Exhibit 10.2

 

EMPLOYMENT, NON-COMPETITION, AND SEVERANCE AGREEMENT
BETWEEN
GOLDEN OVAL EGGS, LLC
AND
ROBERT A. HARRINGTON

 

This Employment, Non-Competition, and Severance Agreement (this “Agreement”),
effective as of May 23, 2006 is entered into by and between Golden Oval Eggs,
LLC, a Delaware limited liability company (“Company”) and Robert A. Harrington,
Chief Operation Officer (“COO”) and supersedes and replaces any prior oral or
written agreement for employment between Golden Oval Eggs, LLC and Robert A.
Harrington. The Company and COO agree that any prior employment agreement
terminates by mutual agreement on the effective date of this Agreement.
Employment on and after the effective date of this Agreement is governed by and
subject to this Agreement.

 

BACKGROUND

 

The Company desires to continue to employ COO to manage the day-to-day
operations of the Company. Company and COO are entering into this Agreement to
set forth the terms under which COO will be employed as Chief Operating Officer
of the Company.

 

STATEMENT OF AGREEMENT

 

Company and COO (the “Parties” or either, the “Party”), each in consideration of
the promises of the other contained in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:

 

1.             Employment Term.

 

(a)           Initial Term. Upon the terms and conditions set forth in this
Agreement and in Exhibit A attached to and a part of this Agreement, Company
offers to employ COO, and COO hereby accepts employment on those terms and
conditions with Company. The term of employment under this Agreement shall be
for the “Employment Term” stated in Exhibit A, unless terminated earlier under
Section 8.

 

(b)           Renewal. The Employment Term, under this Agreement, shall
automatically renew for successive one year periods unless either Party notifies
the other Party in writing, not less than 60 days before the end of the then
current Employment Term, that this Agreement shall not be renewed at the end of
the then current Employment Term.

 

2.             Duties.

 

Generally. COO shall be employed as the Chief Operating Officer of the Company
to provide such services and to have such duties and responsibilities as are
normally associated with that position, together with any other duties and
responsibilities as may be designated by the Chief Executive Officer (CEO) from
time to time. The COO shall devote his full time, attention

 

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and energy to the business affairs of the Company and the performance of COO’s
duties under this Agreement. The COO shall discharge the duties in a diligent
and proper manner and shall conduct himself at all times so as to advance the
best interests of the Company. The COO shall report to the Company’s CEO.

 

(a)           Specific duties of the COO include:

 

(1)           Perform a significant role in the overall strategic development
and operational performance of the business consistent with goals and objectives
established by the Company. Plans and directs all aspects of an organization’s
operational policies, objectives, and initiatives. Responsible for the
attainment of short and long-term financial and operational goals. Directs the
development of the organization to ensure future growth.

 

(2)           Develop and implement programs, plans, objectives and policies
consistent with goals and objectives established in the annual business plan for
the Company; and

 

(3)           Reports to the CEO on a regular basis.

 

3.             Compensation.

 

(a)           Base Salary. During the Employment Term and in consideration of
his services provided hereunder, the Company shall pay COO an annual “Base
Salary” stated in Exhibit A and a bonus as provided in Section 4 and Exhibit A.

 

(b)           Base Salary Payments. The Base Salary shall be paid in equal
biweekly installments each month of the Employment Term, and prorated on a daily
basis for any partial period for which services are rendered at the end of the
Employment Term.

 

(c)           Deductions from Compensation. Company shall withhold from COO’s
compensation payments (Base Salary and Bonus) state, federal and local income
taxes, FICA, social security and other amounts that are customarily withheld
from compensation.

 

4.             Bonus.

 

(a)           Payment of Bonus. The Company shall pay to COO all bonuses for
which the COO is eligible as provided in Exhibit A. Except for the Equity
Capital Markets Transaction Bonus, which shall be paid as provided in Exhibit A,
all bonuses will be paid by 50% in units of the Company, which are subject to
forfeit back to the Company as provided in paragraph (b), and 50% in cash. The
Company shall pay the cash portion of the bonus no later than 30 days after the
audited financial statements are approved by the Company’s Board of Directors
unless deferred by the COO to the next tax year. The ROE Bonus shall be
annualized and prorated to the nearest month end for any partial year for which
services are rendered at the beginning and end of the Employment Term.

 

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(b)           Unit Bonus. The unit portion of any bonus (“Bonus Units”) shall be
issued to the COO effective as of the beginning of the fiscal year, subject to
forfeiture to the Company. Certain Bonus Units will forfeit upon:  (1)
termination of employment for cause (Section 8(a)(4)); or (2) termination at
COO’s election (Section 8(a)(6)) (“Forfeiture Event”). Within one year after the
effective issuance of the Bonus Units, all of the Bonus Units are
nontransferable, and shall forfeit back to the Company with no rights relating
to the Bonus Units remaining with the COO if a Forfeiture Event occurs. One (1)
year after the effective issuance of the Bonus Units, the forfeiture and
nontransferability restrictions on one-third (1/3) of the Bonus Units terminate.
After one (1) year and until two (2) years after the effective issuance of the
Bonus Units, two-thirds (2/3) of the Bonus Units are nontransferable, and shall
forfeit back to the Company with no additional rights relating to the forfeited
Bonus Units remaining with the COO if a Forfeiture Event occurs. Two years after
the effective issuance of the Bonus Units the forfeiture and nontransferability
restrictions on an additional one-third (1/3) (two-thirds (2/3) of the Bonus
Units in total) terminate. After two (2) years and until three (3) years after
the effective issuance of Bonus Units, one-third (1/3) of the Bonus Units are
nontransferable, and shall forfeit back to the Company with no rights relating
to the forfeited Bonus Units remaining with the COO if a Forfeiture Event
occurs. The forfeiture and nontransferability restrictions on the remaining
Bonus Units held by the COO are terminated:  (1) at the end of three years after
the effective issuance of Bonus Units to the COO; (2) notwithstanding the
restrictions above at any time a change of control of the Company resulting in a
different group of owners obtaining governance rights to elect a majority of the
Board of Directors occurs; or (3) notwithstanding the restrictions above, at any
time, if the retirement of the COO occurs at age 59 ½ years of age or older.

 

Except for the Equity Capital Markets Transaction Bonus, which shall be paid as
provided in Exhibit A, the amount of units to be awarded as part of the bonus
shall be based on the higher of book or market value of the units at the time
the bonus is awarded. Book value shall be determined by the most recent year-end
audited financial statements. Market value shall be determined by the average
price of units that have traded in the secondary market during the preceding
fiscal year.

 

(c)            If the Employment Term is terminated prior to the end of a fiscal
year, bonuses shall be calculated based on the financial statements of the most
recent fiscal quarters prior to the termination.

 

5.             COO Benefits, Expenses. COO shall have, and the Company shall pay
for, the following benefits and expenses during the Employment Term:

 

(a)            Group Benefits. COO shall be entitled to participate in group
life insurance, long-term disability, group health and hospitalization, vision
and dental, 401(k) retirement program and other group benefits as are presently
or may hereafter be provided to other employees of Company, which benefits may
be in varying amounts and scope relative to the age, years of employment,
compensation and pay status of the employees.

 

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(b)          Business Expenses. Upon COO’s periodic presentation to Company of
an itemized account, the Company shall pay or reimburse COO for reasonable
expenses incurred by COO on behalf of Company directly in connection with, and
reasonably necessary for the rendering of, his services to Company under this
Agreement.

 

(c)           Vacation. COO shall be entitled to four weeks paid vacation for
each 12-month period of the Employment Term.

 

6.             COO Beneficiary. If COO has deceased:  (1) during the Employment
Term, or (2) after this Agreement expires or is terminated, the payments due or
payable to COO shall be paid or payable to the COO’s beneficiary (referred to as
the “Designated Beneficiary”). If the COO has deceased, the Designated
Beneficiary shall have the authority of the COO under this Agreement on a
post-termination basis (for example, to hold or transfer units, to receive
payments, etc.).

 

The Designated Beneficiary is                                  , if
                                  is then living, (Primary Beneficiary); or if
                                                     is not then living, the
trustee, serving as trustee of the estate of Robert A. Harrington,
                                                         (Second Beneficiary).
The trustee as the Second Beneficiary shall be entitled to receive the payments
due or payable to COO and the trustee shall have the authority of the COO under
this Agreement on a post-termination basis, provided the Company has been
notified in writing of the trustee and there is demonstration that the trustee
is duly authorized to act as such. Upon request, the CEO will acknowledge the
trustee as Second Beneficiary upon receipt of proper notification.

 

COO may change the Designated Beneficiary by submitting a written change of
beneficiary form to the CEO. If the Company is unable to determine or locate the
Designated Beneficiary in the two functions of:  (1) to whom or what entity
should payments due or payable to COO be paid; and (2) who shall have the
authority of the COO under this Agreement on a post-termination basis, then the
Designated Beneficiary shall be deemed to be the estate of the COO as to the
entity to which the payments should be made, and the administrator of COO’s
estate shall have the authority of the COO to make any elections as to how to
receive payments or units, to transfer units or to negotiate a resolution of
compensation issues of payments or units in place of the COO under this
Agreement on a post-termination basis.

 

7.             Life Insurance. Company may at any time, in its discretion, apply
for and procure, as owner and for its own benefit, insurance on the life of COO
in such amounts and in such form or forms as Company may choose. COO shall have
no interest in any such policy or policies, but COO shall, at the request of
Company, submit to such medical examinations, supply such information and
execute such applications, instruments and other documents as may be required by
the insurance company or companies to whom Company has applied for such
insurance.

 

8.             Termination of Agreement.

 

(a)           Termination Events. The Employment Term shall terminate upon the
first to occur of any of the following:

 

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(1)           Last Day of Term. The last day of the then-current Employment Term
if either Party has notified the other, in accordance with Section 1, that the
Employment Term will not be renewed;

 

(2)           Date Set By Company. A date within the Employment Term specified
by the Company by written notice to the COO to terminate the COO’s employment;

 

(3)           Death or Permanent Disability. The death or permanent disability
of COO which, for purposes of this Agreement, the “permanent disability” of COO
shall be deemed to occur on the earlier of: (1) the date on which COO is
determined to be permanently disabled for the purposes of any disability
benefits provided to COO by Company; or (2) the date as of which COO has been
incapable of performing COO’s duties under this Agreement for a continuous
period of 60 days or for periods aggregating 60 days within a period of 365
days; or (3) the date of certification to Company by a physician approved by
Company that COO is so mentally or physically disabled or impaired as to be
incapable of engaging in and performing the duties of the employment position
with Company which COO occupied prior to the commencement of the disorder that
led to the disability and upon the certification by the physician that the
disability is likely to be permanent;

 

(4)           For Cause. A date specified by Company by written notice to COO of
Company’s intention to terminate the Employment Term for Cause which, for
purposes of this clause (4), “Cause” shall mean:  (i) repeated disobedience or
insubordination after written notice of same by the CEO to COO identifying this
paragraph of this Agreement and if the disobedience or insubordination is not
cured by COO within ten (10) days after receiving notice from Company, (ii) any
other breach by COO of any of his agreements contained in this Agreement if the
breach is not cured by COO within ten (10) days after receiving notice of the
breach from Company, (iii) willfully making derogatory statements regarding
Company, (iv) misappropriation of any of Company’s funds, (v) fraud, or (vi) any
criminal conviction of an act of moral turpitude by COO;

 

(5)           Mutual Agreement. The mutual agreement of Company and COO; or

 

(6)           COO Termination. A date specified by COO by written notice to
Company of COO’s intention to terminate the Employment Term.

 

(b)           Notice Requirements. Any notice of termination by either Party
under this Section 8 shall clearly state that the terminating Party elects to
terminate the Employment Term and shall specify the subsection of this Section 8
upon which the Party is relying as the basis for the termination.

 

(c)           Effect of Termination. Except as specifically provided in Section
10 with respect to any applicable continuing covenants or agreements of COO,
subject to the provisions for severance benefits contained in Section 9, subject
to the assignment provisions under Section

 

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13, and subject to indemnification for actions during the employment under
Section 12, if the Employment Term is terminated for any reason whatsoever
pursuant to this Section 8:

 

(1)           this Agreement shall be terminated and of no further force or
effect;

 

(2)           COO shall have no obligation or duty to further serve Company in
any capacity; and

 

(3)           (iii) Company shall not be under any obligation or duty to employ
COO or provide the benefits specified in Section 5 other than through the
Employment Term or as required by law or make any of the payments provided in
Section 4, except to the extent the obligations of payments which have accrued
prior to the effective date of the termination and remain unpaid as of the date
of the termination; provided, however, that Company may offset against, and
deduct from, any amounts due to COO under this Agreement the amount of any
losses, costs or other damages incurred by Company, as the case may be, in
connection with any actions constituting “Cause” for termination of COO pursuant
to Subsection (a), clause (4)(iv) or (v) above.

 

9.             Severance Benefits. In the event that the Employment Term is
terminated other than by death or permanent disability under Section 8(a)(3),
then the Company shall pay COO an amount equal to the Base Salary that would
otherwise be payable to COO under this Agreement for a period of twelve (12)
months following termination (the “Severance Period”) or as long as the
noncompetition restriction in Section 10(a) is effective and all of Section 10
is complied with by COO. The amount shall be payable at normal salary payment
intervals in effect for Company’s executive personnel. In addition, the Company
shall provide to COO the group benefits referred to in Subsection 5(a) for the
Severance Period. In the event any applicable law or any benefit plan referred
to in Subsection 5(a) prohibits or otherwise precludes the provision of benefits
to an individual whose employment with Company has terminated, then the Company
shall pay to COO as expeditiously as is practicable after the effective date of
termination the cash equivalent of any prohibited or precluded benefits.

 

10.          Certain COO Covenants. COO expressly covenants and agrees to and
with Company as set forth in this Section:

 

(a)           Non-competition. COO recognizes and acknowledges that he has been
trained by and has knowledge of know how acquired during his employment with the
Company. During the Employment Term and for a period of twelve (12) months after
the termination of the Employment Term, COO shall not, without the written
consent of Company, within the United States of America, participate through
management or control or be employed by any business or enterprise which is
engaged in any business activity similar to that of the Company that competes
with the Company for the Company’s egg product markets or sources of egg
supplies.

 

(b)           Confidential Information. COO recognizes the interests of Company
in maintaining the confidential nature of its respective proprietary and other
business and commercial information. COO shall not, at any time after the
Employment Term, or in any

 

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manner that does not promote the interests of the Company during the Employment
Term, directly or indirectly, publish, disclose or use, or authorize anyone else
to publish, disclose or use, any secret, confidential or proprietary information
of Company, or any of its respective affiliates, except for such information as
is in the public domain through no fault of COO, which is acquired by COO in
connection with COO’s employment with Company or work with the Company prior to
the date hereof or thereafter and relates to any aspect of the operations,
activities, research, investigations or obligations of Company, or any of its
respective affiliates, including, without limitation:  (1) the information
described in Subsection (c) below; (2) information pertaining to Company, the
business of the Company, or the business of any of Company’s respective
affiliates; and (3) other confidential material or information relating to the
business, customers, suppliers, trade or industrial practices, trade secrets,
technology, know-how or intellectual property of Company or any of Company’s
affiliates (collectively, the “Confidential Information”). All records, files,
data, documents and the like relating to suppliers, customers, costs, prices,
systems, methods, personnel, equipment and other materials relating to Company,
or the Company’s affiliates (including, but not limited to, the Confidential
Information), shall be and remain the sole property of Company or Company’s
affiliate, as the case may be. Any disclosure of Confidential Information by the
COO shall include appropriate protection for the type of information to protect
the Company’s interests in the Confidential Information. Upon termination of
COO’s employment under this Agreement, COO shall not remove from Company’s
premises, or retain, any of the Confidential Information materials described in
this Section.

 

(c)           Development of Information and Intellectual Property. During the
Employment Term, COO shall keep Company informed of any and all customer lists,
supplier lists, manuals, handbooks, inventions, discoveries, improvements, trade
secrets, secret processes, technology, know-how or intellectual property made or
developed by COO, in whole or in part, or conceived of by COO, alone or with
others, which results from COO’s employment with Company or any work COO may do
for, or at the request of, Company or which relates to the operations,
activities, research, investigations or obligations of Company (collectively,
the “Information”).

 

COO shall assign, transfer and set over, and hereby assigns, transfers and sets
over to Company, all of COO’s right, title and interest in and to any and all
information, and any patents, patent applications, copyrights, trademarks, trade
names or other intellectual property rights relating thereto, provided or
conceived by COO and related to the information during the Employment Term.

 

(d)           Return of Information. Upon termination of COO’s employment for
whatever reason, COO shall return to or leave with Company, without making or
retaining copies thereof, all documents, records, notebooks and other
repositories containing Confidential Information.

 

(e)           Breach of Covenants. If COO breaches any of the covenants and
agreements contained in this Section 10, then, in addition to any other rights
or remedies of Company hereunder, Company shall have at its option the following
specific rights and remedies: (1) COO’s right to any payments pursuant to
Sections 3, 4, 5 and 9 may be terminated

 

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by Company; (2) Company shall have the right to enforce any legal or equitable
remedy (including injunctive relief) that may be available to Company; and (3)
Company shall be entitled to an accounting and repayment of all profits,
compensation, commissions, remuneration, or other benefits that COO has directly
or indirectly realized or may realize as a result of any such breach and COO
acknowledges that any breach of the covenants and agreements under this Section
10 will cause irreparable harm and injury to Company.

 

Except to the extent otherwise expressly limited to a restricted period in
Subsection (a) of this Section, all covenants and provisions contained in this
Section 10 shall survive any termination of COO’s employment with Company.

 

11.           Notices. Any notice or other communication required or desired to
be given under this Agreement shall be in writing and shall be deemed duly given
to a Party when personally delivered or when mailed by first class mail,
registered or certified, return receipt requested and postage prepaid, addressed
to the Party at the address set forth below or at such other address as may be
specified by the Party by a notice to the other Party:

 

If to Company:

 

Golden Oval Eggs, LLC

1800 Park Avenue East, P.O. Box 615

Renville, MN  56284

Attention: President & CEO

 

If to COO:

 

Mr. Robert A. Harrington

481 Trap Line Lane

Chanhassen, MN  55317

 

12.          Waiver: Remedies Cumulative. No waiver of any right or option
hereunder by either Party shall operate as a waiver of any other right or
option, or the same right or option as respects any subsequent occasion for its
exercise, or of any legal remedy. No waiver by any Party of any breach of this
Agreement or of any agreement or covenant contained in this Agreement shall be
held to constitute a waiver of any other breach or a continuation of the same.
All remedies; provided by this Agreement are in addition to all other remedies
provided by it or applicable law.

 

13.           Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of Company and shall survive any change of
control or change of ownership of Company. Neither this Agreement nor any rights
under this Agreement shall be assignable by COO and any purported assignment by
COO shall be void and of no force or effect.

 

14.           Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota.

 

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15.          Enforceability; Understanding; Amendment. The invalidity or
unenforceability of any term or provision of this Agreement shall not impair or
affect the other provisions of this Agreement, which shall remain in full force
and effect. This Agreement shall constitute the entire understanding between
Company and COO concerning COO’s employment and shall supersede any and all
previous agreements, whether written or oral, between the Parties concerning
such employment. This Agreement cannot be amended or modified in any respect
unless such amendment or modification is evidenced by a written instrument
executed by Company and COO. The captions of the various sections of this
Agreement are not a part of the context hereof, but are inserted merely for
convenience in locating the different provisions hereof and shall be ignored in
construing this Agreement.

 

16.          Indemnification. Company agrees to indemnify and hold harmless COO
for any matter relating to his performance of his obligations under this
Agreement, other than acts taken by COO with the intention to harm Company and
except to the extent that COO may incur criminal liability for his acts. The
obligation to indemnify and hold harmless includes, but is not limited to, all
pending litigation and claims against Company, its officers, employees and
directors. The expenses against which COO is indemnified include, but are not
limited to, all reasonable attorney fees and other costs associated with legal
representation.

 

17.           Opportunity for Independent Legal Counsel. This Agreement has been
prepared by legal counsel acting as representative solely to Company. COO
confirms that he has been afforded the opportunity to review this Agreement with
his independent legal counsel.

 

IN WITNESS WHEREOF, the Parties have executed multiple counterparts of this
Agreement, each of which is deemed to be an original, as of the date first set
forth above.

 

 

COMPANY:

COO:

GOLDEN OVAL EGGS, LLC

 

 

 

 

 

By:

/s/ Dana Persson

 

/s/ Robert A. Harrington

 

 

President & CEO

 

Robert A. Harrington

 

 

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