EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT"), dated as of May 10, 2005, by
and between the Premium Standard Farms, Inc., a Delaware corporation (the
"EMPLOYER"), and XXXX X. XXXXX (the "EXECUTIVE").
WITNESSETH:
In consideration of the promises, the agreements and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Employer and the Executive
hereby agree as follows:
1. Agreement of Employment. The Executive's future employment with the
Employer shall be subject to the terms and conditions of this Agreement. Various
capitalized terms are defined either where they first appear in this Agreement
or in Section 9.
2. Term, Position and Responsibilities.
(a) Term of Employment. Unless the Executive's employment shall
terminate sooner pursuant to Section 7, the Employer shall employ the
Executive for a term of two years commencing on May 10, 2005 (the
"EFFECTIVE DATE") and ending on May 9, 2007 (such period to be known as
the "TERM"). The respective rights and obligations of the parties
hereunder shall survive the end of the Term to the extent that any
obligation of the Employer under this Agreement remains unpaid (or
otherwise not fully discharged) as of such time, and to the extent
provided in Section 8.
(b) Position and Responsibilities. During the Term, the Executive
shall serve as Chief Executive Officer of the Employer reporting to its
Board of Directors. The Executive shall devote substantially all of his
skill, knowledge and working time to the conscientious performance of such
duties, except for reasonable vacation time (as described in Section 6
below), absence for sickness or similar Disability and authorized leaves
of absence.
(c) Place of Employment. During the Term, the Executive's primary
place of employment shall be at the Employer's headquarters located in
Kansas City, Missouri.
(d) Extension or Replacement Agreement. At least 90 days prior to
the end of the Term, either party hereto may initiate discussions with the
other party regarding the possibility of entering into an extension of
this Agreement or a new replacement employment agreement. Neither party
shall have any obligations or liability under this Section 2(d). If the
Term expires and this Agreement is not extended in writing or a new
replacement employment agreement is not entered into by the parties, and
if Executive remains employed with the Employer, Executive shall
thereafter be deemed an "employee at will."
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3. Base Salary. As partial compensation for the services to be
performed by the Executive hereunder, the Employer shall pay the Executive an
annualized base salary of at least $395,000 during each year of the Term. The
Compensation Committee of the Employer's Board of Directors (the "COMMITTEE")
shall review Executive's base salary at least annually during the Term and, in
its discretion, may increase (but not decrease) such base salary from time to
time based upon the performance of the Executive, the financial condition of the
Employer, prevailing industry salary scales and such other factors as it may
consider relevant. (The annualized base salary payable to the Executive under
this Section 3, as the same may be increased from time to time and without
regard to any reduction therefrom in accordance with the next sentence, shall
hereinafter be referred to as the "BASE SALARY".) The Base Salary actually
payable under this Section 3 shall be reduced to the extent that the Executive
elects to defer any portion of such Base Salary under the terms of any section
401(k) savings plan or nonqualified deferred compensation plan maintained or
established by the Employer and shall be reduced for applicable statutory
reductions and withholding. The Employer shall pay the Executive the Base Salary
in semi-monthly installments, or in such other installments as may be mutually
agreed upon by the Employer and the Executive.
4. Initial Restricted Stock Grant and Incentive Compensation.
(a) Initial Restricted Stock Grant. Effective on the Acquisition
Date, the Employer shall issue in the name of the Executive a number of
matching shares of Company Stock having a value of $1,000,000 valued at
the IPO Price (the "MATCHING GRANTS"). Matching Grants shall be awarded
pursuant to the 2005 Plan as restricted stock awards. Any shares of
Company Stock issued under this Section 4(a) shall be subject to
forfeiture for a period of five years from the date of grant thereof and
during such restriction period shall be nontransferable and shall be held
by the Employer, as follows:
(i) If the Executive's employment with Employer shall be
terminated (A) by the Employer for Cause, or (B) by the Executive
without Good Reason (I) on or before the third anniversary of the
Acquisition Date, all Matching Grants shall be forfeited, or (II)
after the third anniversary of the Acquisition Date but on or before
the fourth anniversary of the Acquisition Date, Matching Grants
originally valued in excess of $750,000 shall be forfeited, or (III)
after the fourth anniversary of the Acquisition Date but on or
before the fifth anniversary of the Acquisition Date, Matching
Grants originally valued in excess of $875,000 shall be forfeited;
and
(ii) If Executive has sold any Prior Option Shares or LTIP
Restricted Shares, other than a number of such shares as would
reasonably approximate the amount of federal, state and local income
tax liability to which the Executive is or would be subjected as a
result of his cashless exercise of all of the Prior Stock Option and
the vesting of the LTIP Restricted Shares, then, if Executive
voluntarily shall sell or otherwise dispose of shares of Company
Stock and as a result of such sale or disposition the original value
of Matching Grants exceeds Current Stock Value immediately after the
sale or disposition, Matching Grants originally valued at an amount
equal to such excess shall be forfeited.
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(iii) On the third anniversary of the Acquisition Date, Matching Grants
which have not been forfeited, not to exceed Matching Grants originally valued
at $750,000, shall become fully vested.
(iv) On the fourth anniversary of the Acquisition Date, Matching Grants
originally valued in excess of $750,000 but not more than $875,000, which have
not been forfeited, shall become fully vested.
(v) On the fifth anniversary of the Acquisition Date, all remaining
Matching Grants which have not been forfeited, shall become fully vested.
(vi) For purposes of this Section 4(a), the following terms shall have
the following meanings:
"ACQUISITION DATE" means the closing date for the IPO.
"COMPANY STOCK" means the common stock, par value $0.01 per share,
of the Employer.
"CURRENT STOCK VALUE" means the aggregate value (determined as the
cost of such shares to the Executive, or, in the case of the Prior Stock Options
and LTIP Restricted Shares, determined as the IPO Price) of the shares of
Company Stock acquired by the Executive during the Matching Period and held by
the Executive on the applicable date, which shall not include Disqualified
Shares.
"DISQUALIFIED SHARES" means shares acquired under this Section 4(a)
and any stock option or other equity incentive compensation award made to the
Executive by the Employer, other than any Prior Option Shares and LTIP
Restricted Shares.
"IPO" means an initial public offering of shares of Company Stock
under the Securities Act of 1933, as amended.
"IPO PRICE" means the price to public per share paid by purchasers
of the Company Stock in the IPO.
"LTIP RESTRICTED SHARES" means restricted shares awarded to
Executive in connection with the Employer's Long Term Incentive Plan for periods
commencing April 1, 2003 and April 1, 2004.
"MATCHING PERIOD" means the one year period commencing after the
later of (1) the Executive's commencement of service under this Agreement and
(2) the Acquisition Date.
"PRIOR OPTION SHARES" means the shares of Company Stock issued upon
exercise of Prior Stock Options.
"PRIOR STOCK OPTIONS" means stock options awarded to the Executive
by the Employer prior to the date hereof pursuant to the 1999 Equity Incentive
Plan.
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"2005 PLAN" means the Company's 2005 Long Term Incentive Plan.
(vii) The restrictions imposed by clauses (i) and (ii) above shall
lapse and shall no longer apply in the event of the Executive's death,
Disability or termination of employment under Section 7(c) of this
Agreement.
(b) Annual Incentive Compensation. The Employer shall provide the
Executive with an annual bonus target opportunity (the "TARGET BONUS") for
Employer's fiscal years 2006 and 2007 equal to at least 100% of the amount of
the Executive's Base Salary payable during such period. For each applicable
fiscal year, Executive's target performance Goals ("TARGET ANNUAL GOALS"), and
threshold performance goals ("THRESHOLD ANNUAL GOALS") shall be determined by
the Committee on an annual basis after consulting with the Executive. If the
Executive achieves his Target Annual Goals, the Target Bonus shall be payable to
the Executive. The maximum annual bonus shall not exceed 300% of the Target
Bonus shall be payable to the Executive. If the Executive achieves his Threshold
Annual Goals, an annual bonus equal to 50% of the Target Bonus shall be payable
to the Executive. If the Executive achieves a level of performance which falls
between the Threshold Annual Goals and the Target Annual Goals or between the
Target Annual Goals and the level which would result in the maximum annual
bonus, lineal interpolation shall be used to determine the amount of the annual
bonus payable to the Executive for the year. Any annual bonus payable to the
Executive shall be paid in a single sum, cash payment within seventy-five (75)
days after the close of the applicable fiscal year. Except as otherwise provided
in Section 7, if Executive is not employed by the Employer on the date of
payment of the annual bonus, such annual bonus shall be forfeited.
(c) Long-Term Incentive Compensation. The Employer shall provide the
Executive with a long-term incentive target for each year of the Term equal to
at least 100% of the amount of the Executive's Base Salary payable during such
period. During the Term, long-term incentive compensation will be delivered
through a combination consisting of sixty percent (60%) stock options and forty
percent (40%) restricted shares of Company Stock.
5. Benefits.
(a) Welfare Benefits. During the Term, the Employer shall arrange for
the provision to the Executive of medical, dental, prescription drug, life
insurance and long-term disability benefits. The benefits so required shall be
comparable to those benefits presently available to the Executive at the
Employer, as the same may be amended and in effect from time to time.
(b) Retirement Benefits. During the Term, the Executive shall be
entitled to participate in a tax-qualified "section 401(k)" retirement plan as
made generally available to employees of the Employer. In addition, the Employer
shall establish such other tax-qualified or nonqualified retirement benefit and
deferred compensation programs that are intended to provide, subject to any
restrictions imposed by applicable law, regulations
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and other authority, the Executive with retirement benefits that are reasonably
comparable to the retirement benefit programs presently available to the
Executive.
6. Perquisites and Expenses.
(a) General. During the Term, the Executive shall be entitled to
participate in such perquisites as are generally available from time to time to
senior executive officers of the Employer, on the terms and conditions then
prevailing under such perquisites.
(b) Vacation. During the Term, the Executive shall be entitled to five
(5) weeks of paid vacation per year, without carry-over accumulation.
7. Termination of Employment.
(a) Due to Death or Disability. Upon the Executive's death or
Disability, all obligations of the Employer and the Executive under Sections 1
through 6 of this Agreement shall immediately cease; provided, however, the
Employer shall pay the Executive, and the Executive shall be entitled to
receive, the following:
(i) any accrued, unpaid portion of Base Salary through the Date of
Termination;
(ii) in lieu of any annual incentive compensation for the period in
which Executive's applicable Date of Termination occurs, but subject to
the terms of any annual incentive compensation plan or program which would
provide for greater compensation upon the Date of Termination, the
Executive shall be paid the amount produced by multiplying:
(A) the Executive's Target Bonus for the year in which the
Executive's Date of Termination occurs, by
(B) a fraction, the numerator of which is the number of days
the Executive was employed in the year through the Date of
Termination, and the denominator of which is the total number of
days in the year relevant to the annual incentive compensation plan;
and
(iii) all amounts owing and accrued at the Date of Termination,
after taking into account such death or Disability, under any long-term
incentive compensation and deferred compensation plans in which the
Executive theretofore participated, under the terms and conditions of such
plans.
Amounts which are immediately payable will be paid as promptly as reasonably
practicable after the Executive's Date of Termination.
(b) Termination by the Employer for Cause and Voluntary Termination by
the Executive. Upon the Executive's termination of employment during the Term
(i) by the Employer for Cause or (ii) by the Executive without Good Reason
(other than due to the Executive's death or Disability), all obligations of the
Employer under Sections 1 through
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6 of this Agreement shall immediately cease; provided, however, the Employer
shall pay the Executive, and the Executive shall be entitled to receive, any
accrued, unpaid portion of Base Salary through the Date of Termination. In
addition, the Executive shall be entitled to any vested, non-forfeitable amounts
owing and accrued at the Date of Termination under any long-term incentive
compensation and deferred compensation plans in which the Executive theretofore
participated, under the terms and conditions of such plans. Amounts which are
immediately payable will be paid as promptly as reasonably practicable after the
Executive's Date of Termination.
(c) Termination by the Employer without Cause and Termination by the
Executive for Good Reason. Upon the Executive's termination of employment during
the Term either (1) by the Employer for any reason other than death, Disability,
or for Cause, or (2) by the Executive for Good Reason, all obligations of the
Employer and the Executive under Sections 1 through 6 of this Agreement shall
immediately cease; provided, however, the Employer shall provide to the
Executive and the Executive shall be entitled to receive:
(i) payment of the aggregate of the following amounts:
(A) the Executive's accrued and unpaid Base Salary through
the Date of Termination to the extent not theretofore paid; and
(B) in lieu of any annual incentive compensation for the
period in which Executive's applicable Date of Termination occurs,
but subject to the terms of any annual incentive compensation plan
or program which would provide for greater compensation upon the
Date of Termination, the Executive shall be paid the amount produced
by multiplying:
(I) the Executive's Target Bonus for the year in which
the Executive's Date of Termination occurs, by
(II) a fraction, the numerator of which is the number
of days the Executive was employed in the year through the
Date of Termination, and the denominator of which is the total
number of days in the year relevant to the annual incentive
compensation plan; and
(C) two times the sum of the Executive's Base Salary plus
Target Bonus, as in effect on such Date of Termination; and
(D) all stock options and restricted stock grants made under
any long-term incentive and deferred compensation plans, including
those provided pursuant to Section 4(a) and 4(c) shall become fully
vested at the Date of Termination; and Executive shall be entitled
to all such vested, amounts owing and accrued at the Date of
Termination; and
(ii) for a period of two years commencing on the Date of
Termination, continuation of medical, dental, prescription drug, and
vision benefits for the
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Executive and the Executive's family (if dependent coverage has been
provided) at least equal to those which would have been provided to them
in accordance with the plans and programs described in Section 5 of this
Agreement if the Executive's employment had not been terminated. The
Executive's coverage for the remainder of such two-year period shall not
be included in the calculation of the period of coverage to be provided
pursuant to any statutory continuation of benefits obligation (such as
COBRA). The Executive's right to statutory continuation coverage shall
commence on the first day following the end of such two-year period. If
such welfare benefit plans and programs do not allow the Executive's
continued participation, a cash payment shall be made to the Executive
equal to the value of the additional benefits the Executive would have
received under such benefit programs in which the Executive was
participating immediately prior to the Date of Termination. With respect
to any payment under the immediately preceding sentence, the value of any
insurance-provided benefits shall be based on the premium cost to the
Executive, which shall not exceed the highest risk premium charged by a
carrier having an investment grade or better credit rating.
Amounts which are immediately payable will be paid as promptly as reasonably
practicable after the Executive's Date of Termination. The amount described in
Section 7(c)(i)(C) above will be paid to the Executive over twenty-four months.
(d) Notice of Termination. Any purported termination of the Executive's
employment (other than by reason of death) shall be communicated by written
"Notice of Termination" from one party hereto to the other party hereto. For
purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a notice that
indicates the specific termination provision in this Agreement relied upon. Any
Notice of Termination shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Failure to provide the Notice of
Termination as provided in this Section, will relieve the other party of its
post-termination obligations under this Agreement, except Executive will
continue to be bound by obligations agreed to in Section 8(c) below.
(e) Notices of Cause and Good Reason. A termination for Cause shall be
permitted hereunder only if an Employer provides the Notice of Termination not
later than six (6) months after the date the Employer first knew or should have
known of the act or omission to act giving rise to the termination for Cause. A
termination for Good Reason shall be permitted hereunder only if the Executive
provides the Notice of Termination not later than six (6) months after the date
the Executive first knew or should have known of the act or omission to act
giving rise to the termination for Good Reason. In either case, the six
(6)-month period shall be tolled during any permitted period of correction or
administrative procedure.
(f) Discharge of Obligations. The payments and benefits under Section 7
shall fully and totally satisfy the Executive's entitlement, and shall fully
discharge the Employer, in respect of all statutory compensation and benefits
and any notice obligation under applicable law.
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(g) Termination by Either Party After the Term Hereof.
Notwithstanding any of the provisions of Section 8 hereof, if Executive's
employment is terminated for any reason after the expiration of the Term
hereof and no other written employment agreement between the Executive and
the Employer is in effect, Executive will be free of all his obligations
under second sentences of Section 8(c), (d) and (e) hereof.
8. Non-Disclosure, Non-Competition and Non-Solicitation Covenants. Set
out in this Section are certain covenants regarding non-disclosure,
non-competition and non-solicitation which the Executive acknowledges, accepts
and agrees to by entering into this Agreement.
(a) Acknowledgements. The Executive acknowledges that, as Chief
Executive Officer of the Employer, the Executive frequently is or will be
exposed to certain "Trade Secrets" and "Confidential Information" (as
those terms are defined in Section 8(b). Accordingly, the Executive
acknowledges and agrees that it is reasonable for the Employer to require
the Executive to abide by the covenants set forth in this Section 8 during
and after Executive's term of employment.
(b) Definitions. For purposes of this Section 8, the following
terms shall have the following meanings:
(i) "COMPETITIVE POSITION" means any employment, consulting,
partnership, advisory, directorship, agency, promotional or
independent contractor arrangement between the Executive and any
Competitor whereby the Executive is required to perform executive
level services substantially similar to those that the Executive
performs for the Employer.
(ii) "COMPETITOR" refers to any person or entity engaged,
wholly or partly, in the meat processing or meat production
industry.
(iii) "CONFIDENTIAL INFORMATION" means the proprietary and
confidential data or information of the Employer, other than "Trade
Secrets" (as defined below), which is of tangible or intangible
value to the Employer and is not public information or is not
generally known or available to the Employer's Competitors.
(iv) "TRADE SECRETS" means information of the Employer,
including, but not limited to, technical or non-technical data,
compilations, programs, devices, methods, techniques, financial
data, financial plans, product plans or lists of actual or potential
customers or suppliers, which (a) 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 (b) is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy.
(c) Non-disclosure, Ownership of Proprietary Property.
(i) The Executive hereby covenants and agrees that (A) with
regard to information constituting a Trade Secret, at all times
during the Executive's
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employment with the Employer and all times thereafter during which such
information continues to constitute a Trade Secret; and (B) with regard to
any Confidential Information, at all times during the Term and while the
Executive is entitled to future payments under Section 7, the Executive
shall regard and treat all information constituting a Trade Secret or
Confidential Information as strictly confidential and wholly owned by the
Employer and will not, for any reason in any fashion, either directly or
indirectly, use, sell, lend, lease, distribute, license, give, transfer,
assign, show, disclose, disseminate, reproduce, copy, appropriate or
otherwise communicate any such information to any party for any purpose
other than strictly in accordance with the express terms of this Agreement
and other than as may be required by law.
(ii) In addition to complying with the provisions of Section
8(c)(i) and except as provided in Section 7(g), the Executive shall
exercise the Executive's best efforts to assist the Employer, to the
extent the Employer deems reasonably necessary, in the procurement of any
protection of its rights to or in any of the Trade Secrets or Confidential
Information.
(iii) Immediately upon the Executive's Date of Termination with the
Employer, or at any point prior to or after that time upon the specific
request of the Employer, the Executive shall return to the Employer all
written or descriptive materials of any kind in the Executive's possession
or to which the Executive has access that constitute or contain any
Confidential Information or Trade Secrets.
(d) Non-Competition. The Executive agrees that, while employed with the
Employer, the Executive will not, either directly or indirectly, alone or in
conjunction with any other party, take any action in furtherance of or in
conjunction with a Competitive Position with a Competitor of the Employer.
Except as provided in Section 7(g), the Executive agrees that for a period of
two years after his Date of Termination, the Executive will not, either directly
or indirectly, alone or in conjunction with any other party, take any action in
furtherance of or in conjunction with a Competitive Position with a Competitor.
(e) Non-Solicitation of Customers. The Executive agrees that, while
employed with the Employer, the Executive will not, either directly or
indirectly, alone or in conjunction with any other party, solicit, divert or
appropriate, or attempt to solicit, divert or appropriate, any customer or
actively sought prospective customer of the Employer for on behalf of himself or
any Competitor. Except as provided in Section 7(g), the Executive agrees that
for a period of two (2) years after his Date of Termination, the Executive will
not, either directly or indirectly, alone or in conjunction with any other
party, for or on behalf of himself or a Competitor, solicit, divert or
appropriate, or attempt to solicit, divert or appropriate any customer or
actively sought prospective customer of the Employer with whom the Executive had
substantial contact during a period of time up to, but no longer than two (2)
years prior to the Executive's Date of Termination.
(f) Non-Solicitation of Personnel. The Executive agrees that, while
employed with the Employer, the Executive will not, either directly or
indirectly, alone or in
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conjunction with any other party, solicit or attempt to solicit any
employee or other personnel of the Employer to terminate, alter or lessen
that party's affiliation with the Employer or to violate the terms of any
agreement or understanding between such employee or other person and the
Employer. The Executive agrees that, for a period of two years after the
Executive's Date of Termination, the Executive will not, either directly
or indirectly, alone or in conjunction with any other party, solicit or
attempt to solicit any "material" or "key" (as those terms are defined in
the next sentence) employee or other personnel of the Employer to
terminate, alter or lessen that party's affiliation with the Employer or
to violate the terms of any agreement or understanding between such
employee or other person and the Employer. For purposes of the preceding
sentence, "material" or "key" employees or other personnel of the Employer
are those who have access to the Employer's Trade Secrets and Confidential
Information.
(g) Remedies.
(i) In the event of a violation by Executive of any of the
covenants in Section 8(d) or (e) above, Executive agrees that
Employer may immediately cease payments to Employee under Section
7(c)(i)(C), and Employer will have no further obligation to make
payment under that Section after the violation by Executive.
(ii) Equitable Remedies. The Executive agrees that damages at
law for the Executive's violation of any of the covenants in this
Section 8 would not be an adequate or proper remedy and that should
the Executive violate or threaten to violate any of the provisions
of such covenants, an Employer or its successors or assigns shall be
entitled to obtain a temporary or permanent injunction against the
Executive in any court having jurisdiction prohibiting any further
violation of any such covenants.
(h) Ability to Earn Livelihood. Executive expressly agrees and
acknowledges that the covenants and restrictions contained in Section 8 do
not preclude Executive from earning a livelihood, nor do they unreasonably
impose limitations on Executive's ability to earn a living. In addition,
Executive agrees and acknowledges that the potential harm to the Employer
of its non-enforcement outweighs any harm to the Executive of its
enforcement by injunction or otherwise.
(i) Enforcement. If any court of competent jurisdiction or other
trier of fact deem the term or scope of Section 8 unenforceable, the
remainder of Section 8 of the Agreement shall nevertheless stand and shall
remain in full force and effect.
9. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings (unless expressly indicated to the contrary)
and the term shall be capitalized when the meaning is intended:
(a) "BOARD" means the Board of Directors of the Employer.
(b) "CAUSE" means, as to the Executive, any of the following:
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(i) the Executive's conviction of any felony, or any other crime
involving misuse or misappropriation of money, or entering a plea of no
contest in a court of law to a felonious crime or other crime involving a
misuse or misappropriation of money or property, which (A) results in
material and demonstrable damage to the Employer or (B) materially and
demonstrably impairs the value of the Executive's services to the
Employer; or
(ii) the Executive's engaging in one or more acts of dishonesty
which (A) result in material and demonstrable damage to the Employer or
(B) materially and demonstrably impair the value of the Executive's
services to the Employer; or
(iii) a fraudulent certification under Section 302 or Section 906 of
the Xxxxxxxx-Xxxxx Act of 2002, as amended from time to time; or
(iv) the Executive's violation of any of the covenants set out in
Section 8 of this Agreement.
Notwithstanding the foregoing, the Executive may not be terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
notice specifying the nature of the grounds for such termination. The notice
also shall afford the Executive with the opportunity, together with the
Executive's counsel, to be heard regarding the existence of Cause. The Executive
shall have thirty (30) days to correct the acts or omissions complained of, if
correctable. Nothing contained in the foregoing provisions of this Section or
elsewhere in this Agreement shall be deemed to interfere in any way with the
right to terminate the Executive's employment at any time without Cause.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "DATE OF TERMINATION" means, (i) if the Executive's employment with
the Employer (or a successor) is terminated by the Executive's death, the date
of the Executive's death; (ii) if such employment is terminated by the Employer
for Cause, the date on which Notice of Termination is given; and (iii) if such
employment is terminated for any other reason, the date on which Notice of
Termination is given or, if no such Notice of Termination is given, the day
after the date the Executive ceases to render services.
(e) "DISABILITY" means the Executive's inability to engage in the
customary duties and responsibilities of his position by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be continued to last for a continuous period of
at least six (6) months, as determined by a physician or physicians selected by
the Employer and reasonably acceptable to the Executive.
(f) "GOOD REASON" means the occurrence of any of the following events:
(i) the assignment to the Executive of duties materially
inconsistent with the Executive's position (including status, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 2 of this
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Agreement, or any other action by the Employer which results in a
significant diminution in such position, authority, duties;
(ii) the Employer's requiring the Executive to be based at
any office or location more than sixty (60) miles from the location
described in Section 2(c);
(iii) a reduction by the Employer in the Executive's rate of
annual Base Salary; or
(iv) the failure of the Employer to obtain from a successor
(including a successor to a material portion of the business or
assets of the Employer) a satisfactory assumption in writing of the
Employer's obligations under this Agreement.
Notwithstanding the foregoing, Good Reason shall not exist if (i) such
event occurs with the Executive's express prior written consent; (ii) the
event is an isolated, insubstantial and inadvertent action or failure to
act which was not taken in bad faith and which is remedied by the Employer
promptly after receipt of notice thereof given by the Executive; or (iii)
the event occurs in connection with the termination of the Executive's
employment for Cause or due to Disability or death.
10. Assumption of Agreement. The Employer will require any successor (by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Employer, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Employer
would be required to perform it if no such succession had taken place. Failure
of the Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Employer in the same amount and on the same terms as
the Executive would be entitled hereunder if the Executive incurred a
termination of employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
the term "EMPLOYER" shall mean the Employer as herein previously defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, written agreement or otherwise.
11. Entire Agreement. Except as otherwise expressly provided herein,
this Agreement constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof, and all promises, representations,
understandings, arrangements and prior agreements relating to such subject
matter (including those made to or with the Executive by any other person or
entity) are merged herein and superseded hereby.
12. Successors and Assigns. This Agreement shall inure to the benefit of
and be enforceable by the Executive and the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees, and shall be binding upon and inure to the benefit of the
Employer and its permitted successors and assigns as provided. This Agreement is
a personal contract and the rights and interests of the Executive hereunder
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may not be sold, transferred, assigned, pledged, encumbered, margined, conveyed,
gifted, alienated, or hypothecated by the Executive, except as otherwise
expressly permitted by the provisions of this Agreement. The Employer shall have
the right to assign this Agreement to any corporation with which it may merge or
consolidate.
13. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement (except in connection with any request for injunctive relief
contemplated by Section 8) shall be resolved by binding arbitration. The
arbitration shall be held in Kansas City, Missouri, and except to the extent
inconsistent with this Agreement, shall be conducted by a single arbitrator
appointed by the CPR Institute for Dispute Resolution pursuant the rules and
procedures of the CPR Institute. The arbitrator shall be acceptable to both the
Employer and the Executive. If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three arbitrators, one
appointed by each of the parties, and the third appointed by the other two
arbitrators. The arbitrator(s) shall apply Missouri law as provided in Section
15. The Employer and the Executive hereby waive, to the fullest extent permitted
by applicable law, any objection, which it may now, or hereafter have to such
jurisdiction and any defense of inconvenient forum. The Employer and the
Executive hereby agree that a judgment upon an award rendered by the arbitrators
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
14. Expense of Enforcement. The costs of enforcement of this Agreement,
whether in litigation or in arbitration, shall be borne by the nonprevailing
party. That is, Executive shall be liable to, and will pay the Employer for all
costs and expenses, including, but not limited to, reasonable attorneys' fees
actually incurred by the Employer in the successful enforcement in any respect
of any of its rights under this Agreement, or in the successful defense against
any claim by Executive. Likewise, in the event the Employer is unsuccessful in
enforcing its rights under this Agreement, or Executive is successful in
enforcing any of his rights under this Agreement, then the Employer shall pay
all of the Executive's costs and expenses, including, but not limited to,
reasonable attorney's fees actually incurred by the Executive in defending
against the Employer's claims or pursuing his own claims.
15. Governing Law. This Agreement is governed by and is to be construed,
administered, and enforced in accordance with the laws of the State of Missouri,
without regard to Missouri conflicts of law principles, except in so far as
federal laws and regulations may be applicable.
16. Withholding. The foregoing and other provisions of this Agreement
notwithstanding, all payments to be made to the Executive under this Agreement
will be subject to required withholding taxes and other required deductions, and
the Executive shall provide the Employer such information as the Employer
reasonably requests so that such Employer may implement and verify the operation
of this Section.
17. Amendments and Waivers. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by the Committee or a person authorized thereby and is agreed to in
writing by the Executive and such officer as may be specifically designated by
the Committee. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or
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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.
18. Severability. In the event that all or any part of any provision of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement or such provision shall be
unaffected thereby and shall remain in full force and effect. If any provision
of this Agreement or portion thereof is so broad as to be unenforceable, it
shall be interpreted to be only so broad as is enforceable. Nothing in this
Agreement is intended to or shall be construed to violate any federal or state
law or regulation.
19. Notices. Any notice or other communication required or permitted to
be delivered under this Agreement shall be in writing, delivered personally, by
courier service or by certified or registered mail, first-class postage prepaid
and return receipt requested, deemed to have been received on the date of
delivery or on the third business day after the mailing thereof, and addressed
as follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
(i) if to the Employer, to it at its headquarters, to the
attention of the chairman of its Board of Directors; and
(ii) if to the Executive, to the Executive at the last
address the Executive has filed in writing with the Employer.
20. No General Waivers. The failure of any party at any time to require
performance by any other party of any provision hereof or to resort to any
remedy provided herein or at law or in equity shall in no way affect the right
of such party to require such performance or to resort to such remedy at any
time thereafter, nor shall the waiver by any party of a breach of any of the
provisions hereof be deemed to be a waiver of any subsequent breach of such
provisions. No such waiver shall be effective unless in writing and signed by
the party against whom such waiver is sought to be enforced.
21. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
22. Headings. The section and other headings contained in this Agreement
are for the convenience of the parties only and are not intended to be a part
hereof or to affect the meaning or interpretation hereof.
Page 14
IN WITNESS WHEREOF, the Employer has duly executed this Agreement by its
authorized representative and the Executive has hereunto set his hand, in each
case effective as of the date first above written.
PREMIUM STANDARD FARMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Executive Vice President, Chief
Financial Officer and Treasurer
THE EXECUTIVE:
/s/ Xxxx X. Xxxxx
--------------------------------------
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