting
discriminatory conduct, or the direction of another employee to violate any
such
law. The preceding list is not intended to be exhaustive; other conduct of
similar nature may result in termination of Employee. However, the results
of
Employer’s or Affiliates’ operations or any business judgment made in good faith
by Employee shall not constitute an independent basis for termination of
Employee's employment for Cause under this Agreement.
14. Limitation
of Competitive Activities.
During
the term of Employee’s employment with Employer and for a period of two (2)
years after termination of Employee’s employment, with or without cause,
Employee will not, alone or with others, directly or indirectly, own or have
an
interest in another company (except for an ownership interest not to exceed
2%
of the outstanding securities of a company that is required to report to the
United
States
Securities and Exchange Commission under the Securities Exchange Act of 1934),
work in, plan, or engage in any employment, consulting, or other business
activity, whether or not for compensation, that is competitive with Employer
or
its Affiliates within a five hundred (500) mile radius from Volga, South Dakota.
Employee will not engage in any other activity that conflicts with Employee’s
obligations to Employer during the term of this Agreement. The provisions of
this paragraph 14 shall survive the termination of Employee’s employment under
this Agreement for any reason whatsoever.
15. Other
Solicitation and Interference Limitations.
For a
period of two (2) years after termination of Employee’s employment, with or
without cause, Employee shall not directly or indirectly solicit or aid in
the
solicitation of any Customers or Prospective Customers, and shall not interfere
with the relationship between Employer and its Affiliates, or any of their
respective employees, vendors, or suppliers. Employee agrees not to solicit
or
assist others in soliciting any Customers or Prospective Customers, employees,
vendors, or suppliers of Employer and/or its Affiliates, directly or indirectly,
even if participating in a business outside of the five hundred (500) mile
radius from Volga, South Dakota. The provisions of this paragraph 15 shall
survive the termination of Employee's employment under this Agreement for any
reason whatsoever.
16. Ownership
of Confidential Information.
Employee acknowledges and agrees that all Confidential Information disclosed
to
Employee is and remains the exclusive property of Employer and/or its
Affiliates. Employee acknowledges that the Confidential Information was and
will
continue to be developed and acquired by Employer and/or its Affiliates at
great
effort and expense, is valuable to the owner thereof and constitutes trade
secrets unique to the owner thereof.
17. Non-Disclosure
of Confidential Information.
Employee shall treat Confidential Information in a secret and confidential
manner. Employee shall comply with Employer’s and its Affiliates’ procedures for
maintaining the confidentiality of Confidential Information and agrees not
to
make use of or disclose Confidential Information without the owner’s written
consent, directly or indirectly, for any purpose whatsoever, to any person
or
entity outside of the owner’s business, either during the term of Employee’s
employment or after termination of Employee’s employment, whether with or
without cause. The provisions of this paragraph 17 shall survive the termination
of Employee's employment under this Agreement for any reason
whatsoever.
18. Delivery
of Confidential Information and Employer Property.
Upon
request of Employer and/or an Affiliate and in any event upon termination of
Employee’s employment, with or without cause, Employee shall promptly deliver to
the Employer or any Affiliate all Confidential Information, including, without
limitation, all originals, copies, summaries or extracts of books, catalogues,
sale brochures, Customer lists, Prospective Customer lists, price lists,
employee manuals, notes, photographs, tape recordings, specifications,
operations manuals and all other documents or tangible materials reflecting
or
referencing Confidential Information, as well as all other materials furnished
to or acquired by Employee as a result of or during the course of Employee’s
employment. The provisions of this paragraph 18 shall survive the termination
of
Employee’s employment under this Agreement for any reason
whatsoever.
19. Reasonableness
of Restrictions and Enforcement.
Employee acknowledges that he has carefully read and considered the provisions
of this Agreement and, having done so, agrees that the restrictions and
limitations in this Agreement are reasonable as to geographic scope and duration
and are necessary to protect Employer’s and its Affiliates’ proprietary
interests in their respective Confidential Information and to preserve for
Employer and its Affiliates the competitive advantages necessary for their
success.
20. Remedies.
Employee acknowledges and agrees that it is impossible to measure
in money the damages which will accrue to Employer and/or its Affiliates
if
Employee should breach or is in default of any of Employee's covenants
or
representations set forth in this Agreement, and that Employer and/or its
Affiliates would be irreparably damaged by such breach or default by Employee.
Accordingly, if any action or proceeding is instituted by or on behalf
of any of
the foregoing to enforce any term of this Agreement, Employee waives any
claim
or defense that Employer and/or its Affiliates have an adequate remedy
at law or
that Employer and/or its Affiliates have not been, or are not being, irreparably
injured. The rights and remedies of Employer and/or its Affiliates pursuant
to
this paragraph are cumulative and shall not be deemed to exclude any other
right
or remedy which Employer and/or its Affiliates may have pursuant to this
Agreement or otherwise, at law or in equity.
21. Indemnification.
Employee shall indemnify and hold harmless Employer, its Affiliates, and their
respective owners, officers, managers, directors, other employees, agents,
and
assigns from any and all claims, damages, liabilities, attorneys’ fees and
expenses arising out of Employee’s violation of any of the terms and conditions
of this Agreement.
22. Expenses
of Enforcement.
If
Employee breaches or threatens to breach any of the covenants described in
this
Agreement, then, in addition to any of the rights and remedies which Employer
and/or its Affiliates may have against Employee, Employee will be liable to
pay
Employer’s court costs and reasonable attorneys' fees incurred in enforcing this
Agreement.
23. Termination
of Prior Agreements and Modification.
Employee acknowledges that any prior agreement with Employer as to employment
was rightfully terminated at Employer’s discretion prior to execution of this
Agreement. This Agreement constitutes the entire Agreement between Employer
and
Employee. It is independent of and supplants all oral or written agreements
entered prior to or contemporaneously with this Agreement, except for the First
Amended and Restated Deferred Compensation Plan made effective February 1,
2004.
This Agreement may not be modified except by written agreement dated subsequent
to the date of this Agreement and signed by both Employer and
Employee.
24. Severability.
If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be unenforceable or invalid, the remaining provisions will remain in full
force and effect. In the event that any of the restrictions or limitations
contained in paragraphs 14 and 15 of this Agreement are held to exceed the
time
or geographic limitations permitted by applicable law, then such restrictions
or
limitations shall be deemed to be reformed to the maximum time and geographic
limitations permitted by law. If any other provision of this
Agreement
is held to be overbroad as written, the provision shall be deemed amended to
narrow its application to the extent necessary to make it enforceable to the
fullest extent allowable.
25. Successors
and Assigns.
This
Agreement is personal to Employee and is not assignable in whole or in part
by
Employee without the express written consent of Employer. Any purported
assignment by Employee without Employer's consent will constitute a breach
for
which Employer has the right to terminate this Agreement.
26. Presumptions.
In
construing the terms of this Agreement, no presumption shall operate in either
party’s favor as a result of counsel's role in drafting the Agreement's terms or
provisions.
27. Waiver
of Breach.
The
waiver by Employer of breach of any covenant of this Agreement or the failure
of
Employer to take action against any other employee for similar breaches on
their
part, shall not operate or be construed as a waiver of any subsequent or later
breach by Employee. No waiver by Employer shall be effective unless in
writing.
28. Text
Controls.
The
headings of paragraphs and sections are included solely for convenience. If
a
conflict exists between any heading and the text of this Agreement, the text
shall control.
29. Governing
Law.
All
rights and obligations arising out of or relating to this Agreement shall be
governed by and construed in accordance with the laws of the State of South
Dakota.
30. Dispute
Resolution.
All
disputes between Employer and Employee arising out of or relating to this
Agreement and/or Employee’s employment shall be exclusively and finally resolved
through the dispute resolution process set forth in Exhibit A.
[Signature
page follows]
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the 25th day of April,
2008.
SOUTH
DAKOTA SOYBEAN PROCESSORS,
LLC
By:
/s/
Xxxxxx Xxxxxx
Its
President
/s/
Xxxxxx Xxxxxxxxxxxx
Xxxxxx
X.
Xxxxxxxxxxxx
EXHIBIT
A
DISPUTE
RESOLUTION PROCESS
1. Arbitration.
All
disputes between Employer and Employee arising out of or relating to this
Agreement and/or Employee’s employment shall be exclusively and finally resolved
through binding arbitration by a single arbitrator. The arbitrator shall also
exclusively and finally resolve all issues relating to the operation of this
Process, including but not limited to all disputes relating to the validity
or
enforceability of this Process, the timeliness of an arbitration demand made
pursuant to subparagraph 1.a.ii, the applicability of this paragraph to a
dispute between Employer and Employee, and the exclusion of other remedies
pursuant to paragraph 3.
a. Demand
for Arbitration.
Either
party to this Agreement may initiate arbitration pursuant to this paragraph
by
delivering, by certified mail, a written demand for arbitration to the other
party at such party’s current business address.
i. Contents
of Demand.
The
demand for arbitration shall bear a current date and shall state the name of
the
initiating party, a brief description of the matter sought to be arbitrated,
and
the amount of damages or other relief sought by the initiating party.
ii. Time
for Demand.
A
demand for arbitration relating to any claim by Employee or Employer shall
be
made within the time within which commencement of legal or equitable proceedings
based on such claim could be made under the South Dakota statute of limitations
or repose applicable to such claim. Any claim not initiated by a demand for
arbitration within the times provided in this paragraph 1.a.ii shall be deemed
waived and forever barred.
b. Qualifications
and Appointment of Arbitrator.
Unless
otherwise agreed by the parties, the arbitrator shall be an attorney licensed
to
practice law in the State of South Dakota and shall have experience in resolving
or litigating the type of claim, dispute or matter at issue in the arbitration.
The parties shall mutually agree upon an arbitrator. If the parties are unable
to so agree, each party shall designate an attorney licensed to practice law
in
the State of South Dakota and that is unaffiliated with Employer, Employee,
and
their respective attorneys, and such third party attorneys shall mutually agree
upon an arbitrator.
c. Cash
Undertaking.
Within
ten (10) days following the appointment of an arbitrator by the parties or
their
representatives, each party asserting a claim or counterclaim in the arbitration
shall deposit with the arbitrator a cash undertaking in the amount of $5,000.00,
which undertaking shall be applied to any costs, fees or expenses awarded
against the party pursuant to subparagraph 1.g.
d. Governing
Law.
The
arbitrator shall resolve all claims solely on the basis of South Dakota law.
The
arbitrator shall also resolve all issues relating to the operation
of
this
Process solely on the basis of South Dakota law, including but not limited
to
all disputes identified in paragraph 1 above. The parties shall be permitted
to
conduct discovery pursuant to SDCL §§ 15-6-26 through 15-6-37; all discovery
disputes shall be resolved by the arbitrator pursuant to these provisions and
applicable case law. The arbitrator shall conduct all arbitration proceedings
pursuant to the South Dakota Rules of Evidence, codified at SDCL Chapters 19-9
through 19-18, and applicable case law.
e. Location.
All
arbitration proceedings shall take place in Brookings, South Dakota, unless
otherwise agreed by the parties.
f. Form
of Award; No Appeal; Entry of Award.
The
arbitrator shall issue a written award setting forth the arbitrator’s findings
of fact, conclusions of law, decision and monetary award. Except as otherwise
permitted by SDCL Chapter 21-25A, no party shall appeal to any court an award
of
an arbitrator issued under this paragraph 1.f, and the decision of the
arbitrator shall be the final, binding and conclusive resolution of the dispute.
Any party to the arbitration may apply to a court of competent jurisdiction
for
entry or confirmation of the arbitration award. Notwithstanding the foregoing,
the issuance of an award pursuant to this subparagraph 1.f shall not preclude
a
party from applying to the arbitrator for costs, fees and expenses as provided
in subparagraph 1.g, nor shall it preclude the arbitrator from modifying the
award to provide for the recovery of such costs, fees and expenses. Any
application for costs, fees and expenses shall be delivered to the arbitrator
within thirty (30) days of the date of the arbitration award.
g. Allocation
of Costs, Fees and Expenses.
The
arbitrator shall award to the prevailing party, as determined by the arbitrator
pursuant to this subparagraph 1.g, all costs, fees and expenses relating to
the
arbitration, including reasonable expert witness and attorneys’ fees, unless the
arbitrator finds a substantial reason for not doing so, which reason shall
be
explained in writing by the arbitrator. As used in this subparagraph, a party
that is seeking an affirmative damage award shall constitute a “prevailing
party” only if such party is awarded damages, exclusive of costs, fees and
expenses relating to the arbitration (including reasonable expert witness and
attorneys’ fees), in excess of the last written settlement demand made by such
party. A party against whom damages are sought shall constitute a “prevailing
party” only if such party is ordered to pay damages, exclusive of costs, fees
and expenses relating to the arbitration (including reasonable expert witness
and attorneys’ fees), in an amount less than the last written settlement offer
made by such party. If no party constitutes a prevailing party pursuant to
the
preceding two sentences, the arbitrator may award costs, fees and expenses
relating to the arbitration, including reasonable expert witness and attorneys’
fees, in the arbitrator’s discretion. Where parties are asserting affirmative
claims against one another, any separate written settlement demands or offers
made on such claims shall be combined for purposes of this subparagraph. No
written demand or offer made less than ten (10) days prior to the arbitration
hearing shall be considered for purposes of this subparagraph. All settlement
demands or offers shall be kept confidential and shall not be disclosed to
the
arbitrator, except in connection with an application for costs, fees and
expenses made pursuant to this subparagraph and subparagraph 1.f.
2. Mediation.
At any
time after a demand for arbitration has been made pursuant to paragraph 1.a,
any
party to the arbitration may request mediation. A mediation shall be conducted
only if all parties to the arbitration consent to mediation.
a. Request
for Mediation.
The
request for mediation shall be in writing and shall be delivered by certified
mail to the current business address of each unrepresented party to the
arbitration and to counsel of each represented party to the arbitration. The
request shall bear a current date and shall state the name of the requesting
party and a brief description of the matter sought to be mediated.
b. Qualifications
and Appointment of Mediator.
Unless
otherwise agreed by the parties, the mediator shall be an attorney licensed
to
practice law in the State of South Dakota and shall have experience in resolving
or litigating the type of claim, dispute or matter at issue in the mediation.
The parties shall mutually agree upon a mediator. If the parties are unable
to
so agree, each party shall designate an attorney licensed to practice law in
the
State of South Dakota and that is unaffiliated with Employer, Employee, and
their respective attorneys, and such third party attorneys shall mutually agree
upon a mediator. The mediator of any dispute submitted to mediation under this
paragraph 2 shall not be the same person serving as arbitrator of such dispute,
unless otherwise agreed by the parties.
c. Location.
The
mediation shall take place in Brookings, South Dakota, unless otherwise agreed
by the parties.
d. Allocation
of Mediation Costs.
Costs
of the mediation shall be borne equally by the parties, unless otherwise agreed
by the parties.
3. Exclusive
Remedy.
This
Exhibit A contains and shall constitute the sole and exclusive remedy of the
parties with respect to any and all disputes, claims or other matters arising
out of or relating to this Agreement and/or Employee’s employment. The parties
hereby waive any and all other remedial rights with respect to such disputes,
claims or other matters, whether in law or in equity.
