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EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into by Purina
Xxxxx, Inc., a Delaware corporation ("Company") and Xxxxx X. Xxxxxx
("Executive").
1. Term. Company agrees to employ Executive in the capacity described in
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Section 2. below, and Executive agrees to accept such employment for a term
of eighteen (18) months commencing on September 1, 1998 (the "Effective
Date"). The term of this Agreement may be extended by mutual, written
agreement of the parties.
2. Duties and Responsibilities. As of the Effective Date, Executive will
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be employed as President and Chief Executive Officer of the Company and will
generally be responsible for the strategic development of the Company's
business (including its international business), for building the Company's
external business relationships with suppliers, customers, and industry
associates in a manner that leads to profitable new business for the Company,
oversight of its technology development group, and for such other
responsibilities and duties as the Company may reasonably assign to him from
time to time. Executive agrees and acknowledges that he will, at all times,
use his reasonable best efforts, and will faithfully and industriously
perform those duties and responsibilities designated by the Company,
provided, however, that such duties and responsibilities shall be reasonably
related to the positions to be held by Executive pursuant hereto.
3. Compensation and Benefits.
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3.1. In exchange for the services rendered by Executive under this
Agreement, the Company will pay Executive a salary at the rate of two
hundred thousand dollars ($200,000) per year, subject to adjustment as
provided in Section 3.3 ("Base Compensation"). The salary will be
subject to all appropriate withholding and will be payable in equal,
periodic installments according to the Company's customary payroll
practices, but no less frequently than twice each month.
3.2. As an employee of the Company, Executive is eligible to
participate in the various employee group benefit plans, and other
employee benefits (including, but not limited to, paid vacation
benefits, holiday pay and sick leave) that are made available to other
employees of the Company. Executive will continue to be eligible to
participate in those plans and receive those other employee benefits to
the same extent and under the same terms and conditions as are other
similarly-situated employees of the Company.
3.3. Executive's Base Compensation and other benefits May be increased
prospectively at any time by the Company solely at its discretion on
the basis of the Company's evaluation of Executive's performance. Such
evaluations shall take place no less frequently than annually. In
addition, not later than March 31, 1999, Executive will receive a
guaranteed minimum bonus ("Bonus Compensation") for calendar year 1998
of one hundred, twenty two thousand, and eighty three dollars
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($122,083). In addition, not later than March 31, 2000, Executive will
receive minimum Bonus Compensation in an amount equal to the difference
between four hundred thousand dollars ($400,000) and the Base
Compensation earned by Executive during 1999. In addition, Executive
will be eligible for additional forms of incentive compensation as
determined by the Company in its sole discretion. All bonuses and
other incentive compensation are subject to appropriate withholding.
3.4. Solely for purposes of Executive's participation in the Purina
Xxxxx, Inc. Capital Accumulation Plans (as itemized below), the parties
acknowledge that Executive will be treated as though he were
involuntarily terminated by the Company on September 1, 1998. Given
the fact that Executive will be considered to have been involuntarily
terminated on September 1, 1998, the parties acknowledge that, under
the Capital Accumulation Plans as they currently exist, the Executive's
annual Retirement Income Benefit (as defined under the Capital
Accumulation Plans) would be one hundred five thousand, five hundred
and twenty three dollars ($105,523). For purposes of this Agreement,
the Capital Accumulation Plans are:
Purina Xxxxx, Inc. 1987 Capital Accumulation Plan For Key
Employees, (a copy of which is attached hereto as Exhibit One);
Purina Xxxxx, Inc. 1988 Capital Accumulation Plan For Key
Employees, (a copy of which is attached hereto as Exhibit Two);
Purina Xxxxx, Inc. 1989 Capital Accumulation Plan For Key
Employees, (a copy of which is attached hereto as Exhibit Three);
Purina Xxxxx, Inc. 1990 Capital Accumulation Plan For Key
Employees, (a copy of which is attached hereto as Exhibit Four);
and
Purina Xxxxx, Inc. Discretionary [1992] Capital
Accumulation Plan For Key Employees, (a copy of which is attached
hereto as Exhibit Five).
3.5. Upon execution of this Agreement, the Company will pay Executive
the sum of two hundred thirty thousand dollars ($230,000) in a single,
lump-sum payment. Thereafter, the Company will make three additional
payments to Executive of two hundred thirty thousand dollars ($230,000)
each. The first such payment will be made on or about March 1, 1999.
The second and third such payments will be made on or about September
1, 1999 and March 1, 2000, respectively. All payments hereunder are
subject to appropriate withholding. To the extent that (i) the
Internal Revenue Service or any similar state or local taxing authority
takes the position that the payments described in this Section 3.5 are
"golden parachute payments," "excess parachute payments" or any
similar, excess, parachute-like compensation, and (ii) to the extent
that such taxing authority also takes the position that the payments
described in this Section 3.5 result in Executive being responsible for
payment of any excise tax described in Internal Revenue Code Sections
4999 or 280G, or any similar federal, state or local statute, rule or
regulation, and (iii) to the extent that Executive ultimately pays such
excise tax, then the Company will pay Executive a "grossed up" sum
which, after
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reduction for any appropriate withholdings, will equal the amount of
such excise tax paid by Executive. Executive and the Company agree
that they will reasonably cooperate with each other and endeavor in
good faith to reduce or eliminate the amount of any such excise taxes
assessable upon either party as a result of the payments under this
Section 3.5.
4. Conflicts of Interest. During the term of this Agreement, Executive
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will devote his full time, attention, energies and business efforts to his
duties under this Agreement. He will not (without the written consent of the
Company) actively engage in any other business activity whatsoever, nor will
he contract or "self-deal" directly or indirectly with the customers,
clients, suppliers, partners, joint venturers or other business associates of
the Company or its parent corporations, subsidiaries, agents or affiliated
companies. The Company acknowledges and agrees that Executive's continuing
to serve as a member of the board of directors of Sterling Diagnostic Imaging
and his performance of his duties and responsibilities in connection
therewith shall not be considered a violation of this Section 4. or otherwise
be prohibited by the Company, provided that (i) such activities do not
materially conflict with Executive's duties and responsibilities under this
Agreement, (ii) Executive does not generally engage in such activities on
Company time, and (iii) such activities do not impede Executive's ability to
effectively perform his duties and responsibilities under this Agreement.
For the purposes of clarification of Subsection (ii) above, that Subsection
does not prohibit Executive from engaging in periodic telephone calls,
responding to occasional correspondence, or engaging in similar activities on
Company time, provided that such activities are brief and infrequent.
5. Non-Disclosure and Non-Competition.
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5.1. Executive recognizes and acknowledges that he has acquired, and
will continue to acquire and have access to, Proprietary Information of
the Company, its parent corporations, subsidiaries, agents or
affiliated companies, (hereafter collectively referred to as
"Affiliates"). Executive acknowledges and agrees that this Proprietary
Information constitutes valuable, special and unique property of the
Company, and he agrees that -- except in the furtherance of his
responsibilities under this Agreement -- he will not disclose any
Proprietary Information to any person, firm, corporation, association,
partnership, company, group, organization, trust or other entity for
any reason or purpose.
5.2. For purposes of this Agreement, the term "Proprietary
Information" means any information pertaining to the Company or its
Affiliates that has economic or competitive value. Proprietary
Information therefore includes, but is not limited to, all Company
trade secrets; production capabilities and processes; customer account
and credit data; referral sources; computer programs and software;
information relating to confidential or secret designs, processes,
formulae, plans, devices or materials; customer lists; information
regarding customer purchases; confidential information and trade
secrets relating to the manufacture, distribution and marketing of
products; patents pending; confidential characteristics of the
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products; customer comments; troubleshooting requirements; product
development; market development; manuals; management, accounting and
reporting systems, procedures and programs; sales employee compensation
information, plans and programs; marketing and financial analysis,
plans, research, programs and related information and data; forms,
agreements and legal documents; regulatory and supervisory reports;
correspondence; dealer and distribution matters; information regarding
raw materials and supplies; information regarding present and proposed
investments, joint ventures and acquisitions; financing and financial
matters; dealer financing information; financial statements; corporate
books and records; and other similar information. The term
"Proprietary Information" shall not be deemed to include information
that (i) is published in any recognized text book, trade journal, or
industry publication, (ii) is generally known throughout the industry,
or (iii) which is generally available to the industry without
restriction through no fault of Executive.
5.3. Any and all work product developed by Executive within the scope
of his employment with the Company and its Affiliates is the property
of the Company. This includes, but is not limited to, any
copyrightable or patentable product or service. Accordingly, Executive
will have no interest, proprietary or otherwise, in such work product.
Moreover, Executive will not avail himself of personal benefits to the
exclusion of the Company and its Affiliates of any duplication,
modification or extension of such a product or service. With respect
to this clause 5.3. and clauses 5.1. and 5.2. above, no territorial
boundaries or temporal limitations shall apply.
5.4. Executive further agrees that during the term of Executive's
employment and for a period of two (2) years immediately following the
expiration or termination of the Executive's employment by either party
for any reason, he will not, for himself or on behalf of any person,
firm, corporation, association, partnership, company, group,
organization, trust or other entity:
5.4.1. solicit, accept, divert, or take away from the
Company or its Affiliates the business of any suppliers,
customers or other individuals or entities with whom the Company
has a relationship;
5.4.2. directly or indirectly induce or attempt to influence
any employee of the Company or any of its Affiliates to terminate
his or her employment with the Company or any of its Affiliates;
or
5.4.3. engage in any commercial or technical activity in the
"Territory" (as defined below) involving the development,
formulation, manufacture, production, distribution, marketing or
sale of any product or service that the Company, or its
predecessors or successors (whether alone or in concert with any
other individual, corporation, company, partnership, joint
venture or other enterprise) has or will design, produce,
manufacture,
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distribute, market or sell during the entire term of Executive's
employment with the Company; provided however, that the foregoing
shall not prohibit Executive's ownership of up to five percent
(5%) of the outstanding shares of capital stock of any
corporation whose securities are publicly traded on a national or
regional stock exchange. The "Territory" shall consist of all of
the United States and all other countries in which the Company or
any of its Affiliates is conducting business (whether alone or in
concert with any other individual, corporation, company,
partnership, joint venture or other enterprise) at the time of
the termination of Executive's employment.
5.5. Executive understands and acknowledges that, due to the unique
nature of the products and services of the Company and its Affiliates,
the limitations as to time and geographic area contained in this
Section 5. are reasonable and are not unduly onerous to Executive.
Executive therefore agrees that the limitations as to time, geographic
area and scope of activity contained in the covenants of this Section
5. do not impose a greater restraint than is necessary to protect the
Proprietary Information, goodwill and other business interests of the
Company and its Affiliates. Executive also agrees that in light of the
facts acknowledged above and the substantial economic damages that the
Company and its Affiliates would suffer if Executive were to engage in
any of the activities described in this Section 5., the Company's need
for the protection afforded by this Section 5. is greater than any
hardship Executive might experience by complying with its terms.
6. Termination of Employment.
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6.1. The Company or the Executive shall have the right to terminate
Executive's employment under this Agreement at any time for "due
cause," as defined below, upon giving written notice to the other party
setting out the reasons for the termination. Such termination will be
effective upon the date of delivery of the notice.
6.1.1. The Company will have the right to terminate
Executive's employment for "due cause" under any one or more of
the following circumstances:
i. If Executive commits any act of fraud or dishonesty
relating to the business, properties or assets of the
Company or its Affiliates.
ii. If Executive commits a willful act of misconduct which
adversely affects the business or affairs of the Company or
its Affiliates.
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iii. If Executive fails or refuses to comply with the
principles, policies or the lawful directions of the
Company, provided that Executive has previously been given
reasonable opportunity (not to exceed thirty days) to cure
his failure to comply with such principles, policies and
directions.
iv. If, by reason of illness, physical or mental
disability or incapacity, Executive fails to effectively
render the services to be provided by him under this
Agreement for a total of 120 days during the eighteen month
term of his employment hereunder.
v. If Executive commits any material breach of the
provisions of this Agreement.
6.1.2. Executive will have the right to terminate his
employment for "due cause" under any one or more of the following
circumstances:
i. If the Company assigns Executive to duties and
responsibilities that are substantially and materially
inconsistent with those outlined in Section 2. above,
without the prior written consent of Executive, which
consent may be withheld for any reason or no reason.
ii. If the Company changes Executive's title from
President and Chief Executive Officer without the prior
written consent of Executive, which consent may be withheld
for any reason or no reason.
iii. If the Company reduces Executive's Base Compensation
and/or Bonus Compensation in any manner that may result in
Executive receiving total compensation for 1998 or 1999 of
less than four hundred thousand dollars ($400,000), without
the prior written consent of Executive, which consent may
be withheld for any reason or no reason.
iv. If the Company discontinues or reduces Executive's
participation in any substantial, material employee benefit
plan in which Executive is a participant without either (a)
paying Executive a reasonable cash equivalent to the
benefit, or (b) providing Executive with a comparable,
alternative program, or (c) acquiring the prior written
consent of Executive.
v. If, without Executive's prior written consent, the
Company requires Executive to relocate his principal
residence.
vi. If the Company commits any material breach of the
provisions of this Agreement.
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6.1.3. To the extent that one party contends that due cause
exists for termination of Executive's employment and consequently
terminates the employment on that basis, and to the extent that a
final, non-appealable ruling is ultimately made by a judicial or
quasi-judicial body that due cause to terminate the employment
did not exist, then the party that terminated the employment
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shall be deemed to have terminated the employment without due
cause.
6.2. This Agreement shall terminate automatically upon the death of
Executive.
6.3. The Company will have the right to terminate the employment of
Executive at any time without due cause by delivering to Executive
written notice of such termination.
7. Effect of Termination.
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7.1. Neither party has any obligation to renew or extend the original
eighteen month term of Executive's employment under this Agreement, and
the decision by either party to allow the term to lapse will not
constitute either a termination with or without "due cause." The
expiration or termination of Executive's employment by either party for
any reason will not impair, diminish, extinguish or affect, in any way,
the rights or obligations of Executive to render full performance of
the Covenants and Agreements set forth in Section 5. of this Agreement.
7.2. Upon expiration or termination of Executive's employment by
either party for any reason, Executive will retain all rights regarding
his employee benefits as are afforded all other, similarly-situated
participants in such plans.
7.3. Upon termination of Executive's employment by either party for
any reason, Executive's right to receive any remaining Base
Compensation (described in Section 3.1.) and any remaining Bonus
Compensation (described in Section 3.3.) will cease; provided however
that Executive will be entitled to receive any unpaid Base Compensation
earned through the date of such termination, and -- if Executive dies
or the Company terminates Executive without due cause or Executive
terminates his employment with due cause -- a pro rata share of Bonus
Compensation earned as of the date of termination. If Executive dies
or the Company terminates Executive without due cause or Executive
terminates his employment with due cause at any time during calendar
year 1998, then the pro rata share of Bonus Compensation shall be
determined by multiplying (a) $122,083 by (b) a fraction, the numerator
of which shall be the number of semi-monthly pay periods that Executive
was employed by the Company during 1998 and the denominator of which
shall be twenty-four (24). If Executive dies or the Company terminates
Executive without due cause or Executive terminates his employment with
due cause at any time during calendar year 1999 (or at any time during
2000
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prior to the time at which the Company pays bonus compensation for
1999), then the pro rata share of Bonus Compensation shall be
determined by multiplying (a) $200,000 by (b) a fraction, the numerator
of which shall be the number of semi-monthly pay periods that Executive
was employed by the Company during 1999 and the denominator of which
shall be twenty four (24).
7.4.1. To the extent that Executive's employment is
terminated by the Company without due cause or by Executive with
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due cause, then the Company will be obligated, at the option of
Executive, to either (i) complete the schedule of payments set
out in Section 3.5. above, or (ii) to make a single, lump sum
payment to Executive in an amount equal to the sum of the
payments set out in Section 3.5. above which have not yet been
paid to Executive. In addition, in such a case, the Company will
pay Executive a one-time, lump sum payment of nine thousand
dollars ($9,000) for transition assistance, which payment will be
subject to all appropriate withholdings.
7.4.2. To the extent that Executive's employment is
terminated by the Company with due cause or by the Executive
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without due cause, then the obligation of the Company to make any
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remaining payments under Section 3.5. shall cease; provided,
however, if Executive's employment hereunder is terminated by the
Company pursuant to Section 6.1.1.iv. above, then the obligation
of the Company to make any remaining payments under Section 3.5.
shall continue.
7.5. To the extent that Company terminates Executive's employment
without due cause, Company shall provide reasonable outplacement
assistance to Executive as he seeks other employment. Such
outplacement assistance shall include providing Executive with
temporary office space, telephone services, preparation of resumes and
mailing services.
7.6. In the event of Executive's death, the obligation of the Company
to make any remaining payments under Section 3.5. shall continue. In
addition, the Company will also be obligated to pay any unpaid Base
Compensation earned by Executive through the date of his death. Such
Base Compensation, pro rata Bonus Compensation, together with all other
payments due Executive hereunder (if any) shall be made to Executive's
designated beneficiary.
8. Notices. Any notice, request, reply, instruction or other
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communication provided or permitted in this Agreement must be given in
writing and may be served by telex; or by depositing same in the mail,
country of origination, in certified or registered form, postage prepaid,
addressed to the party or parties to be notified with return receipt
requested; or by delivering the notice in person to such party or parties.
Notice given by telex shall be effective when sent and the appropriate
answerback is received. Notice given by mail shall
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be effective seventy-two (72) hours after its deposit in the mails as
provided herein. For purposes of notice, the address of Executive or any
administrator, executor or legal representative of Executive or his estate,
as the case may be, shall be as follows:
Xxxxx X. Xxxxxx
#0 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
and the Company will send a copy to:
The Lowenbaum Partnership, L.L.C.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
ATTN: R. Xxxxxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 314-746-4848
The address of the Company shall be:
Purina Xxxxx, Inc.
0000 X. Xxxxxx Xxxx
Xx. Xxxxx, XX 00000
ATTN: Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
and Executive will send a copy to:
Xxxx Agriculture Company
0000 X. 00xx Xx. X.
Xxxxxxx, XX 00000
ATTN: President
Telephone: 000-000-0000
Facsimile: 000-000-0000
The parties shall have the right, from time to time, to change their
respective addresses by written notice given ten (10) days prior to the
effective date of the change.
9. Controlling Law. The execution, validity, interpretation and
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performance of this Agreement shall be determined and governed exclusively by
the laws of the State of Kansas, without reference to the principles of
conflict of laws.
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10. Entire Agreement. This Agreement is the entire agreement of the
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parties respecting the subject matter hereof and supersedes any prior,
inconsistent, written or verbal agreements. MOREOVER, THE COMPANY AND
EXECUTIVE DO HEREBY ACKNOWLEDGE THAT THE EMPLOYMENT AGREEMENT BETWEEN THEM
DATED NOVEMBER 18, 1997 AND THE AMENDMENT TO THAT AGREEMENT DATED MARCH 11,
1998 ARE NULL AND VOID. FURTHERMORE, THE COMPANY AND EXECUTIVE WAIVE ANY AND
ALL RIGHTS TO BENEFITS, CLAIMS OR ACTIONS THAT THEY MAY HAVE AGAINST EACH
OTHER UNDER THOSE DOCUMENTS AND/OR THE PURINA XXXXX, PM HOLDINGS CORPORATION
SEVERANCE PROGRAM FOR KEY EMPLOYEES. Finally, this Agreement may not be
modified or altered orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension
or discharge is sought.
11. Remedies, Modification and Separability. The parties agree that
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Executive's breach of Sections 4. and 5. of this Agreement will result in
irreparable harm to the Company and that no adequate remedy at law is
available. Executive agrees that upon a breach or violation of any of the
provisions of Sections 4. or 5., the Company shall be entitled to injunctive
relief in any court of competent jurisdiction. Nothing herein, however,
shall be construed as prohibiting the Company from pursuing any other
remedies at law or in equity available to the Company for the breach or
violation or threatened breach or violation. Should a court of competent
jurisdiction declare any of the covenants set forth in Section 4. or 5. to be
unenforceable due to an unreasonable restriction of duration or geographical
area, each of the parties hereto agrees that the court shall be empowered to
modify or reform such covenants so as to provide relief reasonably necessary
to protect the interests of the parties and to award injunctive relief, or
damages, or both to which the Company may be entitled. If any covenant,
condition or other provision of this Agreement is declared by a court to be
invalid and not binding on the parties, each of the parties agrees that such
declaration shall in no way affect the validity of the other and remaining
covenants, conditions and provisions of this Agreement. It is also the
intention of the parties that if any provision of this Agreement is capable
of two constructions, one of which would render the provision void and the
other of which would render the provision valid, then the provision shall
have the construction which renders it valid.
12. Assignments. The Company may assign its rights, duties and obligations
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under this Agreement with the approval or consent of the Executive, which
consent will not be unreasonably withheld as long as it does not materially
change the nature of this Agreement, the obligations or benefits thereunder.
The rights, duties and obligations of the Executive under this Agreement are
personal and, therefore, shall not be assigned or transferred by the
Executive to another.
13. Effect of Agreement. This Agreement shall be binding upon the
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Executive and his heirs, executors, administrators, legal representatives,
successors and assigns and this Agreement shall be binding upon the Company
and its successors and assigns.
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14. Waiver of Breach. The waiver by either party of a breach of any
----------------
provision of this Agreement by the other shall not operate or be construed as
a waiver by such party of any subsequent breach by the breaching party.
The parties acknowledge that they have read this Agreement, consulted
with their respective attorneys and understand and agree to all of the
provisions of this Agreement.
Xxxxx X. Xxxxxx Purina Xxxxx, Inc.
/s/ Xxxxx X. Xxxxxx By: Xxxxx X. Xxxxxx
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Name: /s/ Xxxxx X. Xxxxxx
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Title: Director
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September 17, 1998 September 18, 1998
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Date Date
#50973v.3
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