EXHIBIT 10.3
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT made as of the 24th day of August, 2006 (the
"Effective Date"), by and between Delta and Pine Land Company (the "Company")
and X.X. Xxxxxx (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as hereinafter
defined) exists and that the threat or the occurrence of a Change in
Control can result in significant distractions of its key management
personnel because of the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the
best interest of the Company and its stockholders to retain the services of
the Executive in the event of the possibility of a Change in Control and to
ensure his continued dedication and efforts in such event without undue
concern for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ
of the Company, in light of a possible Change in Control, the Company
desires to enter into this Agreement with the Executive to provide the
Executive with certain benefits.
NOW, THEREFORE, in consideration of the respective
agreements of the parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the
Effective Date and shall continue in effect until December 31, 2008;
provided, however, that on December 31, 2008 and on each anniversary
thereof, the term of this Agreement shall be automatically extended for one
year unless either the Company or the Executive shall have given six months
written notice to the other prior thereto that the term of this Agreement
shall not be so extended.
2. Definitions.
2.1. Accrued Compensation. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the "CIC Date" (as hereinafter
defined) but not paid as of the CIC Date including (a) base salary, (b)
reimbursement for reasonable and necessary expenses incurred by the
Executive on behalf of the Company during the period ending on the CIC
Date, (c) vacation and sick leave pay (to the extent provided by Company
policy or applicable law), and (d) bonuses and incentive compensation
(other than the "Pro Rata Bonus" (as hereinafter defined)).
2.2. Base Amount. For purposes of this Agreement, "Base
Amount" shall mean the Executive's annual base salary at the rate in
effect immediately prior to the Change in Control and shall include all
amounts of his base salary that are deferred under the qualified and
non-qualified employee benefit plans of the Company or any other
agreement or arrangement.
2.3. Bonus Amount. For purposes of this Agreement, "Bonus
Amount" shall mean the Executive's highest annual bonus earned (whether
paid or unpaid) during any one of the last five fiscal years that ended
prior to the CIC Date (or, in each case, such lesser period for which
annual bonuses were paid or payable to the Executive).
2.4. Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean the occurrence of any of the following:
(a) An acquisition (other than directly from the Company) by
any "Person" (as the term person is used for purposes of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of the then outstanding
common shares ("Shares") or the combined voting power of the Company's
then outstanding voting securities; provided, however, in determining
whether a Change in Control has occurred pursuant to this Section,
Shares or voting securities which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by (A) the Company or
(B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or its Subsidiaries, or
(iii) any Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(b) The individuals who on August 1, 2006 are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the members of the Board; provided, however, that
if the election, or nomination for election by the Company's common
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(1) A merger, consolidation or reorganization with or
into the Company or in which securities of the Company are issued,
unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean a
merger, consolidation or reorganization with or into the Company or
in which securities of the Company are issued where:
(A) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own directly or
indirectly immediately following such merger, consolidation or
reorganization, at least fifty percent (50%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the voting securities
immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of the
voting securities of the Surviving Corporation, and
(C) no Person other than (1) the Company, (2) any
Subsidiary, (3) any employee benefit plan (or any trust forming a
part thereof) that, immediately prior to such merger,
consolidation or reorganization, was maintained by the Company or
any Subsidiary, or (4) any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership
of twenty percent (20%) or more of the then outstanding voting
securities or Shares, has Beneficial Ownership of twenty percent
(20%) or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities or its common
stock.
(2) A complete liquidation or dissolution of the Company;
or
(3) The sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than a
transfer to a Subsidiary or the distribution to the Company's
stockholders of the stock of a Subsidiary or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding Shares or voting securities as a result of the acquisition
of Shares or voting securities by the Company which, by reducing the
number of Shares or voting securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Persons,
provided that if a Change in Control would occur (but for the operation
of this sentence) as a result of the acquisition of Shares or voting
securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any
additional Shares or voting securities which increases the percentage of
the then outstanding Shares or voting securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.
2.5. CIC Date. For purposes of this Agreement, "CIC Date"
shall mean the date on which a Change in Control is consummated.
2.6.
2.7. Company. For purposes of this Agreement, the "Company"
shall include the Company's "Successors and Assigns" (as hereinafter
defined).
2.8. Confidential Information. For purposes of this Agreement
means (a) all technical and business information of the Company, whether
patentable or not, which is of a confidential, trade secret and/or
proprietary character and that is either developed by the Executive
(alone or with others) or to which the Executive has had access during
his employment, (b) all confidential evaluations, and (c) the
confidential use or non-use by the Company of technical or business
information in the public domain.
2.9. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata
Bonus" shall mean an amount equal to the Bonus Amount multiplied by a
fraction the numerator of which is the number of days in the Company's
fiscal year in which Executive's employment terminates through the CIC
Date and the denominator of which is 365.
2.10. Successors and Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the
Company whether by operation of law or otherwise, and any affiliate of
such Successors and Assigns.
3. Change In Control.
3.1. If, during the term of this Agreement, a Change in
Control occurs and (i) the Executive is employed on the CIC Date or (ii)
the Executive's employment has been terminated prior to a Change in
Control but the Executive reasonably demonstrates that the termination
(A) was at the request of a third party, or (B) otherwise arose in
connection with, or in anticipation of, a Change in Control which
actually occurs, the Executive shall be entitled to the following
compensation and benefits:
(a) the Company shall pay the Executive all Accrued
Compensation and a Pro-Rata Bonus.
(b) the Company shall pay the Executive, in lieu of any
further compensation for periods subsequent to the CIC Date, in a
single payment an amount in cash equal to three times the sum of (1)
the Base Amount and (2) the Bonus Amount.
(c) the Company shall pay all premiums on behalf of and at
no additional cost to the Executive, for the benefit of the Executive
and his spouse and any dependents, for 36 months from the CIC Date
(regardless of whether the employment of the Executive is terminated
for any reason), on all employee benefit programs and arrangements,
including but not limited to health insurance, including employee
medical plan benefits, group life insurance, individual life insurance
coverage, accidental death and dismemberment coverage, long term
disability coverage, and other fringe benefits or benefit plans
generally afforded other executive officers of the Company. If any
such coverage cannot be maintained because of requirements of the
insurance or other companies providing such benefits, the Company
shall provide and pay for alternative coverage providing essentially
identical benefits at no additional cost to the Executive. In the
event that the Executive's employment is terminated for any reason
during the above period, the remaining portion of such period is to be
in addition to that period of time that the Executive may elect COBRA
coverage under such applicable benefit plans. In this regard, it is
the specific agreement of the parties that, if the Executive's
employment has terminated, those benefits which are typically
available under COBRA coverage, at the expense of the Executive, will
be available to the Executive at his expense for a period of 18 months
following the expiration of the 36 months listed above, even though
COBRA coverage might otherwise be unavailable as provided by law.
(d) for a period of at least 36 months following the CIC
Date, the Company shall continue to make available, at its expense, a
company vehicle of the make and model to which the Executive is
entitled in accordance with the vehicle policy in effect as of the
date of the Change in Control.
(e) The Company shall pay the Executive a lump sum payment
in an amount equal to difference between the present values of (1) the
Executive's retirement benefit under the Company Retirement Plan (the
"Retirement Plan"), determined on the date of termination as if the
Executive were credited with an additional three Years of Credited
Service (as such term is defined in the Retirement Plan) and annual
compensation continued at the same rate as in effect on the CIC Date
under the Retirement Plan and (2) the Executive's retirement benefit
under the Retirement Plan, determined on the date of termination based
on the Executive's actual Years of Credited Service under the
Retirement Plan.
(f) The Executive will likely be required to employ a
reputable national accounting firm to assist and advise him with
respect to his finances following a Change in Control. To compensate
the Executive for the costs which he will likely incur, the Company
will pay to the Executive at the CIC Date an amount equal to 30% of
the sum of the Base Amount and the Bonus Amount.
(g) the Company shall continue to provide the Executive with
a reasonable secretarial assistance, a voice mailbox, a laptop
computer, an email account and a mail drop service for 36 months
following the CIC Date, so long as the Executive is not employed by
any entity other than the Company and its affiliates.
3.2. The amounts provided for in Sections 3.1(a), (b),(e), and
(f) shall be paid in a single lump sum cash payment within five days
after the CIC Date.
3.3. The Executive's entitlement to any other compensation or
benefits or any indemnification shall be determined in accordance with
the Company's employee benefit plans and other applicable programs,
policies and practices or any indemnification agreement then in effect.
4. Treatment of Equity Awards. Nothing in this Agreement shall
amend or modify the terms of any equity compensation award or grant
document that the Executive holds or to which the Executive is a party.
5. Income and Excise Tax Limitation.
5.1. Income Tax Gross-Up Payment. In the event that any
payments made to the Executive pursuant to Section 3.1(f) are deemed to
be taxable to the Executive for federal or state income tax purposes,
the Company agrees to tax protect such payments by grossing up said
taxable amount, using the highest marginal federal and state income tax
rates in effect (including FICA and Medicare taxes) for that year and
paying to the Executive such additional amounts. Said payment amounts
shall be calculated quarterly (on a calendar-year basis) and paid to the
Executive by the fifteenth day of the second month following the close
of each quarter.
5.2. Excise Tax Gross-Up Payment. (a) In the event it shall be
determined that any payment (other than the payment provided for in this
Section) or distribution of any type to or for the benefit of the
Executive, by the Company, any of its affiliates, any Person who
acquires ownership or effective control of the Company or ownership of a
substantial portion of the Company's assets (within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder) or any affiliate of such
Person, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise (the "Total Payments"),
would be subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
collectively referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including any income tax, employment tax or Excise Tax, imposed
upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal, state and local
income taxes and employment taxes at the highest marginal rate of
federal, state and local income taxation and employment taxation in the
calendar year in which the Gross-Up Payment is to be made and/or the
calendar year in which the CIC Date occurs, as applicable, net of the
maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes.
(b) Determination By Accountant. All mathematical
determinations, and determinations as to whether any of the Total
Payments are "parachute payments" (within the meaning of Section 280G
of the Code), that are required to be made under this Subsection,
including determinations as to whether a Gross-Up Payment is required,
the amount of such Gross-Up Payment and amounts relevant to the last
sentence of this Subsection shall be made by an independent accounting
firm selected by the Executive from among the four largest accounting
firms in the United States (the "Accounting Firm"), which shall
provide its determination (the "Determination"), together with
detailed supporting calculations regarding the amount of any Gross-Up
Payment and any other relevant matter, both to the Company and the
Executive by no later than ten days following the CIC Date, if
applicable, or such earlier time as is requested by the Company or the
Executive. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive and the
Company with an opinion reasonably acceptable to the Executive and the
Company that no Excise Tax is payable (including the reasons therefor)
and that he has substantial authority not to report any Excise Tax on
his federal income tax return. If a Gross-Up Payment is determined to
be payable, it shall be paid to the Executive within ten (10) days
after the Determination (and all accompanying calculations and other
material supporting the Determination) is delivered to the Company or
the Executive. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive, absent manifest error. As
a result of uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the
Company should have been made ("Underpayment"), or that Gross-Up
Payments will have been made by the Company which should not have been
made ("Overpayments"). In either such event, the Accounting Firm shall
determine the amount of the Underpayment or Overpayment that has
occurred. In the case of an Underpayment, the amount of such
Underpayment (together with any interest and penalties payable by the
Executive as a result of such Underpayment) shall be promptly paid by
the Company to or for the benefit of the Executive. In the case of an
Overpayment, the Executive shall, at the direction and expense of the
Company, take such steps as are reasonably necessary (including, if
reasonable, the filing of returns and claims for refund), follow
reasonable instructions from, and procedures established by, the
Company, and otherwise reasonably cooperate with the Company to
correct such Overpayment, provided, however, that (i) Executive shall
not in any event be obligated to return to the Company an amount
greater than the net after-tax portion of the Overpayment that he has
retained or has recovered as a refund from the applicable taxing
authorities and (ii) this provision shall be interpreted in a manner
consistent with the intent to make the Executive whole, on an
after-tax basis, from the application of the Excise Tax, it being
understood that the correction of an Overpayment may result in the
Executive repaying to the Company an amount which is less than the
Overpayment. The fees and expenses of the Accounting Firm shall be
paid by the Company.
6. Non-Competition Covenant.
6.1. The Company desires the Executive to agree not to compete
with the Company in the event of the Executive's termination of
employment following a Change in Control. The Company is not willing to
enter into this Agreement without such a covenant. As additional
consideration for the agreement of the Company to make payments to or
otherwise compensate the Executive under this Agreement, the Company has
required the Executive to give a Non-Competition Covenant. The Company
may not waive the non-competition obligations in this Section and be
relieved of any of its other obligations under this Agreement.
6.2. In the event of a Change in Control, for the
eighteen-month period following the termination of the Executive's
employment with the Company for any reason, the Executive shall not,
without the prior written consent of the Board, which consent may be
withheld at the sole, absolute and uncontrolled discretion of such
Board, engage or participate in, assist or have an interest in, whether
as an officer, director, partner, owner, employee or otherwise, the
operation, management or conduct of any business or enterprise that
engages in the cotton seed breeding, production and marketing process in
the same geographical area with any line of business in which the
Company is now engaged.
6.3. Nothing in this Section shall prohibit the Executive from
acquiring or holding, for investment purposes only, securities or
ownership interest of any entity which may compete directly or
indirectly with the Company.
6.4. Nothing in this Section shall prohibit the Executive from
seeking or securing employment with a corporation which has a subsidiary
or affiliate whose business activities include cotton seed breeding,
production and marketing so long as the Executive's job duties and
responsibilities do not require or allow the Executive to directly
engage in any activities which would be in violation of this Section,
and so long as he does not violate any of his confidentiality
obligations to the Company.
6.5. In the event of a breach of this Agreement by the
Executive, the Company may seek injunctive relief to prohibit the
Executive from engaging in prohibited competition and/or the Company may
initiate legal proceedings to collect actual damages to the Company
resulting from such breach. A breach by the Executive shall not allow
the Company to terminate its obligations to the Executive under the
other provisions of this Agreement.
7. Confidentiality.
7.1. The Executive shall use his best efforts and diligence
both during and after employment by the Company to protect the
confidential, trade secret and/or proprietary character of all
Confidential Information. The Executive shall not, directly or
indirectly, use (for the Executive or another) or disclose any
Confidential Information, for so long as it shall remain proprietary or
protectible as confidential or trade secret information, except as may
be necessary for the performance of the Executive's duties with the
Company. The Executive shall promptly deliver to the Company, at the
termination of the Executive's employment, or at any other time at the
Company's request, without retaining any copies, all documents and other
material in the Executive's possession relating, directly or indirectly,
to any Confidential Information.
7.2. Each of the Executive's obligations in this Section 7
shall also apply to the confidential, trade secret and proprietary
information learned or acquired by the Executive during his employment
from others with whom the Company has a business relationship. The
Executive understands that he is not to disclose to the Company, or use
for its benefit, any of the confidential, trade secret or proprietary
information of others, including any of the Executive's former
employers.
7.3. In no event shall an asserted violation of the provisions
of this Section 7 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
8. Successors; Binding Agreement.
8.1. This Agreement shall be binding upon and shall inure to
the benefit of the Company, its Successors and Assigns, and the Company
shall require any Successors and Assigns to expressly assume 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 or
assignment had taken place.
8.2. Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal personal representative.
9. Fees and Expenses. The Company shall pay all legal fees and
related expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of the Executive
seeking to obtain or enforce any right or benefit provided by this
Agreement (including, but not limited to, any such fees and expenses
incurred in connection with (i) the dispute and (ii) the Gross-Up Payment
whether as a result of any applicable government taxing authority
proceeding, audit or otherwise) or by any other plan or arrangement
maintained by the Company under which the Executive is or may be entitled
to receive benefits).
10. Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent
by certified mail, return receipt requested, postage prepaid, by overnight
courier or by facsimile, addressed to the respective addresses and
facsimile numbers last given by each party to the other, provided that all
notices to the Company shall be directed to the attention of the Board with
a copy to the Secretary of the Company. All notices and communications
shall be deemed to have been received on the date of delivery thereof or on
the third business day after the mailing thereof, except that notice of
change of address shall be effective only upon receipt.
11. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company
(except for any severance or termination policies, plans, programs or
practices) and for which the Executive may qualify, nor shall anything
herein limit or reduce such rights as the Executive may have under any
other agreements with the Company (except for any severance or termination
agreement). Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the Company
shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
12. No Guaranteed Employment. The Executive and the Company
acknowledge that, except as may otherwise be provided under any other
written agreement between the Executive and the Company, the employment of
the Executive by the Company is "at will" and may be terminated by either
the Executive or the Company at any time.
13. 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.
14. Mutual Non-Disparagement. The Executive agrees that it will
not make or publish any statement critical of the Company, its affiliates
and their respective executive officers and directors, or in any way
adversely affecting or otherwise maligning the business or reputation of
any member of the Company, its affiliates and subsidiaries and their
respective officers, directors and employees. The Company, its affiliates
and subsidiaries agree and the Company shall use its best efforts to cause
their respective executive officers and directors to agree, that they will
not make or publish any statement critical of the Executive, or in any way
adversely affecting or otherwise maligning the Executive's reputation.
15. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreement or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without giving effect to the conflict of laws principles thereof. Any
action brought by any party to this Agreement shall be brought and
maintained in a court of competent jurisdiction in the State of Delaware.
17. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof.
18. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements,
if any, understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Executive has executed
this Agreement as of the day and year first above written.
DELTA AND PINE LAND COMPANY
ATTEST: By: /s/ X.X. Xxxxxxxxxx
---------------------- -------------------------------
Name: X.X. Xxxxxxxxxx
Title: President and Chief
Executive Officer
By: /s/ X.X. Xxxxxx
-----------------------------
X.X. Xxxxxx
