EXHIBIT 10.3
XXXXXXXXX FARMS, INC.
SHARE PURCHASE AGREEMENT
(MANAGEMENT SHARE PURCHASE PLAN)
(NON-EMPLOYEE DIRECTOR AGREEMENT)
This SHARE PURCHASE AGREEMENT (this "Agreement"), made and entered into as
of the _____ day of _______________, 20____ (the "Grant Date"), by and between
___________________________ (the "Participant") and Xxxxxxxxx Farms, Inc.
(together with its subsidiaries and affiliates, the "Company"), sets forth the
terms and conditions of an Award of Share Purchase Rights granted pursuant to
the Xxxxxxxxx Farms, Inc. and Affiliates Stock Incentive Plan, adopted on
February 17, 2005 (the "Plan") and this Agreement. Any capitalized term used but
not defined herein shall have the meaning ascribed to such term in the Plan. The
term "Fiscal Year" shall mean the fiscal year of the Company which begins on
November 1 of each calendar year and ends on October 31 of the next calendar
year.
1. Rights to Purchase Restricted Stock.
The Participant may elect to reduce the annual retainer and meeting
fees otherwise payable to him in respect of his services as a member of the
Board of the Company ("Director Compensation") by a specified percentage (up to
100 percent) and, in lieu of receiving such specified percentage of Director
Compensation, receive a number of Shares of the Company, subject to the terms,
conditions and restrictions set forth herein ("Restricted Stock"), equal to the
amount of such reduction divided by a dollar amount equal to the Fair Market
Value of a Share on the date on which such Restricted Stock is issued or
allocated to the account of the Participant. An election in respect of Director
Compensation payable during calendar year 2005 must be made on or before March
18, 2005 ("Initial Election"), and shall become irrevocable on March 18, 2005.
The Initial Election shall be effective beginning with the date that Director
Compensation is otherwise payable (each such date, a "Director Payment Date")
that first occurs after March 18, 2005. Any election to reduce Director
Compensation otherwise payable in calendar year 2006 or thereafter shall be
effective beginning with the first Director Payment Date occurring on or after
January 1 of the calendar year next following the calendar year in which such
election is made (and shall become irrevocable on December 31 of the calendar
year in which such election is made with respect to the next calendar year). Any
cancellation of, or other change in, any such Director Compensation reduction
election shall become effective as of the first Director Payment Date occurring
on or after January 1 of the calendar year next following the calendar year in
which notice of such cancellation or change is filed (and any such notice shall
become irrevocable on December 31 of the calendar year in which it is filed with
respect to the next calendar year).
Any Director Compensation reduction hereunder shall apply ratably to
the Participant's Director Compensation otherwise payable on each Director
Payment Date covered by such election. Restricted Stock shall be issued or
purchased for the account of the Participant in respect of such Director
Compensation reductions on each Director Payment Date. Fractional shares will be
issued (or allocated) where necessary.
2. Company Matching Contribution.
For each four shares of Restricted Stock acquired by the Participant
pursuant to Section 1 above, the Company shall simultaneously issue for or there
shall be allocated to the account of the Participant, for no additional
consideration, one additional share of Restricted Stock (the "Company Match"),
including fractional shares where necessary.
3. Terms of Restricted Stock.
(a) The Restricted Stock is subject to forfeiture as provided herein
and, during the Restriction Period defined below, may not be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of by the Participant,
other than by will or by the laws of descent and distribution of the state in
which the Participant resides on the date of his death. The period during which
the Restricted Stock is not vested and is subject to transfer restrictions is
referred to herein as the "Restriction Period."
(b) Except as otherwise provided in this Agreement or the Plan, each
share of Restricted Stock shall vest and no longer be subject to forfeiture or
any transfer restrictions hereunder on the third anniversary of its acquisition
by the Participant, so long as the Participant has continued to serve as a
member of the Company's Board from such acquisition date through such third
anniversary.
(c) If the Participant ceases to serve as a member of the Company's
Board by reason of death or Disability (for purposes of this Section 3,
"Disability" shall have the meaning set forth in Section 409A(a)(2)(C) of the
Code at any time such definition is more restrictive than the Plan definition of
"Disability"), or if there is a Change in Control (provided that such Change in
Control also constitutes a "change in ownership or effective control" of the
Company within the meeting of Section 409A(a)(2)(A)(v) of the Code), then any
portion of the Restricted Stock that has not vested shall immediately vest and
no longer be subject to forfeiture or any transfer restrictions hereunder. If
the Participant ceases to serve as a member of the Company's Board for any other
reason, voluntarily or involuntarily, prior to the expiration of the Restriction
Period for any shares of Restricted Stock acquired pursuant to this Agreement by
the Participant, then (X) any portion of the Restricted Stock acquired by the
Participant pursuant to the Company Match that has not vested as of the date of
cessation of service shall immediately be forfeited, ownership shall be
transferred back to the Company and the Restricted Stock shall become authorized
but unissued Shares, and (Y) any portion of the Restricted Stock acquired by the
Participant in respect of Director Compensation reductions that has not vested
as of the date of cessation of service may, at the Company's option, be
repurchased by the Company at the price paid by the Participant for such
Restricted Stock (and the Company may pay such purchase price in whole or in
part by cancellation of any indebtedness owed by the Participant to the
Company).
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4. Registration of Shares.
Certificates representing the number of shares of Restricted Stock
purchased from time to time shall be registered in the Participant's name (or an
appropriate book entry shall be made). Certificates, if issued, may, at the
Company's option, either be held by the Company in escrow until the applicable
Restriction Period expires or until the restrictions thereon otherwise lapse
and/or be delivered to the Participant and registered in the name of the
Participant, bearing an appropriate restrictive legend that refers to this
Agreement and remaining subject to appropriate stop-transfer orders. The
Participant agrees to deliver to the Board, upon request, one or more stock
powers endorsed in blank relating to the Restricted Stock. If and when shares of
Restricted Stock vest and are no longer subject to forfeiture or transfer
restrictions, unlegended certificates for such Restricted Stock shall be
delivered to the Participant (subject to Section 8 pertaining to the withholding
of taxes and Section 16 pertaining to the Securities Act of 1933, as amended
(the "Securities Act")); provided, however, that the Board may cause such legend
or legends to be placed on any such certificates as it may deem advisable under
Applicable Law.
If the Company elects to hold certificates in escrow, then it shall
deliver to the Participant not less often than every six months a statement of
the aggregate number of shares of Restricted Stock held for his account and the
applicable acquisition dates and purchase prices of shares of Restricted Stock
acquired by the Participant since the last such statement.
5. Rights as a Stockholder.
Except as otherwise provided in this Agreement or the Plan, during the
Restriction Period applicable to any Restricted Stock, the Participant shall
have, with respect to the Restricted Stock, all of the rights of a stockholder
of the Company, including the right to vote the Restricted Stock and the right
to receive any dividends or other distributions with respect thereto; provided
that any dividends or other distributions with respect to shares of Restricted
Stock shall be credited to the account of the Participant until the vesting date
of the shares in respect of which such dividends or other distributions were
paid.
6. Adjustments.
If any change in corporate capitalization, such as a stock split, reverse
stock split, stock dividend, or any corporate transaction such as a
reorganization, reclassification, merger or consolidation or separation,
including a spin-off of the Company or sale or other disposition by the Company
of all or a portion of its assets, any other change in the Company's corporate
structure, or any distribution to stockholders (other than a cash dividend)
results in the outstanding Shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
shares or other securities of the Company, or for shares of stock or other
securities of any other corporation, or new, different or additional shares or
other securities of the Company or of any other corporation being received by
the holders of
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outstanding Shares, then the shares of Restricted Stock acquired pursuant to
this Agreement shall be treated in the same manner as other outstanding Shares
of the Company.
7. Validity of Share Issuance.
Upon the issuance of Restricted Stock pursuant to the terms of this
Agreement, such shares of Restricted Stock will be duly authorized by all
necessary corporate action of the Company and will be validly issued, fully paid
and non-assessable.
8. Taxes and Withholding.
As soon as practicable on or after the date as of which an amount first
becomes includible in the gross income of the Participant for federal income tax
purposes with respect to the acquisition of Restricted Stock pursuant to this
Agreement, the Participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, or the Company may deduct
or withhold from any cash or property payable to the Participant, an amount
equal to all federal, state, local and foreign taxes that are required by
Applicable Law to be withheld with respect to such includible amount.
Notwithstanding anything to the contrary contained herein, the Participant may,
if the Company consents, discharge this withholding obligation by directing the
Company to withhold shares of Restricted Stock having a Fair Market Value on the
date that the withholding obligation is incurred equal to the amount of tax
required to be withheld in connection with such vesting, as determined by the
Board
9. Notices.
Any notice to the Company provided for in this Agreement shall be in
writing and shall be addressed to it in care of its Secretary at its principal
executive offices, and any notice to the Participant shall be addressed to the
Participant at the current address shown on the payroll records of the Company.
Any notice shall be deemed to be duly given if and when properly addressed and
posted by registered or certified mail, postage prepaid.
10. Legal Construction.
(a) Severability. If any provision of this Agreement is or becomes or
is deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or this Agreement under any law with respect to which the
Plan or this Agreement is intended to qualify, or would cause Director
Compensation reductions under this Agreement to be includible in a Plan
participant's gross income pursuant to Section 409A(a)(1) of the Code, as
determined by the Board, such provision shall be construed or deemed amended to
conform to Applicable Law or, if it cannot be construed or deemed amended
without, in the determination of the Board, materially altering the intent of
the Plan or the Agreement, it shall be stricken and the remainder of this
Agreement shall remain in full force and effect.
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(b) Gender and Number. Where the context admits, words in any gender
shall include the other gender, words in the singular shall include the plural
and words in the plural shall include the singular.
(c) Governing Law. To the extent not preempted by federal law, this
Agreement shall be construed in accordance with and governed by the laws of the
State of Mississippi.
11. Incorporation of Plan.
This Agreement, the Share Purchase Rights awarded pursuant hereto and the
Restricted Stock acquired pursuant hereto are subject to, and this Agreement
hereby incorporates and makes a part hereof, all terms and conditions of the
Plan that are applicable to Agreements and Awards generally and to Share
Purchase Rights in particular. The Board has the right to interpret, construe
and administer the Plan, this Agreement and the Share Purchase Rights awarded
and the Restricted Stock acquired pursuant hereto. All acts, determinations and
decisions of the Board made or taken pursuant to grants of authority under the
Plan or with respect to any questions arising in connection with the
administration and interpretation of the Plan, including the severability of any
and all of the provisions thereof, shall be in the Board's sole discretion and
shall be conclusive, final and binding upon all parties, including the Company,
its stockholders, Participants, Eligible Participants and their estates,
beneficiaries and successors. The Participant acknowledges that he has received
a copy of the Plan.
12. No Implied Rights.
Neither this Agreement nor the award of Share Purchase Rights nor the
acquisition of any Restricted Stock shall confer on the Participant any right
with respect to continuance of employment or other service with the Company.
13. Integration.
This Agreement and the other documents referred to herein, including the
Plan, or delivered pursuant hereto, contain the entire understanding of the
parties with respect to their subject matter. There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth
herein and restrictions imposed by the Securities Act and applicable state
securities laws. This Agreement, including the Plan, supersedes all prior
agreements and understandings between the parties with respect to its subject
matter.
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14. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but which together constitute one and the same
instrument.
15. Amendments; Termination.
The Board may, at any time, without consent of or receiving further
consideration from the Participant, amend this Agreement and the Restricted
Stock acquired pursuant hereto in response to, or to comply with changes in,
Applicable Law. To the extent not inconsistent with the terms of the Plan, the
Board may, at any time, amend this Agreement in a manner that is not unfavorable
to the Participant without the consent of the Participant. The Board may amend
this Agreement and the Restricted Stock acquired pursuant hereto otherwise with
the written consent of the Participant.
The Company may suspend or terminate this Agreement at any time,
provided that no such suspension or termination may adversely affect the
Participant's rights with respect to any Restricted Stock previously acquired
pursuant to this Agreement, unless his written consent is obtained.
16. Securities Act.
(a) [THE ISSUANCE AND DELIVERY OF THE SHARE PURCHASE RIGHTS TO THE
PARTICIPANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT BY A REGISTRATION
STATEMENT ON FORM S-8 THAT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") AND HAS BECOME EFFECTIVE. THE PARTICIPANT ACKNOWLEDGES
RECEIPT FROM THE COMPANY OF ITS PROSPECTUS DATED MARCH ___, 2005, RELATING TO
THE PLAN.]
(b) If the Participant is an "affiliate" of the Company, which
generally means a director, executive officer or holder of 10% or more of its
outstanding shares, at the time certificates representing Restricted Stock are
delivered to the Participant, such certificates shall bear the following legend,
or other similar legend then being generally used by the Company for
certificates held by its affiliates:
"THESE SHARES MUST NOT BE OFFERED FOR SALE, SOLD, ASSIGNED OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
FOR THE ISSUER, IS EXEMPT FROM REGISTRATION THROUGH COMPLIANCE WITH
RULE 144 OR WITH ANOTHER EXEMPTION FROM REGISTRATION."
The Company shall remove such legend upon request by the Participant
if, at the time of such request, the shares are eligible for sale under SEC Rule
144(k), or any provision that has replaced it, in the opinion of the Company's
counsel.
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17. Arbitration.
Any controversy or claim arising out of or relating to this Share Purchase
Agreement shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules and judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
IN WITNESS WHEREOF, the Participant has executed this Agreement on his own
behalf, thereby representing that he has carefully read and understands this
Agreement and the Plan as of the day and year first written above, and the
Company has caused this Agreement to be executed in its name and on its behalf,
all as of the day and year first written above.
XXXXXXXXX FARMS, INC.
By: ________________________________
Name: _______________________
Title: ________________________
______________________________________
Participant
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