1
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of November 1, 1994 (the "Agreement"),
between PSF Finance L.P., a Delaware limited partnership ("LP"), and Xxxxx
Xxxxxxxx (the "Employee").
WHEREAS, LP desires to employ the Employee in its Premium Standard Farms
of Texas Division and to assure itself of the continued services of the
Employee for the term of employment provided for in this Agreement, and the
Employee desires to be employed by LP in its Premium Standard Farms of Texas
Division for such period, upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. LP hereby employs the Employee, and the Employee agrees
to serve, as Vice President of Operations of the Premiums Standard Farms of
Texas Division of LP, and as Vice President of Operations/Texas of Premium
Standard Farms, Inc. ("Farms"), upon the terms and conditions herein contained.
In such capacities, the Employee agrees to serve the Premium Standard Farms of
Texas Division of LP and Farms faithfully and to the best of his ability under
the direction of Xxxxxx X. Xxxxx, Co-Chairman and Chief Executive Officer of
the Premium Standard Farms of Texas Division of LP ( the "CEO") or such other
person as may be designated by the CEO of the Premium Standard Farms of Texas
Division of LP from time to time. The Employee agrees that he will serve as
Vice President of Operations/Texas of Farms for no compensation. The Employee
also agrees to serve, if elected, at no compensation in addition to that
provided for in this Agreement, in the position of officer or director of any
affiliate of LP; provided, however, that such position shall be of no less
status relative to such affiliate as the position that the Employee holds
pursuant to the first sentence of this Section 1.1 with respect to Farms.
1.2. Term of Employment. The Employee's employment under this
Agreement shall commence on November 1, 1994 (the "Effective Date") and shall
terminate on the earlier of (i) November 1, 1999, or (ii) termination of the
Employee's employment pursuant to this Agreement. This initial term, however,
shall be automatically extended without further action of either party for
additional one-year periods, unless written notice of either party's intention
not to extend has been given to the other party hereto at least three months
prior to the expiration of the then effective term (the period commencing on
the Effective Date and ending on November 1, 1999, or such later date to which
the term of the Employee's employment shall have been extended is hereinafter
referred to as the "Employment Term").
1.3. Duties. For the Employment Term, the Employee agrees to render
full-time service to the Premium Standard Farms of Texas Division of LP as Vice
President of Operations and to Farms as Vice President of Operations/Texas, and
in connection therewith to perform such duties, not inconsistent with the
Employee's positions, as the Employee may be reasonably
2
directed to perform by the CEO of the Premium Standard Farms of Texas
Division of LP, the CEO of Farms or such other person as may be designated by
the CEO of the Premium Standard Farms of Texas Division of LP from time to
time. For purposes of this Agreement, "full-time service" means the rendering
of employment services pursuant to the terms of this Agreement at the Premium
Standard Farms of Texas Division's and Farms' headquarters locations, or such
other locations as may be directed by the CEO of the Premium Standard Farms of
Texas Division of LP or such other person as may be designated by the CEO of
the Premium Standard Farms of Texas Division of LP from time to time, each day
during the Premium Standard Farms of Texas Division's and Farms' regular hours
of business, exclusive of vacations, paid sick leave, paid holidays, or
authorized leaves of absence, unless otherwise directed by the CEO of the
Premium Standard Farms of Texas Division of LP or such other person as may be
designated by the CEO of the Premium Standard Farms of Texas Division of LP
from time to time.
2. COMPENSATION
2.1. Base Salary. From the Effective Date, the Employee shall be
entitled to receive a base salary ("Base Salary") at a rate of $100,000.00 per
annum, payable in arrears in equal installments not less frequently than
monthly in accordance with the Premium Standard Farms of Texas Division's
payroll practices, with such annual increases as necessary to reflect changes
in the cost of living and with such additional increases as may be provided in
accordance with the terms hereof. Once increased, such higher amount shall
constitute the Employee's annual Base Salary.
2.2. Annual Review. The Employee's Base Salary shall be reviewed by
the Compensation Review Committee of Xxxxxxxx Farm, Inc., a Missouri
corporation and the general partner of LP ("Xxxxxxxx Farm"), from time to time,
in good faith, based upon the Employee's performance, not less often than
annually, and such Base Salary may be increased (but not decreased) upon such
review during the remainder of the Employment Term). In addition to any
increases under Section 2.2, LP at any time may in its sole discretion, subject
to the approval of the Compensation Review Committee of Xxxxxxxx Farm, increase
the Employee's Base Salary.
2.3. Equity Incentives. As of the Effective Date of this Agreement,
the Employee shall be eligible to participate in the PSF Finance L.P. Equity
Incentive Plan (the "Plan") and to receive the grant of an option to purchase
20,000 Units (as such term is defined in the Plan) which grant shall be
conditioned upon the Employee's continuous employment by LP from the Effective
Date of this Agreement through May 1, 1995.
3. EMPLOYEE BENEFITS
3.1. General. The Employee shall be included, to the extent eligible
thereunder by virtue of his position, tenure, salary, age and other
qualifications, in all employee benefit plans, programs or arrangements
(including, without limitation, any plans, programs or arrangements providing
for retirement benefits, incentive compensation, profit sharing, bonuses,
disability benefits, health and life insurance, or vacation and paid holidays)
which shall be established by LP for, or made available to, its Premium
Standard Farms of Texas Division employees.
-2-
3
3.2. Company Car. The Employee shall have the use of a car owned or
leased by LP or Farms to be used by the Employee for the performance of his
services under this Agreement. The value of the car shall be approximately
$25,000. The Employee shall also be reimbursed for expenses associated with
the use of such vehicle in accordance with the expense reimbursement policy of
the Premium Standard Farms of Texas Division.
3.3. Reimbursement of Expenses. LP will reimburse the Employee for
reasonable travel and other business expenses incurred by him in the
fulfillment of his duties hereunder upon presentation by the Employee of an
itemized account of such expenditures, in accordance with the Premium Standard
Farms of Texas Division's practices.
3.4. Relocation Expenses. As soon as practicable after the Effective
Date, LP shall reimburse the Employee for reasonable expenses incurred in
moving the Employee's household items, including the costs of packing, loading,
transfer and unloading of the Employee's furniture and other personal items. In
addition, LP shall reimburse the Employee for the cost of driving no more than
two personal cars from the Employee's present domicile to Dalhart, Texas. The
reimbursement shall be at the rate of $ .25 per mile. The Employee shall also
be entitled to reimbursement for reasonable meal and travel expenses incurred
in connection with driving such cars from the Employee's present domicile to
Dalhart, Texas.
4. TERMINATION OF EMPLOYMENT
4.1. Termination without Cause; Resignation for Good Reason.
4.1.1. General. Subject to the provisions of Section 4.1.2 and 4.1.3,
if, prior to the expiration of the Employment Term, the Employee's employment
is terminated by LP without Cause (as defined in Section 4.3), or if the
Employee resigns from his employment hereunder for Good Reason (as defined in
Section 4.4), LP shall continue to pay the Employee his Base Salary as of the
date of termination or resignation for the lesser of (i) one year following the
date of termination or resignation or (ii) the remainder of the Employment Term
(such period, as applicable, being referred to hereinafter as the "Severance
Period"). During the Severance Period, the Employee shall also be eligible to
participate on the same terms and conditions as in effect immediately prior to
such termination or resignation in all health, medical, supplemental medical
and life insurance plans or programs ("Employee Welfare Plans") provided to the
Employee by LP pursuant to Section 3 above at the time of such termination or
resignation and which are provided by LP to its Premium Standard Farms of Texas
Division employees following the date of such termination or resignation;
provided, however, that the Employee's eligibility to participate in these
Employee Welfare Plans shall end at such time as the Employee begins to receive
coverage under comparable programs of a subsequent employer. If, during the
Severance Period, the Employee is precluded from participating in any Employee
Welfare Plan by its terms or applicable law, LP shall provide the Employee with
benefits that are reasonably equivalent in the aggregate to those which the
Employee would have received under such plan had he been eligible to
participate therein. Anything to the contrary herein notwithstanding, LP shall
have no obligation to continue to maintain during the Severance Period any
Employee Welfare Plan solely as a result of the provisions of this Agreement.
4.1.2. Conditions Applicable to the Severance Period. If, during the
Severance Period, the Employee materially breaches his obligations under
Section 7 of this Agreement, LP
-3-
4
may, upon written notice to the Employee,terminate the Severance Period and
cease to make any further payments, or to provide any further benefits,
described in Section 4.1.1.
4.1.3. Death During Severance Period. In the event of the
Employee's death during the Severance Period, the Severance Period shall
immediately cease, LP shall not be obligated to make any further payments
pursuant to this Section 4, and the provisions of Section 5.1 shall apply as
though the Employee's death had occurred immediately prior to termination of the
Employment Term.
4.1.4. Date of Termination. The date of termination of employment
without Cause shall be the date specified in a written notice of termination to
the Employee. The date of resignation for Good Reason shall be the date
specified in the written notice or resignation from the Employee to LP;
provided, however, that no such written notice shall be effective unless the
cure period specified in Section 4.4 has expired without LP having corrected,
to the reasonable satisfaction of the Employee, the event or events subject to
cure. If no date of resignation is specified in the written notice from the
Employee to LP, the date of termination shall be the first day following such
expiration of such cure period.
4.2. Termination for Cause; Resignation Without Good Reason.
4.2.1. General. If, prior to the expiration of the Employment
Term, the Employee's employment is terminated by LP for Cause, or if the
Employee resigns from his employment hereunder other than for Good Reason, the
Employee shall be entitled only to payment of his Base Salary earned through
and including the date of termination or resignation. The Employee shall have
no further right to receive any other compensation, or to participate in any
other plan, arrangement, or benefit, after such termination or resignation of
employment.
4.2.2. Date of Termination. Subject to the proviso to Section 4.3,
the date of termination for Cause shall be the date of receipt by the Employee
of a written Notice of Termination provided for in Section 4.2.3. The date of
resignation without Good Reason shall be the date specified in the written
notice of resignation from the Employee to LP, or if no date is specified
therein, 10 business days after receipt by LP of written notice of resignation
from the Employee.
4.2.3. Notice of Termination. Termination of the Employee's
employment for Cause shall be communicated by delivery to the Employee of a
written notice from LP, stating that in the good faith opinion of LP an event
constituting Cause for termination in accordance with Section 4.3 has occurred
and specifying the particulars thereof (a "Notice of Termination"). For
purposes of this Agreement, no purported termination of the Employee's
employment for Cause shall be effective without delivery of such Notice of
Termination.
4.3. Cause. Termination for "Cause" shall mean termination of the
Employee's employment because of (i) any willful material violation by the
Employee of any law or regulation applicable to the business of LP or any of
its affiliates or the Employee's conviction for, or guilty plea to, a felony or
a crime involving moral turpitude or any willful perpetration by the Employee
of a common law fraud, (ii) the Employee's commission of an act involving gross
negligence on the part of the Employee in the conduct of his duties under this
Agreement or any other employment or consulting agreement with another employer
having a business
-4-
5
relationship with LP or any of its affiliates, (iii) the Employee's
commission of an act of personal dishonesty which involves personal profit in
connection with LP or any other employer having a business relationship with LP
or any of its affiliates, or (iv) material breach of any provision of this
Agreement or any other employment or consulting agreement with another employer
having a business relationship with LP or any of its affiliates, including,
without limitation, the continued failure or refusal of the Employee to perform
the material duties required of him as an employee of LP, or (v) any other
misconduct by the Employee which is materially injurious to the financial
condition or business reputation of, or is otherwise materially injurious to,
LP or any of its affiliates; provided, however, that if any such Cause relates
to the Employee's obligations under this Agreement and (x) is susceptible to
cure and (y) does not constitute a repetition of such Cause, LP shall not
terminate the Employee's employment hereunder unless LP first gives the
Employee a Notice of Termination, and the Employee has not, within 10 business
days following receipt of the notice, cured such Cause, or in the event such
Cause is not susceptible to cure within such 10 business day period, the
Employee has not taken all reasonable steps within such 10 business day period
to cure such Cause as promptly as practicable thereafter.
4.4. Good Reason. For purposes of this Agreement, "Good Reason"
shall mean termination of the employment agreement by the Employee for reason
of LP's material breach of any provision of this Agreement; provided, however,
that if any such material breach relates to LP's obligations under this
Agreement and (x) is susceptible to cure and (y) does not constitute a
repetition of such material breach, the Employee shall not terminate his
employment hereunder unless the Employee first gives LP notice of its
intention to terminate and of the grounds for such termination, and LP has not,
within 10 business days following receipt of the notice, cured such material
breach, or in the event such material breach is not susceptible to cure within
such 10 business day period, LP has not taken all reasonable steps within such
10 business day period to cure such material breach as promptly as practicable
thereafter.
5. DEATH OR PERMANENT DISABILITY
5.1. Death. If the Employee's employment hereunder is terminated by
death, LP shall, within 90 days of the date of death, make a lump sum payment
to the Employee's estate (or other beneficiary designated by him in writing)
equal in amount to the Base Salary as in effect on the date of death that would
have been paid to the Employee over a period of three months. Thereafter, LP
shall have no further obligation under this Agreement.
5.2. Permanent Disability. In the event the Employee shall become
physically or mentally disabled so that he is unable to render the services
provided for by this Agreement for a period of six consecutive months, or for
shorter periods aggregating six months during any twelve-month period, then LP
may at any time after the last day of the six consecutive months of disability
or the day on which the shorter periods of disability equal an aggregate of six
months terminate the Employment Term for "Permanent Disability" by written
notice to the Employee. LP shall, following such termination, continue to pay
the Employee's Base Salary as then in effect for a period of six months, and
shall continue during such period the Employee's participation in medical
benefits programs then maintained for LP's Premium Standard Farms of Texas
Division employees (or shall provide reasonably equivalent benefits). The
Employee will use his reasonable best efforts to cooperate with any physician
engaged by LP to determine whether or not Permanent Disability exists, and the
determination of such
-5-
6
physician made in writing to LP and the Employee shall be final and
conclusive for all purposes of this Agreement. Any payments provided for in
this Section 5.2 shall be offset (but not below zero) by any salary
continuation payments received by the Employee under any plan, program or
arrangements in which the Employee participated pursuant to Section 3 of this
Agreement. Except as provided in this Section 5.2, upon termination of the
Employment Term by virtue of the Employee's Permanent Disability, LP shall have
no further obligation to the Employee under this Agreement.
6. OBLIGATION TO MITIGATE DAMAGES
The Employee shall not be required to mitigate the amount of any payment
provided for in Section 4.1 by seeking other employment, but the amount of any
payment provided for in Section 4.1 shall be reduced (but not below zero) by
any compensation earned by the Employee as the result of his employment by
another employer subsequent to termination or resignation of his employment
with LP.
7. NONCOMPETITION AND CONFIDENTIALITY
7.1. Noncompetition. For so long as the Employee renders
employment to LP or Farms and continuing for two years thereafter, the
Employee shall not, without the prior written consent of LP, directly or
indirectly, as a sole proprietor, member of a partnership, stockholder or
investor (other than as a stockholder or investor owning not more than a 5%
interest), officer or director of a corporation, or as an employee, associate,
consultant or agent of any person, partnership, corporation or other business
organization or entity other than LP or Farms: (x) engage in any business
anywhere within the United States of America that is in competition with any
business actively conducted by LP, any division of LP or Farms; (y) solicit or
endeavor to entice away from LP, any division of LP or Farms any person who is,
or was during the then most recent 12-month period, employed by or associated
with LP, any division of LP or Farms; or (z) solicit or endeavor to entice away
from LP, any division of LP or Farms any person or entity who is, or was
within the then most recent 12-month period, a customer, client or prospect of
LP, any division of LP or Farms. The period during which the obligations of
this Section 7.1 shall apply to the Employee shall be extended by a period of
time equal to any period during which the Employee shall be in breach of such
obligations.
7.2. Confidentiality. The Employee covenants and agrees with LP and
Farms that he will not at any time, except in performance of his obligations to
LP and Farms hereunder or with the prior written consent of LP or Farms,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with LP, any division of
LP, Farms or any business associates or affiliates of LP or its divisions. The
term "confidential information" includes information not previously disclosed
to the public or to the trade by LP's, any division of LP's management, Farms'
management or otherwise in the public domain, with respect to LP's, any
division of LP's, any business associate's, Farms' or any affiliate's,
products, facilities, applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, technical information, financial
information (including the revenues, costs or profits associated with any of
LP's, any division of LP's, Farms' or any affiliate's products), business
plans, prospects or opportunities.
-6-
7
7.3. Exclusive Property. The Employee confirms that all
confidential information is and shall remain the exclusive property of LP or
Farms, as the case may be. All business records, papers and documents kept or
made by Employee relating to the business of LP, any of its divisions or Farms
shall be and remain the property of LP or Farms, as the case may be.
7.4. Injunctive Relief. Without intending to limit the remedies
available to LP and Farms, the Employee acknowledges that a breach of any of
the covenants contained in this Section 7 may result in material and
irreparable injury to LP, Farms or their respective affiliates or business
associates for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, LP or Farms shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by this Section
7 or such other relief as may be required specifically to enforce any of the
covenants in this Section 7. If for any reason a final decision of any court
determines that the restrictions under this Section 7 are not reasonable or
that consideration therefor is inadequate, such restrictions shall be
interpreted, modified or rewritten by such court to include as much of the
duration and scope identified in this Section 7 as will render such
restrictions valid and enforceable.
8. MISCELLANEOUS
8.1. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To LP:
PSF Finance L.P.
Xxxxxxx 00 Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
c/o Xxxxxxxx X. Xxxxxx, Xx.
Telecopy: (000) 000-0000
To the Employee:
Xxxxx Xxxxxxxx
c/o Premium Standard Farms of Texas
XXX Xx. 0, Xxx 000
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Any such notice or communication shall be delivered in person, by cable, by
telecopy (with confirmation copy of such telecopied material delivered in
person or by registered or certified mail, return receipt requested) or by
certified or registered mail, return receipt requested, addressed as above (or
to such other address as such party may designate in writing from time to
time), and the actual date of receipt, as shown by the receipt therefor, shall
determine the time at which notice was given.
-7-
8
8.2. Severability. If a court of competent jurisdiction determines
that any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) such court shall have
the authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that come closest to
expressing the intention of the invalid or unenforceable term or provision.
8.3. Disputes. Any disputes between the parties to this Agreement
shall be settled by arbitration in Kansas City, Missouri under the auspices of,
and in accordance with the rules of, the American Arbitration Association. The
decision in such arbitration shall be final and conclusive on the parties and
judgment upon such decision may be entered in any court having jurisdiction
thereof. Pending resolution of any dispute, any amounts payable pursuant to
the terms of the Agreement shall be set aside by LP in an escrow account. Upon
resolution of the dispute, such amounts held in the escrow account shall be
paid to the appropriate party.
8.4. Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between LP and the Employee. The Agreement may
be amended at any time by mutual written agreement of the parties hereto.
8.5. Withholding. LP shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to the Employee in connection with his employment
hereunder.
8.6. Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of Missouri without
reference to rules relating to conflict of law.
8.7. Successors. This Agreement shall be binding upon and inure to
the benefit of, and shall be enforceable by the Employee and LP, their
respective heirs, executors, administrators and, in the case of LP, its
assigns. In the event of a technical dissolution and reformation of LP, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the reformed LP, which LP from and after the date of such formation shall be
deemed to be LP for purposes of this Agreement. In the event LP is merged,
consolidated, liquidated by a parent corporation, or otherwise combined into
one or more entities, the provisions of this Agreement shall be binding upon
and inure to the benefit of the parent corporation or the entity resulting from
such merger or to which the assets shall be sold or transferred, which entity
from and after the date of such merger, consolidation, sale or transfer shall
be deemed to be LP for purposes of this Agreement. In the event of any other
assignment of this Agreement by LP, by operation of law or otherwise, LP shall
remain primarily liable for its obligations hereunder. This Agreement shall
not be assignable by the Employee.
8.8. Headings. The headings of sections herein are included solely
for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
8.9. Counterparts. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
-8-
9
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, LP has caused this Agreement to be duly executed and
the Employee has hereunto set his hand, as of the day and year first above
written.
PSF FINANCE L.P.
By Xxxxxxxx Farm, Inc.,
as General Partner
By: /s/ Xxxxxx Xxxxx
--------------------------
Title:
-----------------------
EMPLOYEE
/s/ Xxxxx Xxxxxxxx
-----------------------------
Xxxxx Xxxxxxxx
-9-
