EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of
November 18, 1997 is by and between Purina Xxxxx, Inc., a
Delaware corporation ("Company") and Xxxxx X. Xxxxxx
("Executive").
RECITAL
It is the intent and purpose of the parties to specify in
this Agreement the terms and conditions of Executive's employment
with the Company and the means of using his expertise for the
benefit of the Company.
NOW, THEREFORE, in consideration of the promises and
premises contained herein, the parties agree as follows:
1. Term. Company hereby employs Executive in the capacities
set forth in Section 2. hereof, and Executive hereby
accepts employment with the Company in accordance with the
terms and conditions set forth herein for an initial term
of three (3) years beginning November 18, 1997. Executive's
employment hereunder shall automatically be renewed under
the same terms and conditions for successive terms of two
(2) years unless written notice of intent not to renew is
given by either party to the other not less than ninety
(90) days prior to the expiration of the original term or
any renewal term then in effect. If the Company elects not
to renew or to terminate this Agreement, such action shall
constitute termination without cause as described in
Section 7.
2. Duties and Responsibilities. Executive shall serve as
President and Chief Executive Officer of the Company, with
those powers and duties as set forth in the By-Laws of the
Company as they may from time to time be modified by the
Board of Directors of the Company. Executive shall also
serve as President and Chief Executive Officer of the
Company's parent corporation, PM Holdings Corporation. Upon
the reasonable request of the Company, Executive agrees to
perform in various additional capacities, including
officerships and directorships, in the Company and/or the
Company's "Affiliates" as hereinafter defined. The parties
agree that the services of Executive respecting the
Company and its Affiliates (including PM Holdings
Corporation) shall be performed on behalf of the Company,
and that for all purposes Executive will be an employee of
the Company alone and that this Agreement alone shall
govern and control any and all employment relationships
between Executive and the Company, its divisions,
subsidiaries, parent corporation or entities under contract
with the Company ("Affiliates").
3. Compensation and Benefits.
3.1. The compensation and other benefits payable to
Executive under this Agreement shall constitute the
minimum consideration to be paid to Executive for all
services to be rendered by him on behalf of the
Company or its affiliates during the term of this
contract or any extension thereof.
3.2. Executive shall be compensated and shall have the
minimum benefit as described in Exhibit A, which shall
not be modified without mutual consent of Executive
and Company. Executive shall also participate in all
incentive programs or option programs that may
subsequently become available so long as he is in this
capacity. Executive's base salary and target annual
bonus shall be reviewed at least annually and may be
increased prospectively by the Board of Directors on
the basis of performance evaluation.
4. Conflicts of Interest. Executive shall, during the term of
this Agreement, devote his full time, attention, energies
and business efforts to his duties hereunder. He shall not
without the express written consent of the Company actively
engage in any other business activity whatsoever or
contract or "self-deal" directly or indirectly with the
Company or its Affiliates.
5. Non-Disclosure and Non-Competition.
5.1. Executive recognizes and acknowledges that he will
have access to certain confidential information and
trade secrets of the Company and its Affiliates
("Confidential Information"). Such
Confidential Information includes, but is not limited
to: customer names; products purchased by customers;
production capabilities and processes; customer
account and credit data; referral sources; computer
programs and software; information relating to
confidential or secret designs, processes, formulae,
plans, devices or materials; confidential information
and trade secrets relating to the manufacture,
distribution and marketing of products; patents
pending; confidential characteristics of the products;
customer comments; troubleshooting requirements;
product development; market development; manuals;
management, accounting and reporting systems,
procedures and programs; sales employee compensation
information, plans and programs; marketing and
financial analysis, plans, research, programs and
related information and data; forms, agreements and
legal documents; regulatory and supervisory reports;
correspondence; dealer and distribution matters;
information regarding raw materials and supplies;
information regarding present and proposed
investments, joint ventures and acquisitions;
financing and financial matters; dealer financing
information; financial statements; corporate books and
records; and other similar information. Executive
acknowledges and agrees that this Confidential
Information constitutes valuable, special and unique
property of the Company. Executive agrees that he will
not, at any time during or after the term of this
Agreement or his employment with the Company, disclose
any Confidential Information to any person, firm,
corporation, association, limited liability company,
trust or other entity ("Person") for any reason or
purpose, except in furtherance of his responsibility
as Chief Executive. It is further understood that
should Executive no longer be in the employ of the
Company for any reason, he shall not disclose any
Confidential Information as aforementioned except with
written prior approval of the Company.
5.2. Any and all work product of Executive developed within
the scope of Executive's relationship with the Company
and its Affiliates shall constitute the property of
the Company. This includes, but is not limited to, any
copyrightable or patentable
product or service. Accordingly, Executive shall not
have any interest, proprietary or otherwise, in such
work product. Moreover, Executive shall not avail
himself of personal benefits to the exclusion of the
Company and its Affiliates of any duplication,
modification or extension of said product. With
respect to this clause 5.2 and clause 5.1 above, no
territorial boundaries or temporal limitations shall
apply.
5.3. Executive further agrees that during the term of
Executive's employment hereunder and for a period of
two (2) years immediately following termination of the
Executive's employment hereunder he shall not, for
himself or on behalf of any other person:
5.3.1. solicit, accept, divert, or take away from the
Company or its Affiliates the business of any
Person;
5.3.2. directly or indirectly induce or attempt to
influence any employee of the Company or any of
its Affiliates to terminate his or her
employment with the Company or any of its
Affiliates; or
5.3.3. engage in any commercial or technical activity
in the "Territory" (as defined below) involving
the development, formulation, manufacture,
production, distribution, marketing or sale of
any product or service that the Company or any
of its Affiliates or their respective
predecessors or successors has or may design,
produce, manufacture, distribute, market or
sell during the term of Executive's employment
with the Company or its predecessors or
successors. The "Territory" shall consist of
all of the United States and all other
countries in which the Company or any of its
Affiliates is conducting or may conduct
business prior to the termination of
Executive's employment hereunder.
5.4. Executive understands and acknowledges that, due to
the unique nature of the products and services of the
Company and its
Affiliates, the limitations as to time and geographic
area contained in this Section 5 are reasonable and
are not unduly onerous to Executive. Executive
therefore agrees that the limitations as to time,
geographic area and scope of activity contained in the
covenants of this Section 5 do not impose a greater
restraint than is necessary to protect the
Confidential Information, goodwill and other business
interests of the Company and its Affiliates. Executive
also agrees that in light of the facts acknowledged
above and the substantial economic damages that the
Company and its Affiliates would suffer if Executive
were to engage in any of the activities described in
this Section 5, the Company's need for the protection
afforded by this Section 5 is greater than any
hardship Executive might experience by complying with
its terms.
6. Termination of Employment Provisions.
6.1. It is understood and agreed that the termination of
employment of Executive for any reason set forth in
this Section 6. or for any other reason shall not in
any way impair, diminish, extinguish or affect in any
manner the rights or obligations of Executive to
render full performance of the Covenants and
Agreements set forth in section 4. and 5. supra.
6.2. Termination for Due Cause. The Company or the
Executive shall have the right to terminate
Executive's services under this Agreement at any time
for "due cause," as herein defined, upon giving
written notice to the other party setting out the
reasons for such termination, such termination to be
effective upon the date of delivery of such notice.
Termination for "due cause" hereunder shall mean:
6.2.1. As to Company's Right of Termination:
i. any act of fraud or dishonesty of
Executive relating to the business,
properties or assets of the Company or any
member of PM Holdings Corporation group;
or
ii. the willful misconduct of Executive
relating to the business or affairs of the
Company or any member of the PM Holdings
Corporation group; or
iii. Executive's failure or refusal to comply
with either the corporate policies of the
Company or the express lawful directions
of the Board of Directors whether in
writing or orally; or
iv. any material breach by Executive of the
provisions of this Agreement.
6.2.2. As to Executive's Right of Termination: Any
material breach by Company of the provisions of
this Agreement and for those additional reasons
as follows:
i. The assignment of Executive to duties that
are inconsistent with the position held by
the Executive.
ii. The removal of Executive from, or any
failure to elect or reelect Executive to
his current office, except in connection
with Executive's promotion, with his prior
written consent, to a higher office (if
any) with the company.
iii. A reduction by the Company in the amount
of Executive's base salary without the
prior written consent of the Executive.
iv. The discontinuation or reduction by the
Company of Executive's participation in
any bonus or other employee benefit plan,
program, arrangement or policy in which
Executive is a participant without the
prior written consent of the Executive.
v. The relocation, without Executive's prior
written consent, of the Company's
principal executive offices to a location
outside the county in which such offices
are currently located.
6.2.3. Damages: If there shall be a termination for
"due cause," the party wronged by such
termination shall be entitled to money damages
from the other party in such amount as a court
of law shall determine to be equivalent to the
monetary loss which such wronged party shall
have been caused to sustain by reason thereof.
6.3. Termination by Reason of Death or Disability. This
Agreement shall terminate automatically upon the death
of the Executive. If by reason of illness, physical or
mental disability or other incapacity, Executive shall
become unable or shall fail for a period of 120
consecutive days to render the services to be provided
by him hereunder, such event shall constitute "due
cause" and the Board of Directors of the Company may,
at its option, terminate Executive's services under
this Agreement upon written notice to Executive, such
termination to be effective on the date of delivery of
such notice.
6.4. The Right of Company to Terminate Without Cause.
6.4.1. The Board of Directors of the Company shall
have the right to terminate the employment of
Executive hereunder prior to the expiration of
the term of this Agreement without cause by
delivering to Executive written notice of such
termination not less than (ninety) 90 days
prior to the effective date of such
termination. Upon any termination of the
employment of Executive by Company without due
cause hereunder, Company shall be obligated to
pay to Executive his regular monthly salary
until the date of termination along with
vacation pay due and not taken. In addition,
Company shall pay an amount equal to two (2)
full years of the annual base salary then being
paid to the Executive under this Employment
Agreement, plus the
target bonus amount awarded for the year in
which termination takes place. This twenty-four
(24) month period shall be computed from the
end of the above mentioned ninety (90) day
notification requirement.
6.4.2. Notwithstanding the foregoing, the Company
shall have the right at the time of such
initial notice of termination, or at any time
within such ninety (90) day period, to again
notify Executive in writing that his
termination shall be effective the date of
receipt of such final notice, in which case the
date of receipt of such final notice shall be
the effective date of termination; provided,
however, that Executive shall nonetheless be
entitled to receive his regular monthly salary
during the aforesaid ninety (90) day period
from initial notice of termination. Subsequent
to the end of the ninety (90) days, Executive's
severance payments as described in 6.4.1. supra
shall begin.
6.4.3. All termination pay under Paragraphs (a) and
(b) above shall be paid to Executive monthly in
arrears less customary withholdings. Company
may, at its own option, agree to spread the
total amount over a period longer than two (2)
years, upon request of the Executive.
7. Effect of Termination. Upon termination of employment of
Executive under this Agreement for any reason, any and all
obligations of the Company under this Agreement shall cease
immediately upon the effective date of such termination,
except for payment of:
7.1. any amounts of salary which may be due at the point of
termination, along with any vacation time accrued to
date of termination; and
7.2. payment of all amounts of salary due under Section 6.
above; and
7.3. payment of any obligations the Company may have to
Executive under any incentive compensation awards or
programs described
in the Exhibit to this Agreement, and under any stock
option or stock rights programs or other awards also
so described. Stock options and stock rights, in the
event of termination by the Company without cause,
shall be fully vested if in effect at that time.
Executive's individual holdings of Purina securities
are not impacted by this Agreement, and the provisions
of the Purina Registration Rights Agreement shall
govern any disposition of these securities. Company
shall pay Executive an amount equal to any federal or
state income taxes, Social Security taxes or excise
taxes that are due and owing by Executive as a result
of the accelerated vesting of options under Section
7.3 of this Agreement; and
7.4. any obligations the Company may have to Executive
under medical coverage: Executive and his spouse and
eligible dependents shall continue to participate in
Group Executive Medical coverage under the same terms
and conditions as Executive participated in such
coverage as of date of termination; and
7.5. any obligations the Company may have to Executive
under Group Term Life Insurance: During the Salary
Continuation Period, or until Executive is
re-employed, Purina shall continue Executive's Group
Term Life Insurance coverage under the same terms and
conditions as in effect as of date of termination; and
7.6. any obligations the Company may have to Executive
under Disability. During the salary Continuation
Period, or until Executive is re-employed, Executive
shall continue to participate in the Executive Long
Term Disability Option, under the same terms as
Executive participated in such option as in effect as
of date of termination; and
7.7. any obligations the Company may have to Executive
under Executive Post-Retirement Death Benefit.
Beginning on first date of termination, Purina shall
continue Executive's Executive Post-Retirement Death
Benefit coverage under the same terms
and conditions as in effect on date of termination for
as long as Executive lives, by purchasing a separate,
independent policy to provide such coverage; and
7.8. During the salary continuation period or until
Executive is reemployed, Company shall provide
outplacement assistance to Executive at an agreed-upon
level as he seeks other employment. Such outplacement
assistance shall include reimbursement to Executive
for temporary office space, telephone expenses,
preparation of resumes and mailing expenses and any
other agreed upon outplacement services; and
7.9. in the event of Executive's death, all payments due
Executive hereunder shall be made to Executive's
designated beneficiary.
8. Notices. Any notice, request, reply, instruction or other
communication provided or permitted in this Agreement must
be given in writing (including telex) and may be served:
8.1. by telex; or
8.2. by depositing same in the mail, country of
origination, in certified or registered form, postage
prepaid, addressed to the party or parties to be
notified with return receipt requested; or
8.3. by delivering the notice in person to such party or
parties. Notice given by telex shall be effective when
sent and the appropriate answerback is received.
Notice given by mail shall be effective seventy-two
(72) hours after its deposit in the mails as provided
herein. For purposes of notice, the address of
Executive or any administrator, executor or legal
representative of Executive or his estate, as the case
may be, shall be as follows:
Xxxxx X. Xxxxxx
#0 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
The address of the Company shall be:
Purina Xxxxx, Inc.
0000 X. Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
ATTN: Chairman of the Board
Telephone: 000-000-0000
Facsimile: 000-000-0000
The parties shall have the right, from time to time,
to change their respective addresses by written notice
given ten (10) days prior to the effective date of the
change.
9. Controlling Law. The execution, validity, interpretation
and performance of this Agreement shall be determined and
governed exclusively by the laws of the State of Missouri,
without reference to the principles of conflict of laws.
Jurisdiction with respect to any legal proceeding brought
by the Company or its assignee concerning any subject
matter contained in this Agreement shall rest in the State
of Missouri or in any jurisdiction where Executive resides.
10. Entire Agreement. This Agreement and the agreements
referenced herein contain the entire agreement of the
parties respecting the subject matter hereof and supersede
any prior inconsistent agreements. This Agreement may not
be modified or altered orally but only by an agreement in
writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is
sought.
11. Remedies, Modification and Separability. The parties agree
that Executive's breach of Sections 4. and 5. of this
Agreement will result in irreparable harm to the Company
and that no adequate remedy at law is available. Executive
agrees that upon a breach or violation of any of the
provisions of Sections 4. or 5., the Company shall be
entitled to injunctive relief in any court of competent
jurisdiction. Nothing herein, however, shall be construed
as prohibiting the Company from pursuing any other remedies
at law or in equity available to the Company for the breach
or violation or threatened breach or violation. Should a
court of competent jurisdiction declare
any of the covenants set forth in Section 4. or 5. to be
unenforceable due to an unreasonable restriction of
duration or geographical area, or otherwise, each of the
parties hereto hereby agrees that the court shall be
empowered to modify or reform such covenants so as to
provide relief reasonably necessary to protect the
interests of the parties and to award injunctive relief, or
damages, or both to which the Company may be entitled. If
any covenant, condition or other provision of this
Agreement is declared by a court of last resort to be
invalid and not binding on the parties, each of the parties
agrees that such declaration shall in no way affect the
validity of the other and remaining covenants, conditions
and provisions of this Agreement. It is also the intention
of the parties that if any provision of this Agreement is
capable of two constructions, one of which would render the
provision void and the other of which would render the
provision valid, then the provision shall have the
construction which renders it valid.
12. Assignments. The Company may assign its rights, duties and
obligations under this Agreement with the approval or
consent of the Executive, which consent will not be
unreasonably withheld as long as it does not materially
change the nature of this Agreement, the obligations or
benefits thereunder. The rights, duties and obligations of
the Executive under this Agreement are personal and,
therefore, shall not be assigned or transferred by the
Executive to another.
13. Effect of Agreement. This Agreement shall be binding upon
the Executive and his heirs, executors, administrators,
legal representatives, successors and assigns and this
Agreement shall be binding upon the Company and its
successors and assigns.
14. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement by the other shall not
operate or be construed as a waiver by such party of any
subsequent breach by the breaching party.
15. Headings. The paragraph headings in this Agreement are for
convenience of reference and shall not be used in the
interpretation or construction of this Agreement.
16. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and
all of which shall constitute but one instrument.
The parties acknowledge that they have read this Agreement,
consulted with their respective attorneys of their choice and
understand this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
Xxxxx X. Xxxxxx (Executive) Purina Xxxxx, Inc. (Company)
/s/ Xxxxx X. Xxxxxx
--------------------
By: /s/ Xxxx X. Xxxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman of the Board
Exhibit A
Current Compensation and Benefits
1. Direct salary of $310,000 per annum, payable monthly, subject
to all appropriate withholdings, and subject to such
increases as may be from time to time approved by the Board
of Directors of the Company.
2. Purina Xxxxx, Inc. Savings Investment Plan.
3. Purina Xxxxx, Inc. Employee Stock Ownership Plan.
4. PM Holdings Corporation Omnibus Stock and Incentive Plan.
5. Purina Xxxxx, Inc. Profit Sharing Plan.
6. Purina Xxxxx, Inc. Capital Accumulation Plan.
7. Purina Xxxxx, Inc. Supplemental Executive Retirement Plan.
8. Purina Xxxxx, Inc. Annual Incentive Plan (Target Bonus of
$150,000 per Annum).
9. Health and welfare benefits generally available to senior
executive officers of the Company.
10. Purina Xxxxx Retirement Plan for Sales, Administrative and
Clerical Employees.
11. Executive Financial Planning Program.
/s/ Xxxxx X. Xxxxxx
-----------------------
Xxxxx X. Xxxxxx
November 18, 1997
-----------------------
Date
March 11, 1998
Xxxxx X. Xxxxxx
#0 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
RE: Employment Agreement
Dear Xx. Xxxxxx:
Reference is made to (i) the Employment Agreement, dated as of
November 18, 1997 (the "Employment Agreement"), between Purina
Xxxxx, Inc. ("Company") and Xxxxx X. Xxxxxx ("Executive"), and
(ii) the Agreement and Plan of Merger, dated as of January 9,
1998 (the "Merger Agreement"), among Xxxx Agriculture Company,
Arch Acquisition Corporation and PM Holdings Corporation. Company
and Executive hereby agree to amend the Employment Agreement as
follows:
As of the Effective Time (as defined in the Merger Agreement),
Paragraphs 2-11 (inclusive) of Exhibit A of the Employment
Agreement are deleted in their entirety and replaced with the
benefits set forth in Exhibit A hereof; provided, however, that
Executive's target bonus under the terms of the Employment
Agreement following the Effective Time shall remain no less than
$150,000 per annum administered and calculated in the same manner
as provided for in the Company's Annual Incentive Plan as in
effect as of the date of the Merger Agreement. In addition, as of
the Effective Time, all other references in the Employment
Agreement to employee benefit programs (other than the Capital
Accumulation Plans) will be deemed to be replaced with the
similar benefit provided for in Exhibit A hereof and, if no such
similar benefit is provided, such reference is deleted.
Executive and Company hereby recognize and acknowledge that
Executive is a Participant in the Purina Xxxxx, Inc./PM Holdings
Corporation Severance Program for Key Employees (the "Severance
Program") which provides for certain benefits to key employees of
Company upon termination of their employment under certain
circumstances. Executive and Company hereby agree that, in the
event Executive is entitled to receive benefits under the
Severance Program, Executive shall not receive any benefits under
Sections 4(a)(1) and 4(b)(1) of the Severance Program but shall
otherwise be entitled to any and all other benefits set forth in
the Severance Program to which Executive is entitled pursuant to
the terms of the Severance Program.
In the event that any amounts payable to Executive under the
Employment Agreement (as amended) would be subject to an excise
tax pursuant to Section 4999 of the Internal Revenue Code of
1986, as amended, then Company and Executive shall endeavor in
good faith to reduce or eliminate the amount of any such excise
tax. If, after such efforts, any excise tax remains to be paid,
Company shall pay to Executive an amount, which after reduction
for any income, excise or employment taxes on such amount, would
equal the amount of such excise tax.
Except as provided above, the Employment Agreement will remain in
full force and effect as of and after the Effective Time. Please
indicate your agreement and consent to the above by signing the
enclosed copy of this letter in the space provided and return the
signed copy to Purina Xxxxx, Inc., 0000 Xxxxx Xxxxxx Xxxx, Xx.
Xxxxx, Xxxxxxxx 00000, Attention: Chairman of the Board.
Very truly yours,
PURINA XXXXX, INC.
By: /s/ August X. Xxxxxxxx
-----------------------
Name: August X. Xxxxxxxx
Title: Vice President, Secretary
and General Counsel
AGREED AND ACCEPTED:
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
Exhibit A
Benefits
Xxxx Industries Employee Group Benefit Trust (Medical and Dental)
Xxxx Industries, Inc. Primary Life Plan
Xxxx Industries, Inc. Voluntary Life Insurance Plan
Xxxx Industries, Inc. Dependent Life Insurance Plan
Xxxx Industries, Inc. Accidental Death & Dismemberment Plan
Xxxx Industries, Inc. Short Term Disability Plan
Xxxx Industries, Inc. Long Term Disability Plan
Xxxx Industries, Inc. Section 125 Plan
Xxxx Industries, Inc. Health Care Reimbursement Account Plan
Xxxx Industries, Inc. Dependent Care Reimbursement Account Plan
Xxxx Industries, Inc. Supplemental Executive Retirement Plan
Xxxx Industries Employees' Pension Plan
Xxxx Industries Employees' Savings Plan
Guidelines
Compensation:
Xxxx'x compensation philosophy is to reward employees based their
contribution to Xxxx'x long-term profitability in forms of
compensation that achieve the greatest degree of motivation for
each individual. Based on the foregoing philosophy, Executive is
eligible to participate in several forms of compensation
currently available to Koch executives which compensation may be
given in any of several forms including, but not limited to, base
pay, performance/incentive pay, spot bonuses and/or shadow stock.
Sick Leave:
10 days sick leave accrued per year for each full time employee,
with a maximum accumulation of 30 days.
Holidays:*
New Year's Day Thanksgiving Day
Good Friday Day after Thanksgiving
Memorial Day Christmas Day
Independence Day Day before or after Christmas
Labor Day Floating Holiday (Company choice)
*Due to operational requirements, certain Koch divisions may have
a holiday schedule which differs from the above.
Vacation:
Years of Service Weeks
---------------- -----
1 - 4 2
5 - 9 3
10 - 19 4
20 + 5
Tuition Reimbursement:
Approved by supervisor based on business need-- maximum 75%
reimbursement if "B" or better, 50% if "C"