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 1⁄2 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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