EXHIBIT 10.1
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CONSULTING AGREEMENT
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CONSULTING AGREEMENT, made as of September 4, 1997 ("Agreement"), by
and between Tyson Foods, Inc., a Delaware corporation ("Parent"), and Xxxxx X.
Xxxxxx ("Consultant").
WITNESSETH:
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WHEREAS, Parent is engaged in the business of producing, marketing and
distributing a variety of food products (the Business");
WHEREAS, Consultant has acquired extensive knowledge of and experience
in the Business as conducted by Parent;
WHEREAS, Parent desires to obtain the benefit of Consultant's
knowledge and experience by retaining Consultant, and Consultant desires to
accept such position, for the term and upon the other conditions hereinafter set
forth;
WHEREAS, concurrently herewith, Parent, HFI Acquisition Sub Inc., a
Delaware corporation and wholly owned subsidiary of Parent (the "Purchaser"),
and Xxxxxx Foods, Inc., a Delaware corporation (the "Company"), are entering
into an Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"), pursuant to which, among other things, the Company is merging with
and into the Purchaser; and
WHEREAS, Consultant will cease to be a director and officer of the
Company and all of its subsidiaries, effective as of the Effective Time of the
Merger (as such terms are defined in the Merger Agreement).
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Parent and Consultant hereby agree as follows:
1. Consulting Services. During the Term (as defined below),
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Consultant shall make himself available to perform consulting services with
respect to the businesses conducted by Parent and its subsidiaries. Such
consulting services shall be related to such matters as the Chief Executive
Officer of Parent may designate from time to time, including consulting services
to Parent's Board of Directors with respect to the businesses conducted by
Parent and its subsidiaries. Consultant shall accommodate reasonable requests
for Consultant's consulting services, and shall devote reasonable time and his
reasonable best efforts, skill and attention to the performance of such
consulting services, including travel reasonably required in the performance of
such consulting services.
2. Term. The term of Consultant's engagement under this Agreement
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shall commence at the Effective Time of the Merger and, unless earlier
terminated pursuant to Section 8, shall continue in effect for a period of five
years thereafter (such period, as may be earlier terminated, the "Term").
There shall be no extension of this Agreement other than by written instrument
duly executed and delivered by both parties hereto.
3. Compensation. During the Term, Parent shall pay Consultant
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$1,200,000 per annum, payable in equal monthly installments (subject to
proration for any partial month) on the last day of each month during the Term
to an account designated in writing by Consultant.
4. Expenses. Parent shall reimburse Consultant for Consultant's
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travel and other expenses, in an aggregate amount not to exceed $800,000.
5. Additional Benefits. In addition to the compensation set forth
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in Section 3 hereof, Parent shall provide Consultant with the following
additional benefits:
(a) continuation of benefits payable pursuant to and in
accordance with the Company's Salary Continuation Plan in effect on the date
hereof, provided, however, that notwithstanding anything to the contrary in such
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Salary Continuation Plan, Consultant acknowledges and agrees that he shall not
be entitled to receive payments under such plan for an extended period as a
result of the Merger;
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(b) continuation of the split-dollar life insurance policy
provided by the Company prior to the date hereof under terms and conditions at
least as favorable to Consultant as those in effect as of the date hereof;
(c) continued medical insurance benefits during the Term
comparable to those provided by the Company prior to the date hereof;
(d) exclusive use of the Company's condo minium located in
Palm Springs, California during the Term; and
(e) exclusive use of the Company's hangar located at the
Rogers, Arkansas airport during the Term.
6. Confidentiality, Non-Competition.
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(a) Consultant acknowledges that: (i) the Business is
intensely competitive and that Consultant's engagement by Parent will require
that Consultant have access to and knowledge of confidential information of
Parent; (ii) the direct and indirect disclosure of any such confidential
information to existing or potential competitors of Parent would place Parent
at a competitive disadvantage and would do damage, monetary or otherwise, to
Parent's business; and (iii) the engaging by Consultant in any of the activities
prohibited by this Section 6 may constitute improper appropriation and/or use of
such information and trade secrets. Consultant expressly acknowledges the trade
secret status of the confidential information and that the confidential
information constitutes a protectable business interest of Parent.
(b) For purposes of this Section 6, Parent shall be construed
to include Parent and its subsidiaries and affiliates engaged in the Business.
(c) During the Term of this Agreement and at all times after
the termination of Consultant's engagement upon expiration of the Term or
otherwise, Consultant shall not, directly or indirectly, whether individually,
as a director, stockholder, owner, partner, employee, principal or agent of any
business, or in any other capacity, make known, disclose, furnish, make
available or utilize any of the confidential information, other than in the
proper performance of the duties contemplated herein,
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or as required by a court of competent jurisdiction or other administrative or
legislative body; provided that, prior to disclosing any of the confidential
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information to a court or other administrative or legislative body, Consultant
shall promptly notify Parentso that Parent may seek a protective order or other
appropriate remedy. Consultant agrees to return all confidential information,
including all photocopies, extracts and summaries thereof, and any such
information stored electronically on tapes, computer disks or in any other
manner to Parent at any time upon request by Parent and upon the termination of
his engagement for any reason.
(d) During the Term, Consultant shall not engage in Competition (as
defined below) with Parent. For purposes of this Agreement, "Competition" by
Consultant shall mean Consultant's engaging in, or otherwise directly or
indirectly being employed by or acting as a consultant or lender to, or being a
director, officer, employee, principal, licensor, trustee, broker, agent,
stockholder, member, owner, joint venturer or partner of, or permitting his
name to be used in connection with the activities of any other business or
organization which competes, directly or indirectly, with the business of Parent
as the same shall be constituted at any time during or following his engage
ment; provided that, it shall not be a violation of this Section 6(d) for
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Consultant to (i) become the registered or beneficial owner of up to five
percent (5%) of any class of the capital stock of a competing corporation
registered under the Securities Exchange Act of 1934, as amended, provided that
Consultant does not actively participate in the business of such corporation
until such time as this covenant expires,(ii) engage in any business which, at
the commencement of such engagement, Parent was not engaged in Competition with
or Consultant was not aware that Parent was in Competition with, or (iii) own
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and operate the grower farms owned on the date hereof by Consultant.
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(e) Without limiting the generality of the foregoing, during the
Term, Consultant agrees that he will not, directly or indirectly, for his
benefit or for the benefit of any other person, firm or entity, do any of the
following:
(i) solicit from any customer doing business with Parent,
business of the same or of a similar nature to the Business with such
customer;
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(ii) solicit the employment or services of, or hire, any person
who at the time is employed by or a consultant to Parent; or
(iii) otherwise interfere with the Business or accounts of Parent
including the making of any statements or comments of a defamatory or
disparaging nature to third parties regarding Parentor its officers,
directors, personnel or products.
(f) Consultant acknowledges that this Agreement is being entered into
in connection with the consummation of the transactions contemplated by the
Merger Agreement, that the services to be rendered by him to Parent are of a
special and unique character, which gives this Agreement a peculiar value to
Parent, the loss of which may not be reasonably or adequately compensated for by
damages in an action at law, and that a material breach or threatened breach by
him of any of the provisions contained in this Section 6 will cause Parent
irreparable injury. Consultant therefore agrees that Parent shall be entitled,
in addition to any other right or remedy, to a temporary, preliminary and
permanent injunction, without the necessity of proving the inadequacy of
monetary damages or the posting of any bond or security, enjoining or
restraining Consultant from any such violation or threatened violations.
(g) Consultant further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the business and goodwill of Parent; and it is the intent of the
parties hereto that if in the opinion of any court of competent jurisdiction any
provision set forth in this Section 6 is not reasonable in any respect, such
court shall have the right, power and authority to modify any and all such
provisions as to such court shall appear not unreasonable and to enforce the
remainder of this Section 6 as so modified.
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7. Limitation on Dispositions. (a) Consultant agrees that he will
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not for a period of two years commencing as of the Effective Time (the
"Reorganization Xxxxx nuity Period") enter into any transaction or arrangement
to the extent such transaction or arrangement (combined with any other
transactions or arrangements entered into by Consultant) would result in
Consultant having entered into an Economic Disposition (as defined below) with
respect to Parent Common Stock received by Consultant in the Merger, regardless
of whether such transaction or arrangement would be treated as a sale, exchange
or other taxable disposition of such Parent Common Stock for United States
federal income tax purposes, unless at least thirty (30) business days prior to
entering into any proposed transaction or arrangement (combined with any other
transactions or arrangements entered into by Consultant) relating to or
involving any shares of Parent Common Stock (a "Proposed Transaction"),
Consultant provides at his expense a written opinion of nationally recognized
tax counsel, in form and substance reasonably acceptable to Parent, that the
Proposed Transaction will not adversely affect the treat ment of the Merger as a
reorganization within the meaning of Section 368 of the Code.
(b) For purposes of this Section 7, an "Economic Disposition" of
shares of Parent Common Stock shall mean (i) any transaction or arrangement
(including an outright sale) that would be treated as a sale, exchange or other
taxable disposition for United States federal income tax purposes of shares of
Parent Common Stock received in the Merger and (ii) any transaction or
arrangement (or combination of transactions or arrangements) entered into by or
on behalf of Consultant that reduces the economic benefits and burdens to
Consultantof owning shares of Parent Common Stock (including any swap
transaction, notional principal contract or the acquisition or grant of any
calls, puts or other options, whether or not cash settlement is permitted or
required) to such an extent that such transaction or arrangement causes
Consultant not to satisfy the "continuity of proprietary interest" requirement
under Section 368 of the Code with respect to such shares.
8. Termination.
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(a) Notwithstanding any provision of this Agreement to the contrary,
the engagement of Consultant hereunder after the Closing shall terminate on the
first to occur of the following dates (each of which, to the extent applicable,
the "Date of Termination"):
(i) the date that Parent and Consultant mutually agree to such
termination;
(ii) the date of Consultant's death or adjudicated incompetency;
(iii) the date on which Parent shall give Consultant notice of
termination on account of Disability (as defined below);
(iv) the date on which Parent shall give Consultant notice of
termination for Cause;
(v) the date on which Parent shall give Consultant notice of
termination without Cause; or
(vi) the expiration of the Term.
(b) Upon termination of Consultant's engagement after the Closing,
Consultant shall be entitled to the following:
(i) upon termination pursuant to clause (a)(i), (iv) or (vi)
above, Consultant or Consultant's heirs, as the case may be, shall be
entitled to receive (A) any unpaid consulting fees and expenses to the Date
of Termination and (B) all benefits payable pursuant to Section 5(a) and
(b) hereof when they shall become due and payable.
(ii) upon termination pursuant to clause (a) (ii), (iii) or (v)
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above, Consultant shall be entitled to receive (A) any unpaid consulting
fees and expenses to the Date of Termination, (B) all consulting fees and
expenses payable pursuant to Section 3 hereof when they shall become
payable hereunder and (C) all benefits payable pursuant to Section 5
hereof when they shall become payable hereunder.
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(c) For purposes of this Agreement, "Disability" shall mean an
illness, injury or other incapacitating condition as a result of which
Consultant is unable to perform the services required to be performed under this
Agreement for (i) ninety (90) consecutive days during the Term, or (ii) a period
or periods aggregating more than ninety (90) days in any twelve (12) consecutive
months. In any such event, Parent, in its sole discretion, may terminate this
Agreement by giving notice to Consultant of termination for Disability.
Consultant agrees to submit to such medical examinations as may be necessary to
determine whether a Disability exists, pursuant to such reasonable requests
made by Parent from time to time.
(d) For purposes of this Agreement, "Cause" shall mean the occurrence
of any of the following, as reasonably determined by Parent:
(i) the willful and continued failure, neglect or refusal by
Consultant to perform his duties hereunder (including, without limitation,
Consultant's inability to perform such duties as a result of alcohol or
drug abuse, chronic alcoholism or drug addiction) after receiving written
notice from Parent specifying in reasonable detail such failure, neglect or
refusal and after being given a reasonable time and opportunity to remedy
such alleged failure, neglect or refusal; ;
(ii) any willful, intentional or grossly negligent act by
Consultant having the effect of materially and demonstrably injuring the
interest, business or reputation of Parent, any of its parents,
subsidiaries or affiliates;
(iii) Consultant's conviction of any felony or a misdemeanor
involving moral turpitude (including entry of a nolo contendere plea);
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(iv) any misappropriation or embezzlement of the property of
Parent or its affiliates and subsidiaries (whether or not a misdemeanor or
felony); and
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(v) a breach of any one or more of the covenants of this
Agreement by Consultant after receiving written from Parent specifying in
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reasonable detail such breach and after being given a reasonable time and
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opportunity to remedy such breach provided, however, that Parent need not
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give such notice or provide any time for remedy for any breach of Section 7
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hereof;.
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9. Return of Company Property. Consultant agrees that following the
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termination of his engagement for any reason, he shall return all property of
Parent, its subsidiaries, affiliates and any divisions thereof which is then in
or thereafter comes into his possession, including, but not limited to,
documents, contracts, agreements, plans, photographs, books, notes,
electronically stored data and all copies of the foregoing as well as any
automobile or other materials or equipment supplied by Parent to Consultant.
10. Registration Rights. Immediately prior to the Effective Time,
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Parent shall enter into a Registration Rights Agreement with Consultant with
respect to all the shares of Parent Common Stock that he receives in the Merger
on substantially the terms set forth on Exhibit A hereto.
11. Fees and Expenses. Parent shall pay all legal fees and related
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expenses (including the costs of experts, evidence and counsel) incurred by
Consultant as a result of (i) Parent's wrongful termination of Consultant's
engagement hereunder as finally determined by a court of competent jurisdiction
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination), and (ii) any action by Consultant to enforce
Consultant's rights or benefits hereunder before a court of competent
jurisdiction in which Consultant shall obtain a final non-appealable judgment.
12. Arbitration. Any dispute or controversy arising under or in
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connection with this Agreement shall be settled by arbitration, conducted before
a panel of three arbitrators sitting in a location approved by Consultant and
Parent within fifty (50) miles from Little Rock, Arkansas in accordance with the
commercial rules of the American Arbitration Association then in effect.
Judgment may be entered on the award of the arbitrators in any court
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having jurisdiction. Each party shall bear its own fees and expenses (including
all legal fees and related expenses) associated with such arbitration. In the
event an arbitration proceeding is commenced hereunder by Parent or the
Consultant, Parent shall continue to pay to Consultant the compensation and
expenses provided under Section 3 and 5 until a full and final decision
providing otherwise is resolved by the arbitrator with respect to all matters in
dispute. Any determination by such panel of arbitrators shall be consistent
with the provisions of this Agreement as set forth herein.
13. Effectiveness; Termination; Survival.
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(a) Notwithstanding any provision hereof to the contrary, it is
the intention of the parties hereto that: (i) this Agreement shall become
effective at the Effective Time of Merger; and (ii) from and after the
termination of the Merger Agreement in accordance with its terms at any time
prior to the Effective Time of Merger, the engagement contemplated hereby shall
be deemed abandoned and this Agreement shall forthwith become void.
(b) Upon termination of Consultant's engagement for any reason
after the Effective Time of Merger, this Agreement shall terminate and Parent
shall have no further obligation to Consultant; provided that the provisions
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set forth in Sections 6, 7, 8(b) and 9 through 18 hereof shall remain in full
force and effect after the termination of Consultant's engagement,
notwithstanding the expiration or termination of this Agreement.
14. Consultant's Independence and Discretion.
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(a) Nothing herein contained shall be construed to constitute
the parties hereto as partners or as joint venturers, or either as agent of the
other, or as employer and employee. By virtue of the relationship described
herein Consultant's relationship to Parent during the term of this Agreement
shall only be that of an independent contractor and Consultant shall perform all
services pursuant to this Agreement as an independent contractor. Consultant
shall not provide any services under Parent's business name and shall not
present himself as an employee of Parent.
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(b) Subject only to such specific limitations as are contained
in this Agreement, the manner, means, details or methods by which Consultant
performs his obligations under this Agreement shall be solely within the
discretion of Consultant. Parent shall not have the authority to, nor shall it,
supervise, direct or control the manner, means, details or methods utilized by
Consul tant to perform his obligations under this Agreement and nothing in this
Agreement shall be construed to grant Parent any such authority.
15. Entire Agreement. This Agreement sets forth the entire agreement
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between the parties with respect to its subject matter and merges and supersedes
all prior discussions, agreements and understandings of every kind and nature
between any of them, and neither party shall be bound by any term or condition
other than as expressly set forth or provided for in this Agreement. This
Agreement may not be changed or modified except by an agreement in writing,
signed by the parties hereto.
16. Waiver. The failure of any party to this Agreement to enforce
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any of its terms, provisions or covenants shall not be construed as a waiver of
the same or of the right of such party to enforce the same. Waiver by any party
hereto of any breach or default by any other party of any term or provision of
this Agreement shall not operate as a waiver of any other breach or default.
17. Severability. In the event that any one or more of the
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provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of the
Agreement shall not in any way be affected or impaired thereby. Moreover, if any
one or more of the provisions contained in this Agreement shall be held to be
excessively broad as to duration, activity or subject, such provisions shall be
construed by limiting and reducing them so as to be enforceable to the maximum
extent allowed by applicable law.
18. Notices. Any notice given hereunder shall be in writing and
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shall be deemed to have been given when delivered by messenger or courier
service (against appropriate receipt), or mailed by registered or certified
mail (return receipt requested), addressed as follows:
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If to Parent: Tyson Foods, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Executive Vice President
and Chief Financial Officer
If to Consultant: Xxxxx X. Xxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.
19. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Arkansas without regard to conflicts
of law principles.
20. Descriptive Headings. The section headings contained herein are
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for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original for all purposes but which, together,
shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.
TYSON FOODS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chairman and CEO
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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