EXHIBIT
10.1


 


EMPLOYMENT AND NON-COMPETITION AGREEMENT

BETWEEN

GOLDEN OVAL EGGS

AND

DANA PERSSON


 


This Employment and
Non-Competition Agreement (this “Agreement”), effective July 1, 2002 is
entered into by and between Midwest Investors of Renville, Inc. d/b/a Golden
Oval Eggs, a Minnesota cooperative (“Company”) and Dana Persson, (“CEO”).


 


BACKGROUND


 


A.                                   The
Company is a Minnesota Chapter 308A cooperative incorporated on March 16,
1994.


 


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


 


STATEMENT
OF AGREEMENT


 


Company and CEO (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 CEO, and CEO hereby accepts
employment on those terms and conditions with Company. The term of employment
under this Agreement shall be for the “Employment Term” commencing on the
“Effective Date” stated in Exhibit A, unless terminated earlier under
Section 7.


 


(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.


 


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2.                           Duties.


 


Generally.  CEO shall be employed as the Chief Executive
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 Board of
Directors from time to time. The CEO shall devote his full time, attention and
energy to the business affairs of the Company and the performance of CEO’s
duties under this Agreement. The CEO 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 CEO
shall report to the Company’s Board of Directors.


 


(a)                                  Specific
duties of the CEO include:


 


(1)                                  Preparation
and submission of monthly and fiscal year financial and operations reports for
the Board of Directors;


 


(2)                                  Preparation
and revision of the Company’s operating plan and strategic plan for submission
to the Board of Directors;


 


(3)                                  Reports
to the Board of Directors as soon as practicable all hiring and firing of
management personnel;


 


(4)                                  Reports
to the Board of Directors annually on product sale allocations on changes in
product allocations that have a material impact on the Company’s operations or
finances as often as practicable; and


 


(5)                                  Preparation
and submission of an annual budget to the Board of Directors at least thirty
(30) days prior to the start of the fiscal year.


 


(b)                                 Operating
Control; Expenditures.  The
CEO shall have full day-to-day operating control of the Company and may expend
Company funds under the annual budget approved by the Board of Directors and
within identified spending categories as identified in the budget at the CEO’s
discretion, provided the CEO submits a monthly report of the expenditures to
the Board of Directors.


 


3.                                      Compensation.


 


(a)                                  During
the Employment Term and in consideration of his services provided hereunder,
the Company shall pay CEO 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


 


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for any partial period
for which services are rendered at the end of the Employment Term.


 


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


 


4.                                      Bonus.


 


(a)                                  Payment of
Bonus.  Except as provided in
Subsection (c), the Company shall pay a bonus to CEO as provided in
Exhibit A.  The Company shall pay the
bonus no later than 120 days after the audited financial statements are
approved by the Company’s Board of Directors unless deferred by the CEO to the
next tax year.  The bonus shall be
prorated for any partial year on a daily basis for which services are rendered
at the beginning and end of the Employment Term.


 


(b)                                 Liquidation
Bonus.   If more than 20% of the fixed or operating
assets of the Company are sold which would represent a proportional capital
gain on Members’ equity allocated to those assets on a pro rata basis, or has a
change in control resulting in a capital gain on Members’ equity, then CEO
shall be paid a “Liquidation Bonus” equivalent to 2% of the actual or
proportional capital gain on the Members’ equity as provided in Exhibit A.  The date for determination of such percentage
amount shall be as of the effective date of the sale, merger, consolidation, or
change in control and the liquidation bonus shall be paid by 60 days after that
effective date.


 


(c)                                  Merger Bonus.  If the Company merges or consolidates with another business
entity and the asset value of the merged or consolidated business entity is at
least 1.5 times the asset value of the Company, then the CEO shall be entitled
to a “Merger Bonus” equivalent to 50% of the CEO’s base salary in the form of
stock or other similar equity in the new or surviving company which shall vest
as provided below.  The number of shares
of stock or units of similar equity shall be valued and determined as of the
date the merger is effective.


 


CEO may not sell more
than one-third of the Merger Bonus stock or similar equity in each of the first
three years.


 


If CEO is offered the
same or a similar position and compensation with the new or surviving company
(whether or not the surviving company is the Company), then one-third of the Merger
Bonus shall vest and CEO shall be granted one-third of the Merger Bonus if
still employed in such position one year after the merger or
consolidation.  Another one-third of the
Merger Bonus shall vest and shall be granted if the CEO is still employed in
such position two years after the merger or consolidation.  And the final one-third of the Merger Bonus
shall vest and shall be granted if the CEO is still employed in such position
three years after the merger or consolidation. 
If the CEO is not offered such a position subsequent to the merger or
consolidation, then the Merger Bonus shall


 


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vest upon the merger or
consolidation and one-third shall be paid each year over three years in stock
or similar equity.


 


For purposes of this
paragraph (c) a merger or consolidation is a combination of the Company and
another business entity whereby the assets of the Company are exchanged or
combined with another entity and the Company and/or the other business entity
cease to exist and the combined assets are jointly operated by one business
entity which may or may not be the Company.


 


(d)                                 No Bonus If
Termination for Cause.  The
Company shall have no obligation to pay a bonus to CEO if the Employment Term
is terminated under Section 7(a)(4).


 


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


 


(a)                                  Group
Benefits. CEO shall be entitled to participate in group life
insurance, long-term disability, group health and hospitalization, vision and
dental, retirement 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.


 


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


 


(c)                                  Automobile.
 The Company shall provide CEO with
a vehicle owned by the Company for CEO’s use during CEO’s employment with the
Company as approved in the annual budget. 
The Company shall be responsible for the insurance and maintenance of
the vehicle as approved in the annual budget.


 


(d)                                 Vacation. CEO
shall be entitled to five weeks paid vacation for each 12-month period of the
Employment Term.


 


(e)                                  Retirement
Account.  CEO may elect to
reduce his salary and deposit same into the Company 401K retirement plan
subject to, and limited by, any and all ERISA and/or Internal Revenue Code
provisions or regulations or actual plan terms and requirements, as amended
from time to time. Any such deposit by CEO into the Company approved retirement
account shall be matched by Company subject to the maximum amount stated in
Exhibit A.


 


6.                                      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 CEO in such amounts and in such form or forms
as Company may choose. CEO shall have no interest in any such policy or
policies, but CEO shall, at the request of Company, submit to such


 


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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.


 


7.                                      Termination
of Agreement.


 


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


 


(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 Company or 60 days after a “Material Business
Change” occurs.  A termination of the Employment
Term under this provision shall be subject to the requirement to pay severance
benefits as described in Section 8 for a termination date set by the
Company, and after a “Material Business Change” if the CEO is not retained by
the Company with the same position and compensation or is not offered a same or
similar position and compensation with the Company after a change in control,
with the entity to which fifty percent (50%) or more of the Company’s assets
are transferred, or with the joint venture from which fifty percent (50%) or
more of the revenues are received. 
“Material Business Change” shall include:  (i) a transfer of more than fifty percent (50%) of the Company’s
fixed assets in any one or a series of related transactions to another entity
in which the Company does not have a majority of the financial and governance
rights; (ii) a change in control where more than fifty percent (50%) of the
ownership, financial rights, or governance rights are transferred in a single
transaction or a series of related transactions; or (iii) the Company enters a
joint venture in which more than fifty percent (50%) of the Company’s revenues
will be received from the joint venture and either CEO or the Company notifies
the other prior to the effective date of the joint venture that the Company’s
participation in the joint venture will be a “Material Business Change” under
this section;


 


(3)                                  Death or
Permanent Disability.  The
death or permanent disability of CEO which, for purposes of this Agreement, the
“permanent disability” of CEO shall be deemed to occur on the earlier of: (1)
the date on which CEO is determined to be permanently disabled for the purposes
of any disability benefits provided to CEO by Company; or (2) the date as of
which CEO has been incapable of performing CEO’s duties under this Agreement
for a continuous period of 30 days or for periods aggregating 30 days within a
period of 365 days; or (3) the date of certification to Company by a physician
approved by Company that CEO 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 CEO 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;


 


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(4)                                  For
Cause.  A date specified by
Company by written notice to CEO 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, or persistent inattention to CEO’s duties, after written
notice of same by the board to CEO identifying this paragraph of this
Agreement, (ii) any other breach by CEO of any of his agreements contained in
this Agreement if the breach is not cured by CEO 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 CEO
or


 


(5)                                  Mutual
Agreement.  The mutual
agreement of Company and CEO.


 


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


 


(b)                                 Notice
Requirements.  Any notice of
termination by either Party under this Section 7 shall clearly state that
the terminating Party elects to terminate the Employment Term and shall specify
the subsection of this Section 7 upon which such Party is relying as
the basis for such termination.


 


(c)                                  Effect of
Termination.  If the
Employment Term is terminated for any reason whatsoever pursuant to this
Section 7, then, except as specifically provided in Section 9 with respect
to any applicable continuing covenants or agreements of CEO and subject to the
provisions for severance benefits contained in Section 8:  (i) this Agreement shall be terminated and
of no further force or effect, (ii) CEO shall have no obligation or duty to
further serve Company in any capacity, and (iii) Company shall not be under any
obligation or duty to employ CEO or provide the benefits specified in
Section 5 other than through the term of employment 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
CEO 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 CEO pursuant to Subsection (a),
clause (4)(iv) or (v) above.


 


8.                                       Severance
Benefits. In the event that the Employment Term is terminated by
Company prior to the last day thereof pursuant to Section 7(a)(2), then
the Company shall pay CEO an amount equal to the Base Salary that would
otherwise be payable to CEO under this Agreement for a period of twelve (12)
months following termination.  The
amount shall be payable at normal salary payment intervals in effect for
Company’s executive personnel.  In
addition, the Company shall provide to CEO the group benefits referred to in
Subsection 5(a) for the applicable period. In the event any applicable law
or any benefit plan referred to in Subsection 5(a) prohibits or otherwise
precludes the


 


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provision of benefits to
an individual whose employment with Company has terminated, then the Company
shall pay to CEO as expeditiously as is practicable after the effective date of
termination the cash equivalent of such prohibited or precluded benefits.  The unvested portion of any Merger Bonus
under Section 4(c) shall vest upon termination and be paid as provided in
Section 4(c).


 


9.                                       Certain CEO
Covenants. CEO expressly covenants and agrees to and with Company as
hereinafter set forth in this Section:


 


(a)                                  Non-competition.  CEO 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
eighteen (18) months after the termination of the Employment Term, CEO shall
not, without the written consent of Company, with 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. CEO recognizes the interests of Company in maintaining
the confidential nature of its respective proprietary and other business and
commercial information.  CEO shall not,
at any time after the term of employment, or in any manner that does not
promote the interests of the Company during the term of Employment, 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 CEO, which is acquired by CEO in connection
with CEO’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 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 CEO shall include appropriate protection for the type of
information to protect the Company’s interests in the Confidential
Information.  Upon termination of CEO’s
employment under this Agreement, CEO 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, CEO shall keep Company informed
of any and all customer lists,


 


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supplier lists, manuals,
handbooks, inventions, discoveries, improvements, trade secrets, secret processes,
technology, know-how or intellectual property made or developed by CEO, in
whole or in part, or conceived of by CEO, alone or with others, which results
from CEO’s employment with Company or any work CEO 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”).


 


CEO shall assign,
transfer and set over, and hereby assigns, transfers and sets over to Company,
all of CEO’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 CEO and
related to the information during the Employment Term.


 


(d)                                 Return of
Information.  Upon
termination of CEO’s employment for whatever reason, CEO 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 CEO breaches
any of the covenants and agreements contained in this Section 9, 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) CEO’s right
to any payments pursuant to Sections 3, 4, 5 and 8 may be terminated 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 CEO has
directly or indirectly realized or may realize as a result of any such breach
and CEO acknowledges that any breach of the covenants and agreements under this
Section 9 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 9
shall survive any termination of CEO’s employment with Company.


 


10.                                 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:


 


Midwest Investors of
Renville


340 Dupont Avenue, P.O.
Box 615


Renville, MN  56284


 


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Attention: Chairman of
the Board of Directors


 


If to CEO:


 


Mr. Dana Persson


8833 45th
Avenue N.W.


Pennock, MN  56279


 


11.                               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.


 


12.                                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 CEO and any
purported assignment by CEO shall be void and of no force or effect.


 


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


 


14.                               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 CEO concerning CEO’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 CEO. 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.


 


15.                               Indemnification.  Company agrees to indemnify and hold
harmless CEO for any matter relating to his performance of his obligations
under this Agreement, other than acts taken by CEO with the intention to harm
Company and except to the extent that CEO 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 CEO is


 


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indemnified include, but
are not limited to, all reasonable attorney fees and other costs associated
with legal representation.


 


16.                                 Opportunity
for Independent Legal Counsel.  This
Agreement has been prepared by legal counsel acting as representative solely to
Company. CEO 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, this
              day
of                       ,
2002.


 


 


	
  COMPANY:

  	
  CEO:

  
	
  MIDWEST INVESTORS OF RENVILLE, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Chairman of
  Board of Directors

  	
   

  	
  Dana Persson

  



 


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EXHIBIT A


 


EMPLOYMENT AND NON-COMPETITION
AGREEMENT

BETWEEN

GOLDEN OVAL EGGS

AND

DANA PERSSON


 


TERMS AND CONDITIONS


 


	
  1.

  	
  Effective Date:

  	
   

  	
  July 1, 2002

  
	
  2.

  	
  Employment Term:

  	
   

  	
  From July 1, 2002
  until August 31, 2003

  
	
  3.

  	
  Base Salary:

  	
   

  	
  $192,000

  
	
  4.

  	
  Annual Bonus:

  	
   

  	
  Company shall pay CEO a
  bonus based upon the Company’s return on equity (“ROE”) calculated from the
  Company’s audited financial statements for each fiscal year during the
  Employment Term.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The bonus shall vary
  depending on Company’s ROE as calculated by dividing Company’s Net Income by
  Company’s Beginning Fiscal Year Equity. 
  Company’s Net Income for the purposes of this calculation shall be
  defined as the before-tax (tax at the Company level) net income if no bonus
  were to be paid.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  •                  2% of the Net Income that is
  generated between 0% and 15% ROE, plus

  
	
   

  	
   

  	
   

  	
  •                  3% of the Net Income that is
  generated greater than 15% and up to 18% ROE, plus

  
	
   

  	
   

  	
   

  	
  •                  4% of the Net Income that is
  generated greater than 18% and up to 20% ROE, plus

  
	
   

  	
   

  	
   

  	
  •                  5% of the Net Income that is
  generated greater than 20% ROE.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  An example of the bonus
  calculation for the past five (5) fiscal years is provided in Exhibit B.
  Bonus Cap:  $384,000.  The bonus shall be calculated as follows
  with a maximum total bonus in the amount of two times the base salary.

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Liquidation Bonus:

  	
   

  	
  2% of capital gain on
  Members’ Equity. Example provided in Exhibit C.

  



 


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  6.

  	
  401K Retirement Account Match:

  	
   

  	
  The Company shall match
  CEO’s deposit into a Company approved retirement account under
  Section 5(e) up to a maximum of 6% of the Base Salary.

  



 


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EXHIBIT B


 


EXAMPLE

FIVE YEAR BONUS CALCULATION


 


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EXHIBIT C


 


EXAMPLE

CAPITAL GAIN ON MEMBERS’ EQUITY


 


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