EXHIBIT 10.39
EXECUTION VERSION
THIRD AMENDMENT TO EXECUTIVE EMPLOYMENT
AGREEMENT
THIS THIRD
AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this
“Amendment”) is made and entered into as of
April 23, 2005, by and among Swift Foods Company, a Delaware
corporation (the “Company”), and John Simons
(“Executive”).
RECITALS
WHEREAS, the
Company and Executive are parties to the Executive Employment
Agreement, dated May 20, 2002, as amended by that certain
First Amendment to Executive Employment Agreement, dated
July 12, 2002, and that certain Second Amendment to Executive
Employment Agreement, dated November 3, 2004, each as attached
hereto as Exhibit A (as so amended, the
“Employment Agreement”);
WHEREAS,
capitalized terms used herein but not defined herein shall have the
meanings assigned to them in the Employment Agreement;
and
WHEREAS, Executive
has announced his intention to resign his employment with the
Company and its affiliates, and in contemplation of
Executive’s termination of employment with the Company and
its affiliates, the Employment Agreement is being amended to
reflect certain agreements regarding such termination and
Executive’s post-termination role with the
Company.
AGREEMENT
NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. Termination of Employment . The
parties hereby represent and warrant that prior to the Termination
Date (as defined below), Executive’s employment relationship
with the Company and its affiliates was pursuant to and governed
solely by the Employment Agreement. Executive’s employment
with the Company is hereby terminated effective as of the date that
Executive signs this Amendment (the “Termination
Date”). In addition, effective as of the Termination Date,
any and all of Executive’s other appointments and positions
(including positions as a director) that he may hold with the
Company or any of its affiliates are hereby terminated. Executive
agrees to execute all further documents that the Company may
reasonably request of him to effectuate such
terminations.
2. Termination Consideration .
(a) Cash
Payments . In connection with Executive’s termination of
employment, the Company shall cause to be paid to Executive the
following consideration:
(i)
$2,247,500 by the close of business on the third business day
following the Reaffirmation Date (as defined in paragraph
16);
(ii)
$146,394 (which amount equals the full amount of the Accrued
Obligations) by the close of business on the third business day
following the Reaffirmation Date; and
(iii) an
amount equal to the Accrued Investments, payable in accordance with
the terms and conditions of the Investment Plans.
(b)
Participation in Medical Insurance Plan . In connection with
Executive’s termination of employment, for a period of
12 months commencing on the Termination Date, Executive (and
members of his family) shall be entitled to continue their
participation in the Company’s medical insurance plan (in
accordance with the terms of such plan and on the same basis as
Executive participated in such plan immediately prior to the
Termination Date); provided that Executive shall be responsible for
the cost of premiums for coverage under such plan that would have
been payable by Executive had he remained an employee of the
Company during the period of coverage, and the Company shall be
entitled to deduct the amount of such premiums from the amounts
otherwise payable to Executive pursuant to the terms hereof. This
period shall be credited against any period for which Executive
and/or members of his family are entitled to continuation coverage
under Section 4980B of the Internal Revenue Code of 1986, as
amended, and Sections 601-609 of the Employee Retirement
Income Security Act of 1974, as amended.
3. Stock Options .
(a)
General . Executive hereby represents and warrants that,
except for the stock option agreements attached hereto as
Exhibit B (the “Option Agreements”), he is
not a party to any stock option, stock appreciation right or
similar agreement granting Executive the right to acquire or
benefit from the appreciation in value of capital stock of the
Company or any of its affiliates.
(b)
Vesting . On the day following the Reaffirmation Date
(assuming no revocation of this Amendment by Executive), all of
Executive’s options issued under the Option Agreements and
the plans pursuant to which such options were issued that are not
then vested shall be vested in full. Executive shall be permitted
to exercise, in accordance with the terms of the options, any and
all such rights until the earlier of (i) the date the option
would otherwise expire in accordance with its terms, (ii) the
270th day after a Qualifying Public Offering or (iii) the 90th
day after the completion of a merger, combination, share exchange
or similar transaction involving the Company pursuant to which the
securities for which the option is then exercisable are listed on a
national securities exchange or the Nasdaq National Market System
or any successor thereto.
(c)
Purchase of Options . Pursuant to paragraph 7 of that
certain Non-Qualified Stock Option Agreement dated
September 19, 2002 under which options to purchase 6,400,000
shares of common stock of the Company were issued to Executive (the
“Subject Option Agreement”), and in connection with
Executive’s termination of employment, the Company shall
purchase from Executive, and Executive shall transfer and sell to
the Company, free and clear of all encumbrances, by the close of
business on the third business day after the Reaffirmation Date
(subject to paragraph 6 hereof), Executive’s options to
purchase 6,400,000 shares of common
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stock of the Company issued pursuant to the
Subject Option Agreement for cash consideration of $5,504,000.
Executive shall, in exchange for such consideration, deliver to the
Company for cancellation at the closing of such sale the Subject
Option Agreement (Executive’s Option Agreement other than the
Subject Option Agreement, being referred to herein as the
“Remaining Option Agreement”). Upon the closing of such
purchase and sale, Executive shall have no further rights with
respect to the options sold or the Subject Option Agreement. The
terms of this paragraph 3(c) shall constitute the notice of
purchase required under the Subject Option Agreement.
4. Purchase of Stock . Pursuant to
Section 4.5 of that certain Stockholders Agreement dated as of
September 19, 2002 among HMTF Rawhide, L.P., ConAgra Foods,
Inc., Hicks, Muse, Tate & Furst Incorporated, the Company and
the other individuals named therein, as amended (the
“Stockholders Agreement”), and in connection with
Executive’s termination of employment, the Company shall
purchase from Executive, and Executive shall transfer and sell to
the Company, free and clear of all encumbrances, by the close of
business on the third business day after the Reaffirmation Date
(subject to paragraph 6 hereof), 1,237,151 shares of common stock
of the Company owned by Executive for cash consideration of
$1,249,523. Subject to paragraph 6 hereof, Executive shall, in
exchange for such consideration, deliver to the Company at the
closing of such sale stock certificates representing such shares to
the Company, with such certificates being duly endorsed (or
accompanied by duly executed stock powers) and otherwise in good
form for delivery. Upon the closing of such purchase and sale,
Executive shall have no further rights with respect to such shares.
The terms of this paragraph 4 shall constitute the notice of
purchase required under the Stockholders Agreement.
5. Consulting Consideration . As
consideration for the Consulting Services (as defined in paragraph
10), the Company shall cause to be paid to Executive an amount
equal to $166,667 by the close of business on the third business
day following the Reaffirmation Date and monthly payments in the
amount of $10,000 per month (with each monthly payment being due
and payable on the last business day of the month, with the first
payment being made on the last business day of the month after the
month in which the Reaffirmation Date occurs) during the Consulting
Period (as defined in paragraph 10).
6. Debt Agreement Restrictions . Payment
of the amounts under paragraphs 3 and 4 hereof shall in all events
be subject to compliance with any and all restrictions imposed by
agreements evidencing the Company’s and its affiliates’
indebtedness, and under no circumstances shall the Company be
required pursuant to the terms hereof to make any payments under
paragraphs 3 and 4 hereof if such payments would violate any
restrictions in such agreements. The Company agrees to use all
commercially reasonable efforts to obtain any waivers of any
applicable restrictions as promptly as practicable. In the event
that the Company is able to pay a portion, but not all, of the
amounts payable under paragraphs 3 and 4 hereof within the
timeframes set forth herein without restriction under the
agreements evidencing the Company’s and its affiliates’
indebtedness, the Company shall then pay such portion, and
Executive shall be obligated to surrender a corresponding portion
of securities in exchange for such payment at such time. If the
Company later is able to pay additional amounts due hereunder
without restriction, the Company shall pay such amounts, and
Executive shall deliver securities in exchange therefore, within
three business days of the removal of the applicable restriction.
Notwithstanding the Company’s inability to make payments
hereunder due to such restrictions,
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but subject to paragraph 16 hereof, Executive
shall be bound by all terms and conditions of this Amendment and
the applicable provisions of the Employment Agreement, including,
without limitation, paragraphs 6 and 9 of the Employment Agreement,
as of the Termination Date.
7. Taxes . The payments to Executive
hereunder shall be subject to applicable federal, state and local
withholding taxes. Executive agrees that, to the extent that any
individual federal or state taxes of any kind may be due as a
result of any such payment to Executive, Executive shall be solely
responsible for such taxes and will indemnify, defend, and hold
harmless the Company in the event there is any claim against the
Company for such taxes.
8. General Release and Covenant Not to
Sue .
(a) EXECUTIVE,
ON BEHALF OF HIMSELF, HIS FAMILY, ATTORNEYS, HEIRS, ESTATE, AGENTS,
EXECUTORS, REPRESENTATIVES, ADMINISTRATORS AND EACH OF THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS (TOGETHER THE “EXECUTIVE
PARTIES”), HEREBY GENERALLY RELEASES AND FOREVER DISCHARGES
THE COMPANY, ITS PREDECESSORS, SUCCESSORS, ASSIGNS, PARENTS,
SUBSIDIARIES, AND AFFILIATES, AND EACH OF THE FOREGOING
ENTITIES’ AND PERSONS’ PAST, PRESENT AND FUTURE DIRECT
OR INDIRECT STOCKHOLDERS, MEMBERS, MANAGERS, PARTNERS, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, REPRESENTATIVES, PRINCIPALS, INSURERS,
BENEFIT PLANS (AND EACH SUCH PLAN’S FIDUCIARIES,
ADMINISTRATORS, TRUSTEES, SPONSORS, COMMITTEES AND REPRESENTATIVES)
AND ATTORNEYS (TOGETHER THE “COMPANY PARTIES”) FROM ANY
AND ALL CLAIMS, COMPLAINTS, CHARGES, DEMANDS, LIABILITIES, SUITS,
DAMAGES, LOSSES, EXPENSES, ATTORNEYS’ FEES, OBLIGATIONS OR
CAUSES OF ACTION (COLLECTIVELY “CLAIMS”), KNOWN OR
UNKNOWN, OF ANY KIND AND EVERY NATURE WHATSOEVER, AND WHETHER OR
NOT ACCRUED OR MATURED, WHICH ANY OF THEM MAY HAVE, ARISING OUT OF
OR RELATING TO ANY TRANSACTION, DEALING, RELATIONSHIP, CONDUCT, ACT
OR OMISSION, OR ANY OTHER MATTERS OR THINGS OCCURRING OR EXISTING
AT ANY TIME PRIOR TO AND INCLUDING THE TERMINATION DATE, SUBJECT TO
THE LIMITATIONS SET FORTH IN THE FOLLOWING SENTENCE. THIS RELEASE
INCLUDES BUT IS NOT LIMITED TO ANY CLAIMS AGAINST ANY OF THE
COMPANY PARTIES BASED ON, RELATING TO OR ARISING UNDER WRONGFUL
DISCHARGE, RETALIATION, BREACH OF CONTRACT (WHETHER ORAL OR
WRITTEN), TORT, FRAUD, DEFAMATION, NEGLIGENCE, PROMISSORY ESTOPPEL,
TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AGE DISCRIMINATION
IN EMPLOYMENT ACT, THE AMERICANS WITH DISABILITIES ACT, EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, THE WORKER ADJUSTMENT AND
RETRAINING NOTIFICATION ACT, THE FAMILY AND MEDICAL LEAVE ACT OR
ANY OTHER FEDERAL, STATE OR LOCAL LAW RELATING TO EMPLOYMENT, CIVIL
OR HUMAN RIGHTS, OR DISCRIMINATION IN EMPLOYMENT (BASED ON AGE OR
ANY OTHER FACTOR) IN ALL CASES ARISING OUT OF OR RELATING TO
(I) EXECUTIVE’S EMPLOYMENT BY THE COMPANY OR ANY OF ITS
AFFILIATES, (II) THE EMPLOYMENT AGREEMENT (SUBJECT TO THE
TERMS OF THIS AMENDMENT), (III) THE SUBJECT OPTION AGREEMENT,
(IV) EXECUTIVE’S INVESTMENT IN THE
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COMPANY OR ANY OF ITS AFFILIATES,
(V) EXECUTIVE’S SERVICES AS AN OFFICER, DIRECTOR OR
EMPLOYEE OF THE COMPANY OR ANY OF ITS AFFILIATES, OR
(VI) OTHERWISE RELATING TO THE TERMINATION OF
EXECUTIVE’S EMPLOYMENT OR SERVICES OR TO ANY OTHER
TRANSACTION, DEALING OR AGREEMENT BETWEEN EXECUTIVE AND THE COMPANY
OR ANY OF ITS AFFILIATES; PROVIDED , HOWEVER , THAT
THIS GENERAL RELEASE WILL NOT LIMIT OR RELEASE
(I) EXECUTIVE’S RIGHTS UNDER THIS AMENDMENT AND THE
EMPLOYMENT AGREEMENT, AS AMENDED HEREBY,
(II) EXECUTIVE’S RIGHTS UNDER THE REMAINING OPTION
AGREEMENT OR (III) EXECUTIVE’S RIGHTS TO INDEMNIFICATION
FROM THE COMPANY IN RESPECT OF HIS SERVICES AS A DIRECTOR, OFFICER
OR EMPLOYEE OF THE COMPANY OR ANY OF ITS AFFILIATES TO THE MAXIMUM
EXTENT ALLOWED BY LAW, ANY INDEMNIFICATION AGREEMENTS TO WHICH
EXECUTIVE AND THE COMPANY OR ANY OF ITS AFFILATES ARE PARTIES, OR
THE CERTIFICATES OF INCORPORATION OR BY-LAWS (OR LIKE CONSTITUTIVE
DOCUMENTS) OF THE COMPANY OR ANY OF ITS AFFILIATES. EXECUTIVE, ON
BEHALF OF HIMSELF AND THE EXECUTIVE PARTIES, HEREBY COVENANTS
FOREVER NOT TO ASSERT, FILE, PROSECUTE, COMMENCE, INSTITUTE (OR
SPONSOR OR PURPOSELY FACILITATE ANY PERSON IN CONNECTION WITH THE
FOREGOING), ANY COMPLAINT OR LAWSUIT OR ANY LEGAL, EQUITABLE,
ARBITRAL OR ADMINISTRATIVE PROCEEDING OF ANY NATURE, AGAINST ANY OF
THE COMPANY PARTIES IN CONNECTION WITH ANY CLAIMS RELEASED IN THIS
PARAGRAPH 8(a), AND REPRESENTS AND WARRANTS THAT NO OTHER PERSON OR
ENTITY HAS INITIATED OR, TO THE EXTENT WITHIN HIS CONTROL, WILL
INITIATE ANY SUCH PROCEEDING ON HIS BEHALF, AND THAT IF SUCH A
PROCEEDING IS INITIATED, EXECUTIVE SHALL ACCEPT NO BENEFIT
THEREFROM.
(b) THE
COMPANY, ON ITS OWN BEHALF AND ON BEHALF OF ITS SUBSIDIARIES AND
THE COMPANY PARTIES, HEREBY GENERALLY RELEASES AND FOREVER
DISCHARGES THE EXECUTIVE PARTIES FROM ANY AND ALL CLAIMS, KNOWN OR
UNKNOWN, OF ANY KIND AND EVERY NATURE WHATSOEVER, AND WHETHER OR
NOT ACCRUED OR MATURED, WHICH ANY OF THEM MAY HAVE, ARISING OUT OF
OR RELATING TO ANY TRANSACTION, DEALING, RELATIONSHIP, CONDUCT, ACT
OR OMISSION, OR ANY OTHER MATTERS OR THINGS OCCURRING OR EXISTING
AT ANY TIME PRIOR TO AND INCLUDING THE TERMINATION DATE;
PROVIDED , HOWEVER , THAT THIS GENERAL RELEASE WILL
NOT LIMIT OR RELEASE (I) THE COMPANY’S RIGHTS UNDER THIS
AMENDMENT AND THE EMPLOYMENT AGREEMENT AS AMENDED HEREBY,
(II) THE COMPANY’S RIGHTS UNDER THE REMAINING OPTION
AGREEMENT, OR (III) THE COMPANY’S RIGHTS AGAINST
EXECUTIVE WITH RESPECT TO ANY FRAUDULENT ACTIVITY. THE COMPANY ON
BEHALF OF ITSELF, ITS SUBSIDIARIES AND THE COMPANY PARTIES, HEREBY
COVENANTS FOREVER NOT TO ASSERT, FILE, PROSECUTE, COMMENCE,
INSTITUTE (OR SPONSOR OR PURPOSELY FACILITATE ANY PERSON IN
CONNECTION WITH THE FOREGOING), ANY COMPLAINT OR LAWSUIT OR ANY
LEGAL, EQUITABLE, ARBITRAL OR ADMINISTRATIVE PROCEEDING OF ANY
NATURE, AGAINST ANY OF THE EXECUTIVE PARTIES IN CONNECTION WITH ANY
CLAIMS RELEASED IN
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THIS PARAGRAPH 8(b), AND REPRESENTS AND WARRANTS
THAT NO OTHER PERSON OR ENTITY HAS INITIATED OR, TO THE EXTENT
WITHIN ITS CONTROL, WILL INITIATE ANY SUCH PROCEEDING ON ITS
BEHALF, AND THAT IF SUCH A PROCEEDING IS INITIATED, SWIFT FOODS AND
ITS SUBSIDIARIES AND THE COMPANY PARTIES SHALL ACCEPT NO BENEFIT
THEREFROM.
9. Cooperation . Executive agrees to
cooperate with the Company as reasonably requested by the Company
by responding to questions, attending depositions, administrative
proceedings and court hearings, executing documents, and
cooperating with the Company and its accountants and legal counsel
with respect to legal and intellectual property matters, business
issues, and/or claims, administrative or arbitral proceedings and
litigation of which he has or is believed to have personal or
corporate knowledge. Executive further agrees, except as required
by subpoena or other applicable legal process (after the Company
has been given reasonable notice and opportunity to seek relief
from such subpoena or other legal process), to maintain, in strict
confidence, any information of which he has knowledge regarding
current and/or future claims, administrative or arbitral
proceedings and litigation. Executive agrees, except as required by
subpoena or other applicable legal process (after the Company has
been given reasonable notice and opportunity to seek relief from
such requirement), not to communicate with any party(ies), their
legal counsel or others adverse to the Company in any such claims,
administrative or arbitral proceedings or litigation except through
the Company’s designated legal counsel. Executive also shall
make himself available at reasonable times and upon reasonable
notice to answer questions or provide other information within his
possession and requested by the Company relating to the Company,
its affiliates and/or their respective operations in order to
facilitate the smooth transition of Executive’s duties to his
successor.
10. Consulting Arrangement .
(a)
Consulting Services . Effective as of the Termination Date,
the Company hereby retains Executive to render such consulting and
advisory services (the “Consulting Services”) as the
Company may reasonably request from time to time during the term of
the consulting arrangement set forth in this paragraph 10
concerning all aspects of the Company’s business, including,
but not limited to, consulting regarding operational matters,
employee relations, and strategic plans. Executive hereby accepts
such engagement and agrees to perform such services for the Company
upon the terms and conditions set forth herein. Executive will
perform the Consulting Services at such times and places as the
Executive Committee of the Company’s Board of Directors, from
time to time, shall reasonably request. The Company shall, in
accordance with the Company’s normal expense reimbursement
policy, reimburse Executive for reasonable documented out-of-pocket
expenses authorized in advance by the Company that Executive incurs
in the course of providing the Consulting Services. Notwithstanding
anything herein to the contrary, during the Consulting Period (as
hereinafter defined), Executive shall be an independent contractor
with authority to select the means and method of performing the
Consulting Services. During the Consulting Period, Executive shall
not be an employee or agent of the Company, and any action taken by
Executive which is not authorized by this Amendment or any other
agreement between the Company or any of its affiliates and
Executive will not bind the Company or create any claim against the
Company. Unless otherwise specifically authorized by this Amendment
or any other agreement between the Company and Executive, during
the
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Consulting Period, Executive shall have no
authority to transact any business or make any representations or
promises in the name of the Company or its affiliates.
(b)
Term . Unless terminated at an earlier date in accordance
with subparagraph (c) of this paragraph 10, the term of the
consulting arrangement shall be for the period commencing as of the
Termination Date and ending at 5:00 p.m., Central Time, on the
six-month anniversary of the Termination Date (the
“Consulting Period”).
(c)
Termination of Consulting Arrangement . Notwithstanding any
contrary provision contained elsewhere in this Amendment, this
paragraph 10 and the consulting arrangement created by this
paragraph 10 between the Company and Executive (i) may be
terminated prior to the expiration of the term set forth in
subparagraph (b) by the Company for any reason or no reason at
all, and (ii) shall terminate automatically upon the death of
Executive. Termination of this consulting arrangement by the
Company pursuant to clause (i) of the immediately preceding
sentence shall be evidenced by a written notice delivered to
Executive, which notice shall specify the termination date.
Executive may terminate the consulting agreement in the event of a
breach by the Company of its obligations under this Amendment which
remains uncured 15 days after written notice thereof is
received by the Company. Upon a termination of the consulting
arrangement set forth in this paragraph 10, neither of the parties
hereto shall have any further duty or obligation under this
paragraph 10; provided , however , that termination
of the consulting arrangement shall not affect the duties and
obligations set forth in the other sections of this Amendment or
the applicable sections of the Employment Agreement, including,
without limitation, paragraph 9 of the Employment Agreement, and,
within 10 days following the termination, the Company shall
pay to Executive the remainder of any monthly payments owed to
Executive under paragraph 5 in a lump sum payment.
11. Non-Disparagement . Executive and the
Company each agrees to refrain from engaging in any conduct, or
from making any comments or statements, that have the purpose or
effect of harming the reputation or goodwill of Executive, on the
one hand, or the Company or any of its affiliates on the other
hand.
12. Injunctive Relief . Executive hereby
expressly acknowledges that any breach or threatened breach by him
of any of his obligations set forth in paragraphs 8 and 11 of this
Amendment and paragraphs 6 and 9 of the Employment Agreement may
result in significant and continuing injury and irreparable harm to
the Company, the monetary value of which would be impossible to
establish. Therefore, Executive agrees that the Company shall be
entitled to injunctive relief in a court of appropriate
jurisdiction with respect to such provisions. Such injunctive
remedies shall not be deemed the exclusive remedies, but shall be
in addition to all remedies available at law or in equity to the
Company, including, without limitation, the recovery of damages
from Executive and Executive’s agents. Further, if Executive
violates the covenants and restrictions herein and the Company
brings legal action for injunctive or other equitable relief,
Executive agrees that the Company shall not be deprived of the
benefit of the full period of the restrictive covenant, as a result
of the time involved in obtaining such relief. Accordingly,
Executive agrees that the provisions in this paragraph shall have a
duration determined pursuant to paragraph 9 of the Employment
Agreement, computed from the date the relief is granted. Executive
also hereby waives any requirement for the securing or posting
of
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any bond in connection with the obtaining of any
such equitable relief. The parties further agree that this
provision is a material inducement to the Company to enter into
this Amendment.
13. Mail . The Company may open and
answer, and authorize others to open and answer, all mail
communications and other correspondence addressed to Executive
relating to the Company or any of its affiliates or to
Executive’s employment with the Company or any of its
affiliates, and Executive shall promptly refer to the Company all
inquiries, mail communications, and correspondence received by him
relating to the Company or any of its affiliates or to
Executive’s employment with the Company or any of its
affiliates. If any such mail, communications or correspondence
received by the Company includes any threat of any claim against
Executive personally, the Company shall promptly notify Executive
thereof. The Company will promptly forward to Executive any of
Executive’s personal mail, communications or correspondence
received by the Company, unopened to the extent it is reasonably
ascertained to be of a personal nature.
14. Indemnification . EXECUTIVE AGREES,
WARRANTS, AND REPRESENTS TO THE COMPANY THAT EXECUTIVE HAS FULL
EXPRESS AUTHORITY TO RELEASE AND SETTLE ALL CLAIMS THAT ARE THE
SUBJECT OF PARAGRAPH 8(a) OF THIS AMENDMENT AND THAT EXECUTIVE HAS
NOT GIVEN OR MADE ANY ASSIGNMENT TO ANYONE, INCLUDING
EXECUTIVE’S FAMILY OR LEGAL COUNSEL, OF ANY SUCH CLAIMS
AGAINST ANY PERSON OR ENTITY ASSOCIATED WITH OR ANY COMPANY
PARTIES. TO THE EXTENT THAT ANY SUCH CLAIMS MAY BE BROUGHT BY
PERSONS OR ENTITIES CLAIMING BY, THROUGH OR UNDER EXECUTIVE, HIS
RESPECTIVE HEIRS, SUCCESSORS, OR ASSIGNS, THEN EXECUTIVE FURTHER
AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS THE COMPANY OR ANY
COMPANY PARTY, ITS AGENTS, AND ITS SUCCESSORS FROM ANY LAWSUIT OR
OTHER PROCEEDING, JUDGMENT, OR SETTLEMENT ARISING FROM SUCH CLAIMS.
EXECUTIVE FURTHER HEREBY ASSIGNS TO THE COMPANY ALL CLAIMS RELEASED
BY EXECUTIVE PURSUANT TO PARAGRAPH 8(a).
15. No Right to Additional Compensation .
Except as provided in this Amendment, the Employment Agreement as
amended hereby, and in the Remaining Option Agreement, neither the
Company nor any of its predecessors, parents, successors, assigns
or affiliates shall have any further obligation to Executive in
connection with the Employment Agreement or Executive’s
employment by the Company or any of its affiliates, including, but
not limited to, severance, compensation (including but not limited
to deferred compensation, employment contracts, stock options,
bonuses and commissions), health insurance, life insurance,
disability insurance, club dues, vehicle allowances, company plane
privileges, vacation pay, sick pay and any similar
obligations.
16. Execution . Executive acknowledges
and agrees that he has 21 days to consider this Amendment
before accepting, although he may sign this Amendment earlier. The
parties agree that any change to this Amendment, whether material
or immaterial, shall not restart the running of this 21 day
period, which the parties agree began on the date first written
above. Upon execution, Executive will have 7 days to revoke
this Amendment by delivery of a written notice to the Company. This
Amendment shall not become effective or enforceable, the
consideration
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set forth in this Amendment shall not be paid,
and the vesting of options pursuant to paragraph 3 hereof shall not
occur, until after the expiration of this 7 day period without
revocation by Executive (the last day of such 7 day period
being referred to herein as the “Reaffirmation Date”).
At its option, the Company may require, as a condition of Executive
receiving the consideration set forth in this Amendment, Executive
to confirm in writing that he has not revoked this Amendment during
the 7 day period. Executive’s acceptance of any of the
consideration set forth in this Amendment shall constitute his
acknowledgment that he did not revoke this Amendment during this
7 day period.
17. Employment Agreement . This Amendment
replaces and supersedes in their entirety paragraphs 1, 2, 3, 4,
and 10 of the Employment Agreement. Executive hereby acknowledges
and affirms his agreement to the remaining provisions of the
Employment Agreement, including, without limitation, paragraphs 6
(Confidential Information) and 9 (Non-Competition) of the
Employment Agreement. Executive also acknowledges and agrees that
the consideration for his performance under paragraphs 6 and 9 of
the Employment Agreement includes the consideration set forth in
paragraph 2 of this Amendment and the purchase of his options and
shares of common stock pursuant to paragraphs 3 and 4 of this
Amendment. In the event of a conflict between the terms of the
Employment Agreement that remain in effect and this Amendment, the
terms of this Amendment shall control. For purposes of the
provisions of the Employment Agreement that remain in effect,
“Date of Termination” shall have the same meaning given
to the term “Termination Date” in this
Amendment.
18. Attorneys’ Fees . The Company
shall pay the documented attorneys’ fees of Executive
incurred in connection with the negotiation and execution of this
Amendment in an amount not to exceed $5,000, with such payment to
be made within 3 business days after delivery to the Company of
appropriate documentation of such fees.
19. Technology Equipment . Executive
shall be entitled to retain after the Termination Date his home
computer and blackberry device previously issued to him by the
Company; provided that all charges with respect to such equipment
(e.g., monthly service charges) shall be the sole responsibility of
Executive after the Termination Date.
20. Charter Provisions; Directors’ and
Officers’ Liability Insurance Policy . The Company agrees
that it has not, as of the date hereof, amended the indemnification
provisions included in its Certificate of Incorporation or amended
or terminated its directors’ and officers’ liability
insurance policy.
21. Applicable Law . This Amendment shall
be governed by and construed in accordance with the laws of the
State of Delaware without reference to principles of conflict of
laws.
22. Counterparts . This Amendment may be
executed in two or more counterparts.
23. Advice to Consult with Attorney .
Executive is advised to consult with an attorney prior to executing
this Amendment.
24. Survival . The terms and conditions
of this Amendment shall survive the termination of
Executive’s employment.
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blank.]
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IN WITNESS
WHEREOF, Executive has hereunto set Executive’s hand and the
Company has caused this Amendment to be executed in its name on its
behalf, all as of the day and year first above written.
EXECUTIVE
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/s/ John
Simons
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By: John
Simons
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SWIFT FOODS
COMPANY
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By:
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/s/ Danny L.
Herron
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Name:
Title:
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Danny L.
Herron
EVP and CFO
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[SIGNATURE PAGE TO THIRD AMENDMENT TO EMPLOYMENT
AGREEMENT]
EXHIBIT A
Employment Agreement
A-1
Execution Copy
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE
EMPLOYMENT AGREEMENT (the “Agreement”) is made and
entered into as of the 20th day of May by and between S&C
Holdco, Inc. (to be renamed Swift & Company), a Delaware
corporation (together with its successors and assigns permitted
hereunder, the “Company”), and John Simons (the
“Executive”).
WHEREAS, ConAgra
Foods, Inc., a Delaware corporation (“CAGCO”), HMTF
Rawhide, L.P., a Delaware limited partnership (“Acquisition
LP”), and the Company have entered into an agreement of even
date herewith (the “Acquisition Agreement”) pursuant to
which the Company has agreed to acquire (the
“Acquisition”) the fresh beef, pork, and lamb
businesses owned by CAGCO and certain related cattle feeding
operations (the “Businesses”);
WHEREAS, the
Executive has been employed by CAGCO in connection with the
Businesses;
WHEREAS, the
Company and the Executive desire that the Executive’s
employment in connection with the Businesses continue after the
consummation of the Acquisition; and
WHEREAS, the
parties hereto deem it desirable for the Company to employ the
Executive on the terms and conditions set forth herein.
NOW, THEREFORE, IT
IS HEREBY AGREED AS FOLLOWS:
1.
Employment Period . Subject to Section 3, the
Company hereby agrees to employ the Executive, and the Executive
hereby agrees to be employed by the Company, in accordance with the
terms and provisions of this Agreement, for the period commencing
as of the date of consummation of the Acquisition and ending on the
fourth anniversary date of the consummation of the Acquisition (the
“Employment Period”); provided, however, that
commencing on such anniversary date of the consummation of the
Acquisition, and on each anniversary of such date occurring
thereafter, the Employment Period shall automatically be extended
for one additional year unless at least six months prior to the
ensuing expiration date (but no more than 12 months prior to
such expiration date), the Company or the Executive shall have
given written notice that it or he, as applicable, does not wish to
extend this Agreement (a “Non-Renewal Notice”). The
term “Employment Period,” as utilized in this
Agreement, shall refer to the Employment Period as so automatically
extended.
2.
Terms of Employment .
(a)
Position and Duties .
(i) During
the term of the Executive’s employment, the Executive shall
serve as the President and Chief Executive Officer of the Company
and, in so doing, shall report to the Board of Directors of the
Company (the “Board”). The Executive shall have
supervision and control over, and responsibility for, such
management and operational functions of the Company currently
assigned to such positions, and shall have such other powers and
duties (including holding officer positions with the Company and
one or more subsidiaries of the Company) as may from time to time
be prescribed by the Board and agreed to by the
Executive,
so long as such powers and duties are reasonable
and customary for the president and chief executive officer of an
enterprise comparable to the Company.
(i) During
the term of the Executive’s employment, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote substantially all of his
business time to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive’s reasonable
best efforts to perform faithfully, effectively and efficiently
such responsibilities. During the term of Executive’s
employment, it shall not be a violation of this Agreement for the
Executive to (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures or fulfill speaking
engagements and (3) manage personal investments, so long as
such activities do not materially interfere with the performance of
the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement.
b.
Compensation.
(i)
Base Salary . During the term of the Executive’s
employment, the Executive shall receive an annual base salary
(“Annual Base Salary”), which shall be paid in
accordance with the customary payroll practices of the Company, at
least equal to $600,000. Commencing on the first day (the
“First Date”) of the month in the month beginning after
the first anniversary date of this Agreement, and on each
subsequent anniversary date of the First Date as long as the
Executive remains an employee of the Company (the First Date and
each subsequent anniversary of the First Date being herein referred
to as an “Adjustment Date”), the Annual Base Salary of
the Executive shall be increased by an amount equal to five percent
(5%) of the then current Annual Base Salary or such greater amount
as the Board in its discretion may determine appropriate. The
result of such increase to the then current Annual Base Salary
shall constitute the Executive’s Annual Base Salary
commencing on the Adjustment Date then at hand and continuing until
the next Adjustment Date. Any increase in Annual Base Salary shall
not serve to limit or reduce any other obligation to the Executive
under this Agreement. The term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so
increased.
(ii)
Bonuses . The Executive shall be eligible to receive an
annual performance bonus (a “Bonus”) in accordance with
the provisions of Exhibit A . For each fiscal year of
the Company, the Board shall approve a budget which shall include,
among other things, a target for the items set forth on
Exhibit A hereto for that year. A portion of the
Executive’s Bonus shall be based upon the Company’s
achievement of such targets in accordance with the guidelines set
forth on Exhibit A hereto. The Bonus shall be payable
on the first day of the first calendar month after the
determination of the Company’s EBITDA (as defined in
Exhibit A).
(iii)
Incentive, Savings and Retirement Plans . During the term of
the Executive’s employment, the Executive shall be entitled
to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other
executives of the Company (“Investment
Plans”).
(iv)
Welfare Benefit Plans . During the term of the
Executive’s employment, the Executive and/or the
Executive’s family, as the case may be, shall be
eligible
2
for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs (“Welfare Plans”) provided by the Company
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other executives of the
Company.
(v)
Perquisites . During the term of the Executive’s
employment, the Executive shall be entitled to receive (in addition
to the benefits described above) such perquisites and fringe
benefits appertaining to his position in accordance with any
practice established by the Board. Executive shall be furnished
with all such facilities and services suitable to his position and
adequate for the performance of his duties.
(vi)
Airplane Allowance .
(a) For
each 12-month period during the term of the Executive’s
employment, the Executive shall be entitled to the personal use of
a Company plane for up to twelve trips in the continental United
States. The Company shall pay all costs and expenses associated
with the plane for such trips.
(b) To
the extent that the Executive’s actual personal use of the
airplane is properly imputed to the Executive as taxable
compensation under the Internal Revenue Code of 1986, as amended,
the Company shall pay to the Executive an additional bonus equal to
the amount of any federal, state and local taxes payable in respect
of such imputed compensation, along with a gross-up amount such
that the net amount to be paid to the Executive after deduction of
any federal, state and local taxes owed in respect of such
additional bonus amount shall be equal to the amount of federal,
state and local taxes owed by the Executive in respect of such
imputed compensation (such additional bonus and gross-up amount the
“Tax Reimbursement”). For purposes of determining the
amount of the tax reimbursement and the gross-up payment, the
Executive shall be deemed to pay federal, state and local income
taxes at the highest marginal rates applicable to individual in the
calendar year in which the tax reimbursement and the gross-up
payment are to be made and the reduction in federal income taxes
resulting from the payment of additional state and local income
taxes shall be taken into account. The payments provided for in
this Subsection shall be made upon the earlier of (i) a
certification to the Company by a tax advisor to the Executive that
the Executive is liable for taxes with respect to the use of the
airplane, or (ii) the assessment upon the Executive of any
taxes with respect to his personal use of the airplane; provided
that no payment under this Subsection shall be required to be paid
prior to the 31st day of March following the calendar year in which
the imputed income giving rise to the payment occurred.
(vii)
Expenses . During the term of the Executive’s
employment, the Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by
the Executive in accordance with the policies, practices and
procedures of the Company.
(viii)
Vacation and Holidays . During the term of the
Executive’s employment, the Executive shall be entitled to
four weeks of paid vacation time each year in addition to those
days designated as paid holidays in accordance with the plans,
policies,
3
programs and practices of the Company for its
executive officers. Unused vacation time shall carry over to the
next year. Any unused vacation time shall be paid in a cash lump
sum payment promptly after the Date of Termination, pursuant to
Section 4(a)(i).
(ix)
Stock Options . In addition to any benefits the Executive
may receive pursuant to paragraph 2(b)(iii), as may be determined
appropriate by the Board, the Company may, from time to time, grant
Executive stock options (the “Executive Options”)
exercisable for shares of capital stock of the Company and, subject
to the terms of this Agreement, such Executive Options shall have
such terms and provisions as may be determined appropriate by the
Board. Upon the closing of the Acquisition, the Company will grant
Executive Options in accordance with the terms of Exhibit B
hereto and under a stock option plan to be adopted upon such
closing.
3.
Termination of Employment .
(a)
Death or Disability . The Executive’s employment shall
terminate automatically upon the Executive’s death during the
Employment Period. If the Disability of the Executive has occurred
during the Employment Period (pursuant to the definition of
Disability set forth below), the Company may give to the Executive
written notice in accordance with Section 11(b) of its intention to
terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided
that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the Executive’s inability
to perform his duties and obligations hereunder for a period of 180
consecutive days due to mental or physical incapacity as determined
by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive’s legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
(b)
Cause . The Company may terminate the Executive’s
employment during the Employment Period for Cause or without Cause.
For purposes of this Agreement, “Cause” shall mean (i)
commission by the Executive of an act of fraud upon the Company
that has caused demonstrable and serious economic injury to the
Company; (ii) the conviction of the Executive of any felony
(or a plea of nolo contendere thereto) that involves
financial misconduct or moral turpitude or has resulted in any
adverse publicity regarding the Executive or the Company or
economic injury to the Company or (iii) a willful and material
breach by the Executive of Section 6 or Section 9 that
has caused demonstrable and serious economic injury to the Company.
Notwithstanding the foregoing, no act or omission shall constitute
“Cause” for purposes of this Agreement unless the Board
provides Executive (x) written notice clearly and fully
describing the particular acts or omissions which the Board
reasonably believes in good faith constitutes “Cause;”
(y) an opportunity, within 30 days following his receipt
of such notice, to meet in person with the Board to explain or
defend the alleged acts or omissions relied upon by the Board and,
to the extent practicable, to cure such acts or omissions; and
(z) a copy of a resolution duly adopted by a majority of the
Board (excluding Executive) at a meeting of the Board called and
held for such purpose finding that in the good faith opinion of the
Board, Executive committed the alleged acts or omissions and that
they constitute grounds for Cause hereunder. Further, no act or
omission shall be considered willful unless committed in bad
faith
4
and without a reasonable belief that the act or
omission was in the best interests of the Company. The Executive
shall have the right to contest a determination of Cause by the
Company by requesting arbitration in accordance with the terms of
Section 11(j) hereof.
For purposes of this Agreement, “without
Cause” shall mean a termination by the Company of the
Executive’s employment during the Employment Period for any
reason other than a termination based upon Cause, death or
Disability, including pursuant to a Board Determination (as defined
in Section 4(b)).
(c)
Good Reason . The Executive’s employment may be
terminated during the Employment Period by the Executive for Good
Reason or without Good Reason; provided, however, that the
Executive agrees not to terminate his employment for Good Reason
unless (i) the Executive has given the Company at least
30 days’ prior written notice of his intent to terminate
his employment for Good Reason, which notice shall specify the
facts and circumstances constituting Good Reason, and (ii) the
Company has not remedied such facts and circumstances constituting
Good Reason within such 30-day period. For purposes of this
Agreement, “Good Reason” shall mean:
(i) the
assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2(a) or any other
action by the Company which results in a material diminution in
such position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive (without
limiting the foregoing, the Company and the Executive agree that
the delegation of the authority, duties or responsibilities of the
Executive to another person or persons, including any committee,
shall be deemed to be an action by the Company which results in a
material diminution in the Executive’s position, authority,
duties, or responsibilities as contemplated by Section 2(a)),
provided, however, that Good Reason may not be asserted by the
Executive under this clause (i) of Section 3(c) after a
Non-Renewal Notice has been given by either the Company or the
Executive;
(ii) any
termination or material reduction of a material benefit under any
Investment Plan or Welfare Plan in which the Executive participates
unless (1) there is substituted a comparable benefit that is
economically substantially equivalent to the terminated or reduced
benefit prior to such termination or reduction or (2) benefits
under such Investment Plan or Welfare Plan are terminated or
reduced with respect to all then existing senior executives of the
Company previously granted benefits thereunder;
(iii) any
failure by the Company to comply with any of the provisions of
Section 2(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(iv) any
failure by the Company to comply with and satisfy
Section 8(c), provided that such successor has received at
least ten days prior written notice from the Company or the
Executive of the requirements of Section 8(c);
5
(v) the
relocation or transfer of the Executive’s principal office to
a location more than 20 miles from the Company’s current
executive offices as such are maintained on the date hereof in the
city of Greeley, Colorado; or
(iv) without
limiting the generality of the foregoing, any material breach by
the Company or any of its subsidiaries or other affiliates (as
defined below) of (1) this Agreement or (2) any other
agreement between the Executive and the Company or any such
subsidiary or other affiliate, which material breach is not
remedied by the Company promptly after receipt of notice thereof
given by the Executive.
As used in this
Agreement, “affiliate” means, with respect to a person,
any other person controlling, controlled by or under common control
with the first person; the term “control,” and
correlative terms, means the power, whether by contract, equity
ownership or otherwise, to direct the policies or management of a
person; and “person” means an individual, partnership,
corporation, limited liability company, trust or unincorporated
organization, or a government or agency or political subdivision
thereof.
(d)
Notice of Termination . Any termination by the Company for
Cause or without Cause, or by the Executive for Good Reason or
without Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with
Section 11(b). For purposes of this Agreement, a “Notice
of Termination” means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets
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 and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall not
be more than 15 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the
Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
(e)
Date of Termination . “Date of Termination”
means (i) if the Executive’s employment is terminated by
the Company for Cause, or by the Executive for Good Reason or
without Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein pursuant to
Section 3(d), as the case may be, (ii) if the
Executive’s employment is terminated by the Company other
than for Cause, the date on which the Company notifies the
Executive of such termination or any later date specified therein
pursuant to Section 3(d), as the case may be, (iii) if the
Executive’s employment is terminated by reason of death or
Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be, and (iv) if the
Executive’s employment terminates due to the giving of a
Non-Renewal Notice, the last day of the Employment
Period.
4.
Obligations of the Company upon Termination .
(a)
Good Reason; Other Than for Cause, Death or Disability . If,
during the Employment Period, the Company shall terminate the
Executive’s employment other than for
6
either Cause or Disability or the Executive
shall terminate his employment for Good Reason, and the termination
of the Executive’s employment in any case is not due to his
death or Disability:
(i) The
Company shall pay to the Executive in a lump sum in cash within ten
days after the Date of Termination the aggregate of the following
amounts: (1) the sum of the Executive’s Annual Base
Salary through the Date of Termination to the extent not
theretofore paid and any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon)
and any accrued vacation pay (“Accrued Obligations”);
(2) an amount equal to two times the Executive’s then
current Annual Base Salary; (3) an amount equal to the greater
of either fifty percent (50%) of (a) the maximum annual Bonus
(excluding any “Stretch” amounts as described on
Exhibit A ) that the Executive could have earned over
the remainder of the Employment Period (assuming that a Non-Renewal
Notice would be timely given by the Company prior to the next
ensuing expiration date of the Employment Period) or (b) the
highest Bonus paid hereunder to the Executive prior to the Date of
Termination multiplied by the number of complete, and prorated for
any partial, fiscal years remaining in the Employment Period
(assuming that a Non-Renewal Notice would be timely given by the
Company prior to the next ensuing expiration date of the Employment
Period); and (4) any amount arising from Executive’s
participation in, or benefits under, any Investment Plans
(“Accrued Investments”), which amounts shall be payable
in accordance with the terms and conditions of such Investment
Plans. Notwithstanding anything to the contrary contained herein,
for purposes of clauses 3(a) and (b) of the preceding
sentence, if the Date of Termination occurs (x) during the
first year of the Employment Period, the Employment Period shall be
deemed to end two years from the end of the year in which the Date
of Termination occurs, (y) during the second year of the
Employment Period, the Employment Period shall be deemed to end one
year from the end of the year in which the Date of Termination
occurs, and (z) during the third or any subsequent year, the
Employment Period shall be deemed to end at the end of the year in
which the Date of Termination occurs. In addition, the Company
shall pay to the Executive an amount equal to any Tax Reimbursement
due pursuant to Section 2(vi)(b) as provided
therein.
(ii) Except
as otherwise provided in Section 4(d), the Executive (and
members of his family) shall be entitled to continue their
participation in the Company’s Welfare Plans for a period of
12 months from the Date of Termination. This period shall be
credited against any period for which the Executive and/or members
of his family are entitled to continuation coverage under Section
4980B of the Internal Revenue Code of 1986, as amended, and
Sections 601-609 of the Employee Retirement Income Security
Act of 1974, as amended.
(iii) Notwithstanding
the terms or conditions of any Executive Option, stock appreciation
right or similar agreements between the Company and the Executive,
the Executive shall vest, as of the Date of Termination, in all
rights under such agreements (i.e., Executive Options that would
otherwise vest after the Date of Termination) and thereafter shall
be permitted to exercise, in accordance with the terms of the
Executive Options, any and all such rights until the earlier of
(w) the date the Option would otherwise expire in accordance
with its terms, (x) if the Date of Termination is prior to a
Qualifying Public Offering (as defined in that certain Stock Option
Agreement of even date herewith between the Company and Executive),
the 270th day after a Qualifying Public Offering, (y) if the
Date of Termination is after a Qualifying Public Offering, the 90th
day after the Date of Termination, or (z) the 90th day after
the completion of a merger, combination, share exchange or similar
transaction involving the
7
Company pursuant to which the securities for
which this Option is then exercisable are listed on a national
securities exchange or the Nasdaq National Market System or any
successor thereto; provided, however, the provisions of this clause
(iii) of this Section 4(a) shall not apply to a termination of
the Executive’s employment during the Employment Period that
is made by the Company pursuant to a Board
Determination.
(b)
Board Determination . If the Executive’s employment is
terminated by the Company pursuant to a Board Determination during
the Employment Period, the Executive shall be entitled to receive
the benefits specified in Sections 4(a)(i) and 4(a)(ii) of
this Agreement. Further, notwithstanding the terms or conditions of
any Executive Option, stock appreciation rights or similar
agreement between the Executive and the Company, all unvested
Executive Options and unvested stock appreciation rights or similar
agreements shall be forfeited and the Executive shall not vest, as
of the Date of Termination or otherwise, in any rights under such
unvested Executive Options, stock appreciation rights or similar
agreements that are unvested immediately prior to the Date of
Termination and thereafter shall be permitted to exercise, in
accordance with the terms of the Executive Options, only those
rights that were otherwise vested immediately prior to the Date of
Termination until the earlier of (w) the date the Option would
otherwise expire in accordance with its terms, (x) if the Date
of Termination is prior to a Qualifying Public Offering, the 270th
day after a Qualifying Public Offering, (y) if the Date of
Termination is after a Qualifying Public Offering, the 90th day
after the Date of Termination, or (z) the 90th day after the
completion of a merger, combination, share exchange or similar
transaction involving the Company pursuant to which the securities
for which this Option is then exercisable are listed on a national
securities exchange or the Nasdaq National Market System or any
successor thereto. For purposes of this Agreement, a “Board
Determination” means a unanimous determination by the Board
(excluding the Executive) (which is evidenced by one or more
written resolutions of the Board to such effect), (i) to terminate
the Executive’s employment during the Employment Period based
upon the Board’s dissatisfaction with the manner in which the
Executive has performed his obligations and duties under Section
2(a) and (ii) that Cause does not exist as a basis for such
termination. Notwithstanding the foregoing, no act or omission
shall constitute or be the basis for a termination based upon a
Board Determination unless the Board provides the Executive
(a) written notice of its intention to terminate
Executive’s employment pursuant to a Board Determination, and
(b) an opportunity, within 30 days following the
Executive’s receipt of such notice, to meet in person with
the Board to explain or defend his performance to the
Board.
(c)
Death or Disability . If the Executive’s employment is
terminated by reason of the Executive’s death or Disability
during the Employment Period, the Company shall pay to his legal
representatives (i) in a lump sum in cash within ten days
after the Date of Termination the aggregate of the following
amounts: (A) an amount equal to the Executive’s then
current Annual Base Salary or Six Hundred Thousand Dollars
($600,000.00), whichever is greater; and (B) the Accrued
Obligations; and (ii) the Accrued Investments which shall be
payable in accordance with the terms and conditions of the
Investment Plans. In addition, the members of the Executive’s
family shall be entitled to continue their participation in the
Company’s Welfare Plans for a period of 12 months after the
Date of Termination. Further, notwithstanding the terms or
conditions of any Executive Option, stock appreciation right or
similar agreements between the Company and the Executive, the
Executive shall vest, as of the Date of Termination, in all rights
under such agreements (i.e., Executive Options that
would
8
otherwise vest after the Date of Termination)
and thereafter his legal representative shall be permitted to
exercise, in accordance with the terms of the Executive Options,
any and all such rights until the earlier of (w) the date the
Option would otherwise expire in accordance with its terms,
(x) if the Date of Termination is prior to a Qualifying Public
Offering, the 270th day after a Qualifying Public Offering,
(y) if the Date of Termination is after a Qualifying Public
Offering, the 90th day after the Date of Termination, or
(z) the 90th day after the completion of a merger,
combination, share exchange or similar transaction involving the
Company pursuant to which the securities for which this Option is
then exercisable are listed on a national securities exchange or
the Nasdaq National Market System or any successor thereto. In
addition, the Company shall pay to the Executive an amount equal to
any Tax Reimbursement due pursuant to Section 2(vi)(b) as
provided therein. The Company shall have no further payment
obligations to the Executive or his legal representatives under
this Agreement.
(d)
Cause; Other than for Good Reason . If the Executive’s
employment shall be terminated by the Company for Cause or by the
Executive without Good Reason during the Employment Period, the
Company shall have no further payment obligations to the Executive
other than for payment of Accrued Obligations, Accrued Investments
(which shall be payable in accordance with the terms and conditions
of the Investment Plans), and the continuance of benefits under the
Welfare Plans to the Date of Termination (or later to the extent
required by law). Further, notwithstanding the terms or conditions
of any Executive Option, stock appreciation rights or similar
agreement between the Executive and the Company, all unvested
Executive Options and unvested stock appreciation rights or similar
agreements shall be forfeited and the Executive shall not vest, as
of the Date of Termination or otherwise, in any rights under such
Executive Options, stock appreciation rights or similar agreements
that are unvested immediately prior to the Date of Termination and
thereafter shall be permitted to exercise, in accordance with the
terms of the Executive Options, only those rights that were
otherwise vested immediately prior to the Date of Termination until
the earlier of (w) the date the Option would otherwise expire
in accordance with its terms, (x) if the Date of Termination
is prior to a Qualifying Public Offering, the 270th day after a
Qualifying Public Offering, (y) if the Date of Termination is
after a Qualifying Public Offering, the 90th day after the Date of
Termination, or (z) the 90th day after the completion of a
merger, combination, share exchange or similar transaction
involving the Company pursuant to which the securities for which
this Option is then exercisable are listed on a national securities
exchange or the Nasdaq National Market System or any successor
thereto. In addition, the Company shall pay to the Executive an
amount equal to any Tax Reimbursement due pursuant to Section
2(vi)(b) as provided therein.
(e)
Put Option .
(i) If,
during the Employment Period, the Executive’s employment is
terminated by the Executive or the Company for any reason,
including due to death or Disability, then the Executive shall have
the option, in his sole discretion, to require the Company to
purchase all and not less than all shares of Company common stock
(“Common Stock”) that the Executive purchased from the
Company pursuant to any subscription agreement to be entered into
between the Executive and the Company prior to the date of the
Acquisition (the “Subscription Agreement”) (the
“Option Shares”), at the Fair Market Value (as
hereinafter defined) of the Option Shares. Notwithstanding anything
to the contrary contained herein, the Company’s obligation to
purchase the Option Shares is subject to the Company having
funds
9
legally available therefore as well as
compliance with any restrictions imposed by agreements evidencing
the Company’s indebtedness. If any restrictions imposed by
agreements evidencing the Company’s indebtedness prevent or
restrict the purchase of the Option Shares, the Company shall use
all commercially reasonable efforts to obtain a wavier of such
restrictions.
(ii) In
the event that the Executive elects to require such a purchase,
then (a) the Executive shall give written notice to the
Company of such election (the “Option Notice”) within
ten (10) days of the Date of Termination; (b) such purchase
shall be closed on the tenth (10th) business day following the
determination of the Fair Market Value of the Option Shares;
(c) at such closing, the Executive shall deliver to the
Company the certificate(s) representing the Option Shares,
accompanied by stock powers duly executed by the Executive in
blank; and (d) the Option Shares shall be delivered to the
Company free and clear of all liens, security interests, claims,
rights of another, and encumbrances of any kind or character (and
Executive shall certify to such effect at such closing).
(iii) “Fair
Market Value” as used herein means the fair market value as
agreed upon by the Company and the Executive. In the event that,
within ten days after the date of the Option Notice, the Company
and the Executive cannot agree upon the fair market value of the
Option Shares, then, within five days after such ten-day period has
expired, the parties shall select an independent appraiser who will
determine the fair market value of the Option Shares as of the Date
of Termination. Such independent appraiser will determine the fair
market value of the Option Shares within 30 days following its
appointment and such determination of the fair market value of the
Option Shares will be final and binding. If, within the five days
provided for the parties to select an independent appraiser, the
parties are unable to agree upon an independent appraiser, the
Company, on the one hand, and the Executive, on the other hand,
shall, within five days after the first five-day selection period
expires, each select an independent appraiser and such independent
appraisers together will select a third independent appraiser that
will determine the fair market value of the Option Shares, whose
determination of the fair market value of the Option Shares will be
final and binding. Such third appraiser shall have 30 days
following his or her selection to determine the fair market value
of the Option Shares. All fees and expenses for any appraisers
selected hereunder shall be borne equally (50:50) by the Company
and the Executive. Notwithstanding the foregoing, if on the Date of
Termination the Common Stock is then listed or admitted to trading
on a national securities exchange or is traded in the
over-the-counter market as reported by the Nasdaq National Market
System or any successor thereto, the Fair Market Value of each
share of the Option Shares shall be equal to the average of the
closing price of the Common Stock for the 20 consecutive trading
days immediately preceding the Date of Termination. The closing
price for any day shall be the last reported sale price regular way
or, in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for such
day, in each case (x) on the principal national securities
exchange on which the Common Stock is listed or to which such
shares are admitted to trading or (y) if the Common Stock is
not listed or admitted to trading on a national securities
exchange, in the over-the-counter market as reported by the Nasdaq
National Market System or any successor thereto.
(f) If
pursuant to the terms and provisions of the Company’s Welfare
Plans the Executive (or members of his family) are not eligible to
participate in the Company’s Welfare Plans because the
Executive is no longer an employee of the Company, then the Company
may fulfill its obligations under Section 4(a)(ii), Section
4(b) or Section 4(c), as
10
applicable, by either providing to the Executive
(or his legal representatives), or reimbursing the Executive (or
his legal representatives) for the costs of, benefits substantially
similar to the benefits provided by the Company to its senior
management under its Welfare Plans as such may from time to time
exist after the Date of Termination.
5.
Full Settlement, Mitigation . In no event shall the
Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other
employment. Neither the Executive nor the Company shall be liable
to the other party for any damages in addition to the amounts
payable under Section 4 arising out of the termination of the
Executive’s employment prior to the end of the Employment
Period; provided, however, that the Company shall be entitled to
seek damages for any breach of Sections 6, 7 or 9 or criminal
misconduct.
6.
Confidential Information .
(a) The
Executive acknowledges that the Company and their affiliates have
trade, business and financial secrets and other confidential and
proprietary information (collectively, the “Confidential
Information”). As defined herein, Confidential Information
shall not include information (i) that becomes generally
available to the public other than as a result of a disclosure by
Executive, (ii) that is rightfully available to Executive on a
non-confidential basis from a source other than the Company
(provided such source was not bound by a confidentiality agreement
with the Company or otherwise prohibited from transmitting the
information to Executive by a contractual, legal, or fiduciary
obligation), or (iii) that is required to be disclosed by the
Executive pursuant to a subpoena or court order, or pursuant to a
requirement of a governmental agency or law of the United States of
America or a state thereof or any governmental or political
subdivision thereof; provided , however , that the
Executive shall take all reasonable steps to prohibit disclosure
pursuant to subsection (iii) above.
(
