AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “Agreement”) is made and entered into as of January 27, 2009,
but effective as of the Effective Date (as defined below), by and between
Pilgrim’s Pride Corporation, a Delaware corporation, with its principal offices
at 0000 XX Xxxxxxx 000 Xxxxx, Xxxxxxxxx, Xxxxx, 00000, (the “Company”), and Xxx
Xxxxxxx, an individual (“Executive”).
RECITALS
A. The
Company would like Executive to serve as its Chief Executive Officer and
Executive desires to provide employment services to the Company on all of the
terms and conditions herein set forth.
B. The
Company desires to provide Executive with a compensation plan in recognition of
Executive’s valuable skills and services.
C. The
Company and Executive entered into that certain Employment Agreement dated
December 16, 2008 (the “Original Employment Agreement”).
D. The
Company and Executive desire to amend and restate the Original Employment
Agreement in its entirety.
NOW, THEREFORE, in consideration of the
mutual covenants and conditions herein contained, the parties hereto agree as
follows:
ARTICLE
I. EMPLOYMENT
1.1 Employment. The
Company hereby employs Executive as its Chief Executive Officer and President
and Executive hereby accepts such engagement with the Company, in accordance
with and subject to all of the terms, conditions and covenants set forth in this
Agreement.
1.2 Term. The
term of this Agreement shall be for three (3) years (the “Initial Term”),
commencing on the Effective Date, unless terminated earlier in accordance with
the terms of Article IV hereof. The Initial Term may be extended in
writing by mutual consent of Executive and the Company for such additional term
as may be agreed (collectively with the Initial Term, the “Term”).
1.3 Conditions
Precedent; Effective Date. Notwithstanding
anything to the contrary contained in this Agreement, all rights and obligations
hereunder are subject to, and conditioned on, issuance of an order of the United
States Bankruptcy Court for the Northern District of Texas, Fort Worth Division,
or another court having jurisdiction over the case pending under Chapter 11
of the United States Bankruptcy Code wherein the Company is debtor and
debtor-in-possession (the “Bankruptcy Court”), approving the terms of this
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Agreement
in the form hereof. The effective date of this Agreement (the
“Effective Date”) shall be that date upon which the Bankruptcy Court issues its
order approving the terms of this Agreement in the form
hereof. Notwithstanding anything to the contrary contained in this
Agreement or otherwise, the Term and Executive’s employment under this Agreement
and period thereof shall not commence until the Effective
Date. Neither the Company nor Executive shall have any obligations
hereunder and the Company shall have no obligation to provide any compensation
or benefit or make any payment under this Agreement, including the Sign-on
Bonus, in each case, unless and until the Effective Date occurs.
ARTICLE
II. DUTIES OF EXECUTIVE
2.1 Scope of
Duties. Executive shall be the Chief Executive Officer and
President of the Company, reporting to the Board of Directors of the Company
(the “Board”), and shall have such other or additional offices or positions with
the Company and its subsidiaries as the Board shall determine from time to
time. Executive shall operate within the established guidelines,
plans or policies as may be established or approved by the Company from time to
time.
2.2 Performance of
Duties. Executive shall perform his duties from Pittsburg,
Texas, and devote his full time and attention to the business affairs of the
Company, but nothing in this Agreement shall preclude Executive from devoting
reasonable time to serve as a director or a member of a committee of any
organization involving no conflict of interest with the interest of the Company,
from engaging in charitable and community activities, and from managing
Executive’s personal affairs, provided that such activities do not materially
interfere with the regular performance of Executive’s duties and
responsibilities or derogate from Executive’s obligations under this
Agreement. Executive shall furnish to the Board a detailed statement
of any outside directorship, membership, employment or consulting services in
which Executive seeks to engage or invest, and must obtain prior approval from
the Board prior to engaging or investing in such services. In
addition, as from time to time requested by the Board, Executive must resubmit
for approval a detailed statement thereof. In the event the Board
determines in good faith that a conflict of interest or likelihood of
interference with his duties owed hereunder exists, Executive shall refrain from
such activity.
ARTICLE
III. COMPENSATION AND BENEFITS
3.1 Salary. Executive
shall be paid a base annual salary of not less than one million five hundred
thousand dollars (US$1,500,000.00) during the Initial Term, which shall be paid
with the same frequency and on the same basis that the Company normally makes
salary payments to other executive personnel of the Company.
3.2 Sign-on
Bonus. Within five (5) business days of the Effective Date,
the Company shall pay Executive a lump sum gross amount of three million dollars
($3,000,000.00) (the “Sign-on Bonus”), subject to Executive’s obligation to
re-pay this amount to the Company should the Executive’s employment be
terminated by Executive other than for Good Reason during the Initial Term in
accordance with Article IV hereof. Beginning on the Effective Date,
Executive’s obligation to repay the Sign-on Bonus shall be forgiven in
one-thirty-sixth (1/36) equal amounts for each full month of employment during
the Initial Term. During the Initial
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Term, if
Executive terminates his employment without Good Reason in accordance with
Article IV hereof, the remaining unforgiven amount of the Sign-on Bonus shall be
deemed unearned and Executive agrees to immediately repay upon the Date of
Termination the remaining unforgiven amount of the Sign-on Bonus in accordance
with Article V hereof.
3.3 Relocation Expenses; Living
Expenses. Executive shall be reimbursed his reasonable moving
expenses incurred in relocating his principal residence to Texas in order to
commence employment hereunder in accordance with the terms and conditions of the
Pilgrim’s Pride Corporation Executive Relocation Policy and Repayment Agreement
(the “Relocation Policy”). Notwithstanding anything to the contrary
contained in the Relocation Policy, the Company agrees that (a) the temporary
housing period under the Relocation Policy shall be extended until the earliest
of (i) confirmation of a plan of reorganization of the Company, (ii) the first
anniversary of the Effective Date or (iii) the date Executive permanently
relocates his residence to Texas (the earliest of such dates, the “Extension
Deadline”) and (b) Executive shall be entitled to reimbursement of the costs and
expense under the “Trips Home” provision of the Relocation Policy for a trip
home every two (2) weeks up to a maximum of twenty-six (26) trips until the
Extension Deadline.
3.4 Bonus Upon Plan of
Reorganization. The Company agrees that Executive shall be
entitled to the Reorganization Bonus (as defined below) subject to the terms and
conditions of this Section 3.4. For purposes of this Agreement, the
term “Reorganization Bonus” shall mean:
(a) a
lump sum gross amount of two million dollars (US$2,000,000), upon the occurring
of the following conditions (i) confirmation of a Plan of Reorganization (as
defined herein), (ii) EBITDAR (as defined herein) is at least an aggregate of
three hundred million dollars (US$300,000,000) for the third and fourth fiscal
quarters of the Company’s fiscal year ending 2009, and (iii) the annualized
operational improvements of the Company and its subsidiaries are at least one
hundred million dollars (US$100,000,000) for the Company’s fiscal year ending
2009 compared to the Company’s fiscal year ending 2008, or
(b) if
the conditions in clause (a) above are not satisfied, a lump sum gross amount of
one million dollars (US$1,000,000) upon the occurring of the following
conditions (i) confirmation of a Plan of Reorganization, (ii) EBITDAR is at
least an aggregate of two hundred million dollars (US$200,000,000) for the third
and fourth fiscal quarters of the Company’s fiscal year ending 2009, and (iii)
the annualized operational improvements of the Company and its subsidiaries are
at least fifty million dollars (US$50,000,000) for the Company’s fiscal year
ending 2009 compared to the Company’s fiscal year ending 2008.
The Company and Executive agree that no
Reorganization Bonus shall be due or payable under this Agreement if the EBITDAR
is less than an aggregate of two hundred million dollars (US$200,000,000) for
the third and fourth fiscal quarters of the Company’s fiscal year ending 2009,
or if the annualized operational improvements of the Company and its
subsidiaries are less than fifty million dollars (US$50,000,000). The
Reorganization Bonus shall be paid in a lump sum in the next normal payroll
cycle immediately following the substantial consummation of such Plan of
Reorganization; provided, however, that such payment shall be made not later
than 2½ months following the “year” in which the Plan of Reorganization is
confirmed. For purposes
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of this
Section 3.4, “year” means either the Company’s fiscal year or the calendar year,
whichever provides the latest payment date.
3.5 Incentive, Savings and
Retirement Plans. Executive will be eligible to participate in
all incentive, savings and retirement plans, practices, policies and programs
applicable generally to other executive personnel of the Company, including, but
not limited to, the Pilgrim’s Pride Corporation Performance Bonus Plan, subject
to and to the extent such plan is approved by the Bankruptcy Court and the
stockholders of the Company.
3.6 Sign-on Stock
Grant. Within one business day after the Effective Date,
Executive shall be granted three million eighty-five thousand six hundred
fifty-six (3,085,656) shares of the Company’s common stock (the
“Shares”). One-half of the Shares shall vest upon the occurrence of
the following conditions: (a) confirmation of a Plan of Reorganization, and (b)
the EBITDAR is at least an aggregate of three hundred million dollars
(US$300,000,000) for the third and fourth fiscal quarters of the Company’s
fiscal year ending 2009. The remaining one-half of the Shares shall
vest upon the occurrence of the following conditions: (a) confirmation of a Plan
of Reorganization, and (b) the EBITDAR is at least an aggregate of five hundred
million dollars (US$500,000,000) for the last twelve months ending on the last
day of the fiscal month of the Company immediately preceding substantial
consummation of such Plan of Reorganization. The Shares shall be
subject to forfeiture if the Company terminates Executive’s employment for Cause
or if Executive terminates his employment without Good Reason before, and to the
extent, the Shares have not vested. During the Term, Executive shall
not transfer, sell, or otherwise dispose of the unvested Shares and shall not
transfer, sell, or otherwise dispose of at least fifty percent (50%) of the
vested Shares. The Company hereby represents and warrants to
Executive that the Shares represent four percent (4%) of the issued and
outstanding shares of the Company on the Effective Date after giving effect to
the issuance of the Shares.
3.7 Reimbursable
Expenses. Upon submission of expense reports to the extent
necessary to substantiate the Company’s federal income tax deductions for such
expenses under the Code, and such expense report procedures as may be
established by the Company, the Company shall promptly reimburse Executive for
all reasonable business expenses incurred in the performance of Executive’s
duties hereunder on behalf of the Company, including expenses related to travel
and expenses while away from home on business. All such
reimbursements shall be made in accordance with the timing requirements of
Section 409A of the Code.
3.8 Fringe
Benefits. Executive shall be eligible to participate in all
group benefit plans and programs which the Company has established or may
establish for its executive employees and such other employee benefits or plans
as the Company has established or may establish for its employees and as may be
modified by the Company from time to time.
3.9 Vacations and Sick
Pay. Executive shall be entitled to an annual vacation and to
sick leave in accordance with policies as periodically established by the
Company for similarly situated executive employees.
3.10 Holidays. Executive
shall be entitled to all paid holidays given to the Company’s executive
employees.
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3.11 Deductions. All
payments provided for in this Agreement will be subject to any deductions
required by applicable law, including but not limited to applicable payroll or
other taxes or withholdings required to be withheld by the Company.
ARTICLE
IV. TERMINATION
4.1 Termination by the
Company. Executive’s employment with the Company may be
terminated by the Company under the following conditions:
(a) Upon
Executive’s death, in which case termination shall be effective
immediately;
(b) If
the Company determines in good faith that the Disability of Executive has
occurred during the Term (pursuant to the definition of Disability), it may give
to Executive written notice of its intention to terminate Executive’s
employment. In such event, Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such written notice
by Executive (the “Disability Effective Date”), provided that, within the 30
days after such receipt, Executive shall not have returned to full-time
performance of Executive’s duties;
(c) If
the Company terminates Executive’s employment for Cause, effective on the Date
of Termination; or
(d) If
the Company terminates Executive’s employment at any time, without Cause,
effective on the Date of Termination.
4.2 Termination by
Executive. Executive may terminate Executive’s employment with the
Company (a) for Good Reason during the 60-day period following the occurrence of
an event or events giving rise to such Good Reason, or (b) for the convenience
of Executive. A termination by Executive shall not constitute
termination for Good Reason unless Executive shall first have delivered to the
Company written notice identifying with specificity the occurrence claimed to
give rise to a right to terminate for Good Reason, and a reasonable time (not
less than 30 days) within which the Company may take action to correct,
rescind or otherwise substantially reverse the event supporting the basis for a
termination for Good Reason as identified by Executive and such period has
passed. Executive’s mental or physical incapacity following the
occurrence of an event otherwise constituting Good Reason shall not affect
Executive’s ability to terminate employment for Good Reason.
4.3 Notice of
Termination. Any termination by the Company or Executive shall
be communicated by Notice of Termination to the other party hereto given in
accordance with Section 8.1 hereof. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (a) indicates the
specific termination provision in this Agreement relied upon, (b) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive’s employment under the provision
so indicated, and (c) if the Date of Termination is other than the date of
receipt of such notice, specifies the
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termination
date. The failure by Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of Executive or the Company,
respectively, hereunder or preclude Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing Executive’s or the Company’s
rights hereunder.
4.4 Date of
Termination. “Date of Termination” means (a) if Executive’s
employment is terminated by the Company for Cause, or by Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein within 60 days after receipt of the Notice of Termination, as
the case may be, (b) if Executive’s employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the date on
which the Company notifies Executive of such termination, and (c) if Executive’s
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of Executive or the Disability Effective
Date, as the case may be. The Company and Executive shall take all
steps necessary (including with regard to any post-termination services by
Executive) to ensure that any termination described in this Article constitutes
a “separation from service” within the meaning of Section 409A of the Code, and
notwithstanding anything contained herein to the contrary, the date on which
such separation from service takes place shall be the “Date of
Termination.”
ARTICLE
V. COMPENSATION UPON TERMINATION
5.1 Termination by Executive for
Good Reason; Termination by the Company for Death, Disability, or Other than for
Cause. If the Company terminates the Executive’s employment
for death or Disability or other than for Cause, or Executive terminates his
employment for Good Reason during the 60-day period following the occurrence of
an event or events giving rise to Good Reason:
(a) The
Company shall pay to Executive in a lump sum within 30 days after the Date of
Termination all Accrued Obligations and Other Accrued Benefits through the Date
of Termination;
(b) If
the terms and conditions in Section 3.4 hereof are satisfied after the Date of
Termination and on or before December 1, 2010, then the Company shall pay to
Executive or his estate the Reorganization Bonus on December 1, 2010;
and
(c) If
the conditions in Section 3.6 hereof are satisfied after the Date of Termination
such that the Shares would vest, in whole or in part, then the Shares shall
immediately vest and all restrictions shall lapse, at the time and under the
terms and conditions of Section 3.6.
Notwithstanding anything to the
contrary contained herein, as a condition to the payment of any Reorganization
Bonus or the vesting of the Shares in accordance with Section 3.4 and Section
3.6, as applicable, and this Section 5.1, Executive or his estate shall have
timely executed and not revoked a general release, in the form presented by the
Company, of all known and
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unknown
claims that Executive may then have against the Company or Persons affiliated
with the Company, and has expressly agreed in writing not to prosecute any legal
action or other proceeding based on any of such claims.
5.2 Termination by the Company
for Cause. If Executive’s employment shall be terminated by the Company
for Cause, this Agreement shall terminate without further obligations to
Executive other than the obligation to pay to Executive the Accrued Obligations
and any Other Accrued Benefits and Executive shall forfeit the Shares still
subject to forfeiture.
5.3 Termination by Executive
Other than for Good Reason. If Executive’s employment shall be
terminated by Executive other than for Good Reason, this Agreement shall
terminate without further obligations to Executive other than the obligation to
pay to Executive the Accrued Obligations and any Other Accrued
Benefits. The remaining unforgiven amount of the Sign-on Bonus as
provided for in Section 3.2 hereof shall be due and payable within five (5)
business days from the Date of Termination, and Executive shall forfeit the
Shares still subject to forfeiture.
5.4 Expiration of
Term. If Executive’s employment shall be terminated due to the
normal expiration of the Term, this Agreement shall terminate without further
obligations to Executive, other than for payment of Accrued Obligations and the
timely payment or provision of Other Accrued Benefits.
5.5 Section
409A. Notwithstanding the foregoing provisions of this
Article, if as of the Date of Termination Executive is a “specified employee”
within the meaning of Section 409A of the Code (as determined in accordance with
the methodology established by the Company as in effect on such Date of
Termination), amounts or benefits that are deferred compensation subject to
Section 409A of the Code, as determined in the reasonable discretion of the
Company, that would otherwise be payable or provided during the six-month period
immediately following termination (other than the Accrued Obligations and Other
Accrued Benefits), shall instead be paid or provided, with interest on any
delayed payment at the
prime lending rate prevailing at such time, as published in the Wall
Street Journal,
on the first business day after the date that is six months following
Executive’s “separation from service” within the meaning of Section 409A of the
Code.
ARTICLE
VI. RESTRICTIONS OF CONDUCT OF EXECUTIVE
6.1 General. Executive
and the Company understand and agree that the purpose of this Article is to
protect legitimate business interests of the Company, as more fully described
below, and is not intended to impair or infringe upon Executive’s right to work,
earn a living, or acquire and possess property from the fruits of his
labor. Executive hereby acknowledges that Executive has received good
and valuable consideration for the employment and post-employment restrictions
set forth in this Article in the form of the compensation and benefits provided
for herein and in the form of the Company allowing Executive access to
Confidential Information and Trade Secrets which he would not otherwise receive
had he not entered into the post-employment restrictions set forth in this
Article. Executive hereby further acknowledges
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that the
post-employment restrictions set forth in this Article are reasonable and that
they do not, and will not, unduly impair his ability to earn a living after the
termination of this Agreement.
6.2 Restrictive
Covenants.
(a) Restriction on Disclosure
and Use of Confidential Information and Trade
Secrets. Executive understands and agrees that the
Confidential Information and Trade Secrets constitute valuable assets of the
Company and its affiliated companies, and may not be converted to Executive’s
own use. Accordingly, Executive hereby agrees that Executive shall
not, directly or indirectly, at any time, beginning on the Effective Date and
following termination, for any reason, reveal, divulge, or disclose any
Confidential Information to any Person not expressly authorized by the Company,
and Executive shall not, directly or indirectly, at any time, use or make use of
any Confidential Information in connection with any business activity other than
that of the Company. Throughout the Term, and at all times after the
date that this Agreement terminates for any reason, Executive shall not directly
or indirectly transmit or disclose any Trade Secret of the Company to any
Person, and shall not make use of any such Trade Secret, directly or indirectly,
for himself or for others, without the prior written consent of the
Company. The parties acknowledge and agree that this Agreement is not
intended to, and does not, alter either the Company’s rights or Executive’s
obligations under any state or federal statutory or common law regarding trade
secrets and unfair trade practices.
Anything herein to the contrary
notwithstanding, Executive shall not be restricted from disclosing or using
Confidential Information or any Trade Secret that is required to be disclosed by
law, court order or other legal process; provided, however, that in the event
disclosure is required by law, Executive shall provide the Company with prompt
notice of such requirement so that the Company may seek an appropriate
protective order prior to any such required disclosure by
Executive.
(b) Nonsolicitation of Protected
Employees. Executive understands and agrees that the
relationship between the Company and each of its Protected Employees constitutes
a valuable asset of the Company and may not be converted to Executive’s own
use. Accordingly, Executive hereby agrees that beginning on the
Effective Date and continuing during the Restricted Period, Executive shall not,
directly or indirectly, on Executive’s own behalf or as a Principal or
Representative of any Person or otherwise, solicit or induce any Protected
Employee to terminate his or her employment relationship with the Company or any
of its affiliated companies or to enter into employment with any other
Person.
(c) Noncompetition with the
Company. In consideration of the compensation and benefits
paid by the Company to Executive hereunder, and in consideration of the Company
giving Executive Confidential Information and Trade Secrets, Executive hereby
agrees that, during the Restricted Period, Executive shall not, without prior
written consent of the Company, directly or indirectly, anywhere in the United
States seek or obtain a Competitive Position. Executive acknowledges
that in the performance of his duties for the Company he is charged with
operating on the Company’s behalf throughout the United States and he hereby
acknowledges, therefore, that this restriction is reasonable. It is intended and
agreed that during the term of Executive’s employment, Executive shall not
knowingly perform any act which may
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confer
any competitive benefit or advantage upon any enterprise competing with Company,
its subsidiaries, affiliates or any successor. Executive shall not
directly or indirectly, engage, individually or as an officer, director,
employee, consultant, advisor, partner or co-venturer, or as a stockholder or
other proprietor owning more than a five percent (5%) interest in any firm,
corporation, partnership or other organization (in case of any such ownership or
participation) in the business of manufacturing, selling or distributing
products in competition with the products and/or services of the Company or its
subsidiaries or affiliates.
6.3 Enforcement of Restrictive
Covenants.
(a) Rights and Remedies Upon
Breach. In the event Executive breaches, or threatens to
commit a breach of any of the provisions of the Restrictive Covenants, the
Company shall have the right and remedy to enjoin, preliminarily and
permanently, Executive from violating or threatening to violate the Restrictive
Covenants and to have the Restrictive Covenants specifically enforced by any
court or tribunal of competent jurisdiction, it being agreed that any breach or
threatened breach of the Restrictive Covenants would cause irreparable injury to
the Company and that money damages would not provide an adequate remedy to the
Company. Such right and remedy shall be independent of any others and
severally enforceable, and shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company at law or in
equity.
(b) Severability of
Covenants. Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in time and scope and in all
other respects. The covenants set forth in this Agreement shall be
considered and construed as separate and independent
covenants. Should any part or provision of any covenant be held
invalid, void or unenforceable, such invalidity, voidness or unenforceability
shall not render invalid, void or unenforceable any other part or provision of
this Agreement. If any portion of the foregoing provisions is found
to be invalid or unenforceable because its duration, the territory, the
definition of activities or the definition of information covered is considered
to be invalid or unreasonable in scope, the invalid or unreasonable term shall
be redefined, or a new enforceable term provided, such that the intent of the
Company and Executive in agreeing to the provisions of this Agreement will not
be impaired and the provision in question shall be enforceable to the fullest
extent of the applicable laws.
ARTICLE
VII. DEFINITIONS AND INTERPRETATION
7.1 Definitions. The
following capitalized terms as used in this Agreement shall have the meanings
assigned to them below:
(a) “Accrued
Obligations” shall mean, to the extent not theretofore paid, (i) Executive’s
annual base salary through the Date of Termination, (ii) Executive’s accrued but
unpaid Reorganization Bonus, (iii) Executive’s annual incentive bonus for the
fiscal year immediately preceding the fiscal year in which termination occurs,
(iv) any accrued vacation pay to the extent the vacation was not theretofore
taken, and (v) any other amounts accrued but unpaid under Article III as of the
Date of Termination; provided that the term “Accrued
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(b) “Capital
Lease” means any lease of Property which in accordance with GAAP is required to
be capitalized on the balance sheet of the lessee.
(c) “Capitalized
Lease Obligation” means, for any Person, the amount of the liability shown on
the balance sheet of such Person in respect of a Capital Lease determined in
accordance with GAAP.
(d) “Cause”
shall mean, as determined by the Board, of any one of the following specific
material acts or failure to act by Executive:
(i) Executive’s
conviction in a court of law of, or entry of a guilty plea or plea of no contest
to, a felony charge (regardless of whether subject to appeal);
(ii) the
willful and continued failure of Executive to perform substantially Executive’s
duties (as contemplated by Article II hereof) with the Company or any of its
affiliated companies (other than any such failure resulting from incapacity due
to physical or mental illness or following Executive’s delivery of a Notice of
Termination for Good Reason);
(iii) any
willful act that constitutes, on the part of Executive, fraud, dishonesty in any
material respect, breach of fiduciary duty, misappropriation, embezzlement or
gross misfeasance of duty;
(iv) willful
disregard or continued breach in any material respect of published Company (or
of any of its affiliated companies) policies and procedures or codes of ethics
or business conduct; or
(v) any other
material breach by Executive of any provision of this Agreement.
provided,
however, that in the case of (ii), (iv) and (v) above, such conduct or omission
shall not constitute “Cause” unless the Board shall have delivered to Executive
notice identifying with specificity (A) the conduct or omission the Board
believes constitutes “Cause,” (B) reasonable action that would remedy such
objection, and (C) a reasonable time (not less than 30 days) within which
Executive may take such remedial action, and Executive shall not have taken such
specified remedial action within the specified time. For purposes of
this definition, no act, or failure to act, on the part of Executive shall be
considered “willful” unless it is done, or omitted to be done, by Executive in
bad faith or without reasonable belief that Executive’s action or omission was
in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel for the Company shall be conclusively presumed
to be done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. The cessation of employment of Executive
shall not be deemed to be for “Cause” unless and until there shall have been
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delivered
to Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board (excluding
Executive, if Executive is a member of the Board) at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to
Executive and Executive is given an opportunity, together with counsel for
Executive, to be heard before the Board), finding that, in the good faith
opinion of the Board, Executive is guilty of any of the conduct described above,
and specifying the particulars thereof in detail; provided that, in the event
Executive disputes such finding, no such finding shall be deemed to be
conclusive of the issue of whether “Cause” exists or a waiver by Executive from
challenging such finding and exercising any right under Section 8.4
hereof.
(e) “Code”
means the Internal Revenue Code of 1986, as amended from time to time, with all
references to the Code to include the Treasury Regulations promulgated
thereunder as in effect from time to time, and any successor provisions of the
Code and the applicable Treasury Regulations.
(f) “Competitive
Position” means any employment or consulting arrangement with a Competitor in
which Executive will use or is likely to use any Confidential Information or
Trade Secrets, or in which Executive has duties for such Competitor that are the
same or similar to those services actually performed by Executive for the
Company.
(g) “Competitor”
means any company or entity engaged in poultry production (including without
limitation broiler production, processing, sales and marketing) in which its
headquarters is located in the United States.
(h) “Confidential
Information” means all information regarding the Company, its activities,
business or clients that is the subject of reasonable efforts by the Company to
maintain its confidentiality and that is not generally disclosed by practice or
authority to Persons not employed by the Company, but that does not rise to the
level of a Trade Secret. “Confidential Information” shall include,
but is not limited to, financial plans and data concerning the Company or any of
its affiliated companies, management planning information, business plans,
operational methods, market studies, marketing plans or strategies, product
development techniques or plans, customer lists, customer files, data and
financial information, details of customer contracts, current and anticipated
customer requirements, identifying and other information pertaining to business
referral sources, past, current and planned research and development, business
acquisition plans, and new personnel acquisition plans. “Confidential
Information” shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right or privilege of the Company. This
definition shall not limit any definition of “confidential information” or any
equivalent term under state or federal law.
(i) “Determination
Date” means the Date of Termination or any earlier date of an alleged breach of
the Restrictive Covenants by Executive.
(j) “Disability”
shall mean the inability of Executive, as determined by the Board, to perform
the responsibilities and functions of the position held by Executive, with or
without reasonable accommodation, by reason of any medically determined physical
or mental impairment which has lasted (or can reasonably be expected to last)
for a period of not less than
-11-
(k) “EBITDAR”
means, with reference to any period, Net Income for such period (x) plus
all amounts deducted in arriving at such Net Income amount in respect of
(a) Interest Expense for such period, (b) federal, state, and local
income taxes for such period, (c) depreciation of fixed assets and
amortization of intangible assets for such period, (d) all asset impairment
charges and Restructuring Costs incurred during such period and losses in an
aggregate amount not to exceed $17,500,000 suffered in the month of October 2008
in connection with commodity hedging transactions, (e) losses realized upon
any sale or other disposition of Property during such period, and (f) any
write-downs of goodwill or other intangibles during such period, and
(y) minus all amounts included in arriving at such Net Income in respect of
gains realized upon any sale or other disposition of Property during such period
(all amounts referred to in clauses (x) and (y) to be determined on a
consolidated basis using the standards used in the preparation of the Company’s
quarterly financial statements other than those items or adjustments that are
only reflected on a quarterly basis).
(l) “GAAP”
means generally accepted accounting principles set forth from time to time in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
(m) “Good
Reason” shall mean:
(i) the
assignment to Executive of any duties inconsistent in any material respect with
Executive’s position (including status, offices, titles and reporting
requirements), authority, duties, or responsibilities as contemplated by Section
2.1 hereof or any other action by the Company which results in a material
diminution in such position, authority, duties, or responsibilities, excluding
for this purpose an isolated, insubstantial, and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of
notice;
(ii) any
failure in any material respect by the Company to comply with any of the
provisions of Article III hereof, other than an isolated, insubstantial, and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by
Executive;
(iii) the
Company’s requiring Executive (A) to be based at any office or location that is
more than 150 miles from the initial location of
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(iv) any
purported termination by the Company of Executive’s employment otherwise than as
expressly permitted by this Agreement; or
(v) any
failure by the Company to require any successor (whether direct or indirect by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place.
(n) “Interest
Expense” means, with reference to any period, the sum of all interest charges
(including imputed interest charges with respect to Capitalized Lease
Obligations and all amortization of debt discount and expense) and letter of
credit fees of the Company and its subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
(o) “Net
Income” means, with reference to any period, the net income (or net loss) of the
Company and its subsidiaries for such period computed on a consolidated basis
using the standards used in the preparation of the Company’s quarterly financial
statements other than those items or adjustments that are only reflected on a
quarterly basis; provided that there shall be excluded from Net Income
(a) the net income (or net loss) of any Person accrued prior to the date it
becomes a subsidiary of, or has merged into or consolidated with, the Company or
another subsidiary, and (b) the net income (or net loss) of any Person
(other than a subsidiary) in which the Company or any of its subsidiaries has an
equity interest, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any of its subsidiaries during
such period.
(p) “Other
Accrued Benefits” shall mean amounts that are vested benefits or which Executive
is otherwise entitled to receive under any plan, policy, practice, or program of
the Company or any of its affiliated companies at the Date of Termination,
including benefits under such plans, programs, practices, and policies relating
to death or disability benefits, if any, as are applicable to Executive on the
Date of Termination.
(q) “Person”
means any individual or any corporation, partnership, joint venture, limited
liability company, association or other entity or enterprise.
(r) “Plan of
Reorganization” means a plan of reorganization of the Company that does not
provide for a sale of a majority of the Company’s and its subsidiaries’ assets;
provided that no Plan of Reorganization shall be deemed to have occurred if a
majority of the Company’s assets have been sold under Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Bankruptcy Code prior to the date of such confirmation. For
purposes hereof, a sale or issuance of the Company’s equity to third parties or
creditors in a capital raising transaction or in satisfaction of pre-petition
claims in connection with a plan or reorganization or otherwise will not be
deemed to be a sale of a majority of the Company’s and its subsidiaries
assets.
-13-
(s) “Principal
or Representative” means a principal, owner, partner; stockholder, joint
venturer, investor, member, trustee, director, officer, manager, employee,
agent, representative, or consultant.
(t) “Property”
means, as to any Person, all types of real, personal, tangible, intangible or
mixed property owned by such Person whether or not included in the most recent
balance sheet of such Person and its subsidiaries under GAAP.
(u) “Protected
Employees” mean employees of the Company who were employed by the Company or its
affiliated companies at any time within six months prior to the Determination
Date, other than those who were discharged by the Company or such affiliated
employer without cause.
(v) “Restricted
Period” means two (2) years following the Date of Termination.
(w) “Restrictive
Covenants” means the restrictive covenants contained in Article VI
hereof.
(x) “Restructuring
Costs” means (a) nonrecurring costs consisting of lease termination costs,
severance costs, facility shutdown costs and other related restructuring charges
related to or associated with a permanent reduction in capacity, closure of
plants or facilities, cut-backs or plant closures or a significant
reconfiguration of a facility and (b) restructuring costs consisting of fees and
expenses of professionals (whether engaged by the Company, any official
committee, the Bank of Montreal, as DIP agent (or its counsel), any lenders (or
their respective counsel) or any other Person) incurred during such
period.
(y) “Third
Party Information” means confidential or proprietary information subject to a
duty on the part of the Company or its affiliated companies to maintain the
confidentiality of such information and to use it only for certain limited
purposes.
(z) “Trade
Secret” means all information, without regard to form, including, but not
limited to, technical or nontechnical data, a formula, a pattern, a compilation,
a program, a device, a method, a technique, a drawing, a process, financial
data, financial plans, product plans, distribution lists or a list of actual or
potential customers, advertisers or suppliers which is not commonly known by or
available to the public and which information: (i) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other Persons who can obtain economic
value from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Without
limiting the foregoing, Trade Secret means any item of confidential information
that constitutes a “trade secret(s)” under the common law or statutory law of
Texas.
7.2 Interpretation. The
foregoing definitions are equally applicable to both the singular and plural
forms of the terms defined. The words “include,” “includes,” and
“including” shall be deemed to be followed by the phrase “without
limitation.” Unless the context requires otherwise (a) any definition
of or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, restated, amended and restated, supplemented or
-14-
otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), and (b) any reference herein to any Person
shall be construed to include such Person’s permitted successors and permitted
assigns. The words “hereof,” “herein,” and “hereunder” and words of
like import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
ARTICLE
VIII. MISCELLANEOUS PROVISIONS
8.1 Notices. All
notices, requests and other communications under this Agreement must be in
writing and will be deemed duly delivered (a) when delivered if delivered in
person, (b) three days after being sent by registered or certified mail, return
receipt requested, postage prepaid, (c) one day after being sent for next
business day delivery, fees prepaid, via a reputable nationwide overnight
courier service, (d) on the date of confirmation of receipt of transmission by
facsimile or (e) on the date of the notice being sent by e-mail at the e-mail
address in the records of the Company, in each case to the intended recipient as
set forth below (or to such other address, facsimile number, email address or
individual as a party may designate by notice to the other
parties).
|
If
to Executive:
|
Xxx
Xxxxxxx
0000
XX Xxxxxxx 000 Xxxxx
Xxxxxxxxx,
XX 00000
|
|
If
to the Company:
|
Pilgrim’s
Pride Corporation
0000
XX Xxxxxxx 000 Xxxxx
Xxxxxxxxx,
XX 00000
|
|
Attention: Executive
Vice President Human Resources
Facsimile:
(000) 000-0000
|
or to
such other address as either party shall have furnished to the other in writing
in accordance herewith.
8.2 Successors.
(a) This
Agreement is personal to Executive and without the prior written consent of the
Company shall not be assignable by Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive’s legal representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The
Company shall require any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company as
-15-
hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
8.3 No Breach of
Duty. Each of
the Company and Executive represents and warrants to the other party that
neither the execution, delivery and performance of this Agreement will conflict
or be inconsistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, any agreement to which such Person is a party or which it or he may
be subject. Executive represents that Executive’s performance
of this Agreement and as an employee of the Company does not and will not breach
any agreement or duty to keep in confidence proprietary information acquired by
Executive in confidence or in trust prior to employment with the
Company. Executive has not and will not enter into any agreement
either written or oral in conflict with this Agreement.
8.4 Arbitration Any
claim or dispute arising under or relating to this Agreement or the breach,
termination, or validity of any term of this Agreement shall be subject to
arbitration, and prior to commencing any court action, the parties agree that
they shall arbitrate all controversies; provided, however, that nothing in this
Section shall prohibit the Company from exercising its right under Article VI
hereof to pursue injunctive remedies with respect to a breach or threatened
breach of the Restrictive Covenants. The arbitration shall be
conducted in Dallas, Texas, in accordance with the Employment Dispute Rules of
the American Arbitration Association and the Federal Arbitration Act, 9 U.S.C.
§l, et.
seq. Any award shall be binding and conclusive upon the
parties hereto, subject to 9 U.S.C. §10. Each party shall have the
right to have the award made the judgment of a court of competent
jurisdiction. Any fees and related expenses associated with the cost
of arbitration shall be borne by the Company.
8.5 Settlement of
Claims. The Company’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Executive or others.
8.6 Severability. If
any term, provision, covenant or condition of this Agreement is held to be
invalid, void, or unenforceable, the remainder of the provisions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
8.7 Personal
Loan. Notwithstanding any other provisions in this Agreement,
in the event the Company determines in its good faith judgment, that any
provision of this Agreement is likely to be interpreted as a personal loan
prohibited by the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated thereunder (the “Act”), then such provision shall be modified as
necessary or appropriate so as to not violate the Act; and if this cannot be
accomplished, then the Company shall use its reasonable efforts to provide the
Executive with similar, but lawful, substitute benefits at a cost to the Company
not to significantly exceed the amount the Company would have otherwise paid to
provide such benefits to the Executive.
8.8 Survival. Articles
V, VI, VII and VIII shall survive the termination of this
Agreement.
-16-
8.9 Entire Agreement;
Amendments; Waiver. This Agreement amends and restates the
Original Employment Agreement in its entirety and is the entire agreement
between the parties hereto concerning the subject matter hereof and supersedes
and replaces all prior or contemporaneous agreements or understandings between
the parties, including the Original Employment Agreement. This
Agreement may not be amended or modified in any manner, except by an instrument
in writing signed by the Executive and a duly authorized officer on behalf of
the Company (other than Executive). Failure of either party to
enforce any of the provisions of this Agreement or any rights with respect
thereto or failure to exercise any election provided for herein shall in no way
be considered to be a waiver of such provisions, rights or elections or in any
way effect the validity of this Agreement. The failure of either
party to exercise any of said provisions, rights or elections shall not preclude
or prejudice such party from later enforcing or exercising the same or other
provisions, rights or elections which it may have under this
Agreement.
8.10 Governing Law and
Forum. This Agreement shall be governed by and construed in
all respects in accordance with the laws of the State of Texas. With the
exception of “arbitrable claims,” which are those claims subject to arbitration
under Section 8.4 hereof, the courts of Dallas County, Texas, shall have
exclusive jurisdiction and be the venue of all disputes between the Company and
Employee whether such disputes arise from this Agreement or
otherwise. In addition, Executive expressly waives any right to xxx
or be sued in the county of Executive’s residence and consents to venue in
Dallas County, Texas.
8.11 Attorneys’
Fees. In the event of any action for the breach of this
Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees,
costs and expenses incurred in connection with such action.
[Signature page
follows.]
-17-
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the day and year first above written.
|
“Executive”
|
“Company”
|
|||
|
PILGRIM’S
PRIDE CORPORATION
|
||||
|
/s/ Xxx Xxxxxxx
|
By:
|
/s/ Xxxxxxx X. Xxxxxxx
|
||
|
Xxx
Xxxxxxx
|
Xxxxxxx
X. Xxxxxxx
Chief
Financial Officer, Secretary
and
Treasurer
|
|||
