Consulting Agreement - Tyson Foods Inc. and Michael T. Hudson
CONSULTING AGREEMENT, made as of September 4, 1997 ('Agreement'), by
and between Tyson Foods, Inc., a Delaware corporation ('Parent'), and Michael T.
WHEREAS, Parent is engaged in the business of producing, marketing
and distributing a variety of food products (the Business');
WHEREAS, Consultant has acquired extensive knowledge of and
experience in the Business as conducted by Parent;
WHEREAS, Parent desires to obtain the benefit of Consultant's
knowledge and experience by retaining Consultant, and Consultant desires to
accept such position, for the term and upon the other conditions hereinafter set
WHEREAS, concurrently herewith, Parent, HFI Acquisition Sub Inc., a
Delaware corporation and a wholly owned subsidiary of Parent (the 'Purchaser'),
and Hudson Foods, Inc., a Delaware corporation (the 'Company'), are entering
into an Agreement and Plan of Merger dated as of the date hereof (the 'Merger
Agreement'), pursuant to which, among other things, the Company is merging with
and into the Purchaser; and
WHEREAS, Consultant will cease to be a director and officer of the
Company and all of its subsidiaries, effective as of the Effective Time of the
Merger (as such terms are defined in the Merger Agreement).
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein, the adequacy and sufficiency of which are hereby
acknowledged, Parent and Consultant hereby agree as follows:
1. Consulting Services. During the Term (as defined below), Consultant shall
make himself available to perform consulting services with respect to the
businesses conducted by Parent and its subsidiaries. Such consulting services
shall be related to such matters as the Chief Executive Officer of Parent may
designate from time to time, including consulting services to Parent's Board of
Directors with respect to the businesses conducted by Parent and its
subsidiaries. Consultant shall accommodate reasonable requests for Consultant's
consulting services, and shall devote reasonable time and his reasonable best
efforts, skill and attention to the performance of such consulting services,
including travel reasonably required in the performance of such consulting
2. Term. The term of Consultant's engagement under this Agreement
shall commence at the Effective Time of the Merger and, unless earlier
terminated pursuant to Section 7, shall continue in effect for a period of ten
years thereafter (such period, as may be earlier terminated, the 'Term').
There shall be no extension of this Agreement other than by written instrument
duly executed and delivered by both parties hereto.
3. Compensation. During the Term, Parent shall pay Consultant
$350,000 per annum, payable in equal monthly installments (subject to proration
for any partial month) on the last day of each month during the Term to an
account designated in writing by Consultant.
4. Expenses. Parent shall reimburse Consultant for reasonable and
necessary business expenses of Consultant for travel, meals and similar items
incurred in connection with the performance of Consultant's duties hereunder,
and which are consistent with such guidelines as the Board of Directors of
Parent may from time to time establish. All payments for reimbursement of such
expenses shall be made to Consultant only upon the presentation to Parent of
appropriate vouchers or receipts.
5. Additional Benefits. In addition to the compensation set forth
in Section 3 hereof, Parent shall provide Consultant with the following
(a) continuation of benefits payable pursuant to and in
accordance with the Company's Salary Continuation Plan in effect on the date
however, that notwithstanding anything to the contrary contained in such Salary
Continuation Plan, Consultant acknowledges and agrees that he shall not be
entitled to receive payments under such plan for an extended period as a result
of the Merger;
(b) continuation of the split-dollar life insurance policy
provided by the Company prior to the date hereof under the terms and conditions
at least as favorable to Consultant as those in effect as of the date hereof;
(c) continued medical insurance benefits during the Term
comparable to those provided by the Company prior to the date hereof.
6. Confidentiality, Non-Competition.
(a) Consultant acknowledges that: (i) the Business is intensely
competitive and that Consultant's engagement by Parent will require that
Consultant have access to and knowledge of confidential information of Parent;
(ii) the direct and indirect disclosure of any such confidential information to
existing or potential competitors of Parent would place Parent at a competitive
disadvantage and would do damage, monetary or otherwise, to Parent's business;
and (iii) the engaging by Consultant in any of the activities prohibited by this
Section 6 may constitute improper appropriation and/or use of such information
and trade secrets. Consultant expressly acknowledges the trade secret status of
the confidential information and that the confidential information constitutes
a protectable business interest of Parent.
(b) For purposes of this Section 6, Parent shall be construed to
include Parent and its subsidiaries and affiliates engaged in the Business.
(c) During the Term of this Agreement and at all times after the
termination of Consultant's engagement upon expiration of the Term or
otherwise, Consultant shall not, directly or indirectly, whether individually,
as a director, stockholder, owner, partner, employee, principal or agent of any
business, or in any other capacity, make known, disclose, furnish, make
available or utilize any of the confidential information, other than in the
proper performance of the duties contemplated herein, or as required by a court
of competent jurisdiction or
other administrative or legislative body; provided that, prior to disclosing any
of the confidential information to a court or other administrative or
legislative body, Consultant shall promptly notify Parent so that Parent may
seek a protective order or other appropriate remedy. Consultant agrees to return
all confidential information, including all photocopies, extracts and summaries
thereof, and any such information stored electronically on tapes, computer disks
or in any other manner to Parent at any time upon request by Parent and upon the
termination of his engagement for any reason.
(d) During the Term, Consultant shall not engage in Competition
(as defined below) with Parent. For purposes of this Agreement, 'Competition' by
Consultant shall mean Consultant's engaging in, or otherwise directly or
indirectly being employed by or acting as a consultant or lender to, or being a
director, officer, employee, principal, licensor, trustee, broker, agent,
stockholder, member, owner, joint venturer or partner of, or permitting his name
to be used in connection with the activities of any other business or
organization which competes, directly or indirectly, with the business of Parent
as the same shall be constituted at any time during or following his engagement;
provided that, it shall not be a violation of this Section 6(d) for Consultant
to (i) become the registered or beneficial owner of up to five percent (5%) of
any class of the capital stock of a competing corporation registered under the
Securities Exchange Act of 1934, as amended, provided that Consultant does not
actively participate in the business of such corporation until such time as this
covenant expires,(ii) engage in any business which, at the commencement of such
engagement, Parent was not engaged in Competition with or Consultant was not
aware that Parent was in Competition with, or (iii) own and operate the grower
farms owned on the date hereof by Consultant.
(e) Without limiting the generality of the foregoing, during the
Term, Consultant agrees that he will not, directly or indirectly, for his
benefit or for the benefit of any other person, firm or entity, do any of the
(i) solicit from any customer doing business with Parent,
business of the same or of a similar nature to the Business with such
(ii) solicit the employment or services of, or hire, any
person who at the time is employed by or was a consultant to Parent; or
(iii) otherwise interfere with the Business or accounts of
Parent including the making of any statements or comments of a defamatory
or disparaging nature to third parties regarding Parent or its officers,
directors, personnel or products.
(f) Consultant acknowledges that this Agreement is being entered
into in connection with the consummation of the transactions contemplated by the
Merger Agreement, that the services to be rendered by him to Parent are of a
special and unique character, which gives this Agreement a peculiar value to
Parent, the loss of which may not be reasonably or adequately compensated for by
damages in an action at law, and that a material breach or threatened breach by
him of any of the provisions contained in this Section 6 will cause Parent
irreparable injury. Consultant therefore agrees that Parent shall be entitled,
in addition to any other right or remedy, to a temporary, preliminary and
permanent injunction, without the necessity of proving the inadequacy of
monetary damages or the posting of any bond or security, enjoining or
restraining Consultant from any such violation or threatened violations.
(g) Consultant further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the business and goodwill of Parent; and it is the intent of the
parties hereto that if in the opinion of any court of competent jurisdiction any
provision set forth in this Section 6 is not reasonable in any respect, such
court shall have the right, power and authority to modify any and all such
provisions as to such court shall appear not unreasonable and to enforce the
remainder of this Section 6 as so modified.
(a) Notwithstanding any provision of this Agreement to the
contrary, the engagement of Consultant hereunder after the Closing shall
terminate on the first to occur of the following dates (each of which, to the
extent applicable, the 'Date of Termination'):
(i) the date that Parent and Consultant mutually agree to
(ii) the date of Consultant's death or adjudicated
(iii) the date on which Parent shall give Consultant notice
of termination on account of Disability (as defined below);
(iv) the date on which Parent shall give Consultant notice
of termination for Cause;
(v) the date on which Parent shall give Consultant notice
of termination without Cause; or
(vi) the expiration of the Term.
(b) Upon termination of Consultant's engagement after the
Closing, Consultant shall be entitled to the following:
(i) upon termination pursuant to clause (a)(i), (iv) or
(vi) above, Consultant or Consultant's heirs, as the case may be, shall be
entitled to receive any (A) unpaid consulting fees and expenses to the Date
of Termination and (B) all benefits payable pursuant to Section 5(a) and
(b) hereof when they shall become due and payable.
(ii) upon termination pursuant to clause (a)(ii), (iii) or
(v) above, Consultant shall be entitled to receive (A) any unpaid
consulting fees and expenses to the Date of Termination, (B) all consulting
fees payable pursuant to Section 3 hereof when they shall become payable
hereunder and (C) all benefits payable pursuant to Section 5 hereof when
they shall become payable hereunder.
(c) For purposes of this Agreement, 'Disability' shall mean an
illness, injury or other incapacitating condition as a result of which
Consultant is unable to perform the services required to be performed under this
Agreement for (i) ninety (90) consecutive days during the Term, or (ii) a period
or periods aggregating more than ninety (90) days in any twelve (12) consecutive
months. In any such event, Parent, in its sole discretion, may terminate this
Agreement by giving notice to Consultant of termination for Disability.
Consultant agrees to submit to such medical examinations as may be necessary to
determine whether a Disability exists, pursuant to such reasonable requests
made by Parent from time to time.
(d) For purposes of this Agreement, 'Cause' shall mean the
occurrence of any of the following, as reasonably determined by Parent:
(i) the willful and continued failure, neglect or refusal
by Consultant to perform his duties hereunder (including, without
limitation, Consultant's inability to perform such duties as a result of
alcohol or drug abuse, chronic alcoholism or drug addiction) after
receiving written notice from Parent specifying in reasonable detail such
failure, neglect or refusal and after being given a reasonable time and
opportunity to remedy such alleged failure, neglect or refusal;
(ii) any willful, intentional or grossly negligent act by
Consultant having the effect of materially and demonstrably injuring the
interest, business or reputation of Parent, any of its parents,
subsidiaries or affiliates;
(iii) Consultant's conviction of any felony or a misdemeanor
involving moral turpitude (including entry of a nolo contendere plea);
(iv) any misappropriation or embezzlement of the property
of Parent or its affiliates and subsidiaries (whether or not a misdemeanor
or felony); and
(v) a breach of any one or more of the covenants of this
Agreement by Consultant after receiving written notice from Parent
reasonable detail such breach and after being given a reasonable time and
opportunity to remedy such breach.
8. Return of Company Property. Consultant agrees that following the
termination of his engagement for any reason, he shall return all property of
Parent, its subsidiaries, affiliates and any divisions thereof which is then in
or thereafter comes into his possession, including, but not limited to,
documents, contracts, agreements, plans, photographs, books, notes,
electronically stored data and all copies of the foregoing as well as any
automobile or other materials or equipment supplied by Parent to Consultant.
9. Effectiveness; Termination; Survival.
(a) Notwithstanding any provision hereof to the contrary, it is
the intention of the parties hereto that: (i) this Agreement shall become
effective at the Effective Time of Merger; and (ii) from and after the
termination of the Merger Agreement in accordance with its terms at any time
prior to the Effective Time of Merger, the engagement contemplated hereby shall
be deemed abandoned and this Agreement shall forthwith become void.
(b) Upon termination of Consultant's engagement for any reason
after the Effective Time of Merger, this Agreement shall terminate and Parent
shall have no further obligation to Consultant; provided that the provisions set
forth in Sections 6, 7(b), 8 and 10 through 17 hereof shall remain in full force
and effect after the termination of Consultant's engagement, notwithstanding the
expiration or termination of this Agreement.
10. Consultant's Independence and Discretion.
(a) Nothing herein contained shall be construed to constitute
the parties hereto as partners or as joint venturers, or either as agent of the
other, or as employer and employee. By virtue of the relationship described
herein Consultant's relationship to Parent during the term of this Agreement
shall only be that of an independent contractor and Consultant shall perform all
services pursuant to this Agreement as an independent contractor. Consultant
shall not provide any services under Parent's business name and shall not
present himself as an employee of Parent.
(b) Subject only to such specific limitations as are contained
in this Agreement, the manner, means, details or methods by which Consultant
performs his obligations under this Agreement shall be solely within the
discretion of Consultant. Parent shall not have the authority to, nor shall it,
supervise, direct or control the manner, means, details or methods utilized by
Consultant to perform his obligations under this Agreement and nothing in this
Agreement shall be construed to grant Parent any such authority.
11. Fees and Expenses. Parent shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by
Consultant as a result of (i) Parent's wrongful termination of Consultant's
engagement hereunder as finally determined by a court of competent jurisdiction
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination), and (ii) any action by Consultant to enforce
Consultant's rights or benefits hereunder before a court of competent
jurisdiction in which Consultant shall obtain a final non-appealable judgment.
12. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled by arbitration, conducted before
a panel of three arbitrators sitting in a location approved by Consultant and
Parent within fifty (50) miles from Little Rock, Arkansas in accordance with the
commercial rules of the American Arbitration Association then in effect.
Judgment may be entered on the award of the arbitrators in any court having
jurisdiction. Each party shall bear its own fees and expenses (including all
legal fees and related expenses) associated with such arbitration. In the
event an arbitration proceeding is commenced hereunder by Parent or the
Consultant, Parent shall continue to pay to Consultant the compensation and
expenses provided under Section 3 and 5 until a full and final decision
providing otherwise is resolved by the arbitrator with respect to all matters in
dispute. Any determination by such panel of arbitrators shall be consistent
with the provisions of this Agreement as set forth herein.
13. Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to its subject matter and merges and supersedes
all prior discussions, agreements and understandings of every kind and
nature between any of them, and neither party shall be bound by any term or
condition other than as expressly set forth or provided for in this Agreement.
This Agreement may not be changed or modified except by an agreement in writing,
signed by the parties hereto.
14. Waiver. The failure of any party to this Agreement to enforce
any of its terms, provisions or covenants shall not be construed as a waiver of
the same or of the right of such party to enforce the same. Waiver by any party
hereto of any breach or default by any other party of any term or provision of
this Agreement shall not operate as a waiver of any other breach or default.
15. Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of the
Agreement shall not in any way be affected or impaired thereby. Moreover, if
any one or more of the provisions contained in this Agreement shall be held to
be excessively broad as to duration, activity or subject, such provisions shall
be construed by limiting and reducing them so as to be enforceable to the
maximum extent allowed by applicable law.
16. Notices. Any notice given hereunder shall be in writing and
shall be deemed to have been given when delivered by messenger or courier
service (against appropriate receipt), or mailed by registered or certified
mail (return receipt requested), addressed as follows:
If to Parent: Tyson Foods, Inc.
2210 Oaklawn Drive
Springdale, Arkansas 72764
Attn: Executive Vice President
and Chief Financial Officer
If to Consultant: Michael T. Hudson
#2 Clubhouse Drive
Rogers, Arkansas 72758
or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Arkansas without regard to conflicts
of law principles.
18. Descriptive Headings. The section headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original for all purposes but which, together,
shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.
TYSON FOODS, INC.
By: /s/ Leland E. Tollett
Name: Leland E. Tollett
Title: Chairman and CEO
/s/ Michael T. Hudson
Michael T. Hudson