Document:

exv10w1

 

Exhibit 10.1

PREMIUM STANDARD FARMS, INC.

RESTRICTED STOCK AWARD AGREEMENT

     THIS
RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”),
dated as of  ___ (the “Grant
Date”), is made by and between Premium Standard Farms, Inc., a Delaware corporation (the
“Company”), and ___, an ___ of the Company (the “Participant”).

W I T N E S S E T H:

     WHEREAS, the Company adopted that certain 2005 Long Term Incentive Plan, dated as of June 17,
2005 (the “Plan”); and

     WHEREAS, among other things, the Plan provides for the granting of restricted stock awards by
the Compensation Committee of the Board of Directors of the Company (the “Committee”) to eligible
employees of the Company or an Affiliate to purchase shares of the common stock of the Company, par
value $.01 per share (the “Common Stock”), in accordance with the terms and provisions thereof; and

     WHEREAS, the Committee considers the Participant to be an employee who is eligible for a grant
of restricted stock pursuant to the Plan, and has determined that it would be in the best interests
of the Company to grant the restricted stock documented herein; and

     WHEREAS, the Participant wishes to accept such award, subject to the terms and conditions
hereinafter set forth.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     1. Definitions. Unless otherwise provided herein, the capitalized terms
have the same definition and meaning as provided in the Plan.

     2. Restricted Stock Award. Subject to the terms and conditions of the Plan
and the terms, conditions and restrictions set forth in this Agreement, the Committee hereby awards
to the Participant                      shares of Common Stock of the Company (the “Restricted Stock”).

     3. Restrictions. Prior to the expiration of any period in which a
possibility of forfeiture exists pursuant to Section 4 below (the “Applicable Restriction Period”),
the Participant may not sell, assign, margin, transfer, encumber, convey, gift, alienate,
hypothecate, pledge or otherwise dispose of any Restricted Stock to which such Applicable
Restriction Period relates, except for transfer by will or the laws of descent and distribution.
Any attempt to sell, assign, margin, transfer, encumber, convey, gift, alienate, hypothecate,
pledge or otherwise dispose of the Restricted Stock to which such Applicable Restriction Period
relates, or to subject such Restricted Stock to execution, attachment or similar process, contrary
to the provisions hereof, shall be void and ineffective, shall give no right to any purported
transferee, and may, at the discretion of the Committee, result in forfeiture of such Restricted
Stock.

     4. Applicable Restriction Period. Except to the extent otherwise provided
in this Agreement and in the Plan, if the Participant remains continuously employed by the Company
through the expiration of any Applicable Restriction Period, the possibility of forfeiture with
respect to such percentage of the Restricted Stock as is set forth below shall lapse, and such
Restricted Shares shall be fully-owned by the Participant in accordance with the following
schedule:

     (a)                      percent (                    %) of the Participant’s Restricted Stock shall no
longer be subject to forfeiture on and after the                      anniversary of the Grant Date; and

 - 1 -

 

     (b) An additional                      percent (                    %) of the Participant’s Restricted
Stock shall no longer be subject to forfeiture on and after each of the                     ,                      and
                     anniversaries of the Grant Date.

     5. Shareholder Rights. Notwithstanding the foregoing and except as provided
in Section 3, the Participant shall have, with respect to the Restricted Stock, all of the rights
of a shareholder of the Company holding a class of Common Stock that is the subject of the
Restricted Stock, including, if applicable, the right to vote the shares and the right to receive
any cash dividends thereon; provided, however, that if any dividends or other distributions with
respect to the Restricted Stock shall be paid in shares of Common Stock, such shares shall be
subject to the same restrictions as the shares of Restricted Stock with respect to which they are
paid.

     6. Escrow of Restricted Stock. As of the Grant Date of the Restricted Stock
award, the Company shall issue in the name of the Participant a certificate or certificates
evidencing the Restricted Stock, or retain such shares in a separate account, and shall retain
custody of any such certificate or certificates and control of any such account to the extent, and
for so long as, the restrictions described herein have not lapsed during any Applicable Restriction
Period. The Participant hereby agrees, upon the request of the Company, to execute in blank and to
deliver to the Company such stock powers and other related documents as may be deemed advisable by
the Company in order to effectively carry out the provisions of this Agreement, and, by execution
of this Agreement, the Participant hereby designates the Secretary of the Company as his or her
attorney in fact, with full power and authority to execute on the Participant’s behalf any of the
foregoing documents.

     7. Other Conditions.

     (a) Termination of Employment. If the Participant incurs a
Termination of Employment, all shares of Common Stock remaining subject to the restrictions
described herein as of the date of Termination of Employment shall be forfeited and
Participant shall have no rights therein. Notwithstanding the foregoing, the effect of a
Termination of Employment for death or Disability of the Participant shall be governed by
the Plan.

     (b) Termination due to Change in Control. In the event of a Change
of Control, the restrictions applicable to the Restricted Stock shall lapse, and such
Restricted Stock shall become free of all restrictions and become fully vested and
transferable to the full extent of the original grant.

     8. Government Regulations, Registration and Listing of Stock. This
Agreement, the awarding of the Restricted Stock and the Company’s obligation to deliver shares
evidencing the Restricted Stock hereunder shall be subject to all applicable federal, state and
local laws, rules and regulations and to such approvals which may be required by regulatory or
governmental agencies.

     9. Agreement Respecting Taxes. The Participant hereby agrees to pay to the
Company, or to make arrangements satisfactory to the Company for the payment of, any federal, state
or local taxes of any kind required by law to be withheld with respect to the Restricted Stock or
this Restricted Stock award, including withholding from the Participant’s compensation. In
addition, the Participant hereby acknowledges and agrees that the Company shall, to the maximum
extent permitted by law, have the right to deduct from any compensation, other payments or awards
otherwise due to the Participant, any taxes described in the previous sentence required by law to
be withheld with respect to the Restricted Stock or this Restricted Stock award. Finally, the
Participant acknowledges that he or she is aware that any taxes referred to in this section may be
due upon the vesting of all or a portion of the Restricted Stock.

     10. Code Section 83(b) Election. The Participant hereby agrees to
immediately notify the Company in the manner described in this Section 10 of any election made by
the Participant under Section 83(b) of the Code with respect to the Restricted Stock. The
Participant shall execute and deliver to the Company with this executed Agreement the (i)
Acknowledgement and Statement of Decision Regarding Election Pursuant to Section 83(b) of the
Internal Revenue Code and (ii) Election Pursuant to Section 83(b) of the Internal Revenue Code,
both of which are attached hereto as Exhibits A and B, respectively. The Participant should
consult the Participant’s own tax adviser

 - 2 -

 

to determine if there is a comparable election to file in the state of the Participant’s
residence and whether such filing is desirable under the circumstances.

     11. No Other Rights Created. Neither this Agreement nor the Restricted
Stock award shall constitute an employment agreement nor shall confer upon the Participant any
right to remain in the employ of the Company. The Participant shall remain subject to termination
of his employment to the same extent as though this Agreement and the Restricted Stock award did
not exist.

     12. Binding Effect. The Participant hereby acknowledges receipt of a copy
of the Plan and agrees to be bound by all of the terms and provisions thereof. The terms of the
Plan as it presently exists, and as it may hereafter be amended, are deemed incorporated herein by
reference, and any conflict between the terms of this Agreement and the terms and provisions of the
Plan shall be resolved by the Committee, whose determination shall be final and binding on all
parties. In general, and except as otherwise determined by the Committee, the provisions of the
Plan shall supersede the provisions of this Agreement to the extent of any conflict between the
Plan and this Agreement.

     13. Notices. Any notice hereunder to the Company shall be addressed to it
at 805 Pennsylvania Avenue, Suite 200, Kansas City, Missouri 64105, to the attention of Vice
President, Human Resources. Any notice hereunder to the Participant shall be addressed to the
Participant at the address set forth below, subject to the right of either party at any time
hereafter to designate at any time hereafter in writing a different address.

     14. Amendment. The Committee may at any time unilaterally amend the terms
and conditions pertaining to the Restricted Stock award; provided, however that any such amendment
which is adverse to the Participant shall require the Participant’s written consent. Any other
amendment of this Agreement shall require a written agreement executed by both parties.

     15. Miscellaneous. This Agreement contains a complete statement of all the
arrangements between the parties with respect to its subject matter. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed exclusively in the State of Delaware. The
headings in this Agreement are solely for convenience of reference and shall not affect its meaning
or interpretation.

     (a) Legend on Stock Certificates. All certificates representing the
Restricted Stock will bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RESTRICTED STOCK
AWARD AGREEMENT AMONG PREMIUM STANDARD FARMS, INC. (THE “CORPORATION”) AND THE
HOLDER OF THE STOCK REPRESENTED BY THIS CERTIFICATE. COPIES OF THE AGREEMENT WILL
BE FURNISHED BY THE CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and the Participant has executed this Agreement as of the day and year first
above written.

	 	 	 	 	 	 	 
	 	 	PREMIUM STANDARD FARMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	          Name:	 	 
	 

	 	 	 	          Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Participant:	 	 

 - 3 -

 

	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

 - 4 -

 

EXHIBIT A

ACKNOWLEDGMENT AND STATEMENT 

OF DECISION REGARDING ELECTION 

PURSUANT TO SECTION 83(b) 

of

THE INTERNAL REVENUE CODE

     The undersigned (which term includes the undersigned’s spouse), a holder of                      shares of
Common Stock (the “Restricted Stock”) of Premium Standard Farms, Inc., a Delaware
corporation (the “Company”), pursuant to a Restricted Stock Award Agreement with the
Company dated as of                      (the “Agreement”), hereby states as follows:

     1. The undersigned acknowledges receipt of a copy of the Agreement. The undersigned
has carefully reviewed the Agreement.

     2. The undersigned either [check as applicable]:

                          (a) has consulted, and has been fully advised by, the undersigned’s
own tax adviser, whose business address is
                                                            , regarding the federal, state and local tax consequences of
being issued the Interests under the Agreement, and particularly regarding the advisability
of making elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as
amended (the “Code”), and pursuant to the corresponding provisions, if any, of
applicable state laws; or

                          (b) has knowingly chosen not to consult such tax adviser.

     3. The undersigned hereby states that the undersigned has decided to make an
election pursuant to Section 83(b) of the Code and is submitting to the Company, together with the
undersigned=s executed Agreement, an executed form which is attached as Exhibit B to the Agreement.

     4. Neither the Company nor a representative of the Company has made any warranty or
representation to the undersigned with respect to the tax consequences of the issuance of the
Restricted Stock to the undersigned pursuant to the Agreement or of the making or failure to make
an election pursuant to Section 83(b) of the Code or corresponding provisions, if any, of
applicable state law.

     5. The undersigned is also submitting to the Company, together with the Agreement,
an executed original of an election, if any is made, of the undersigned pursuant to provisions of
state law corresponding to Section 83(b) of the Code, if any, which are applicable to the issuance
of the Restricted Stock to the undersigned pursuant to the Agreement.

	 	 	 	 	 
	Date:                     

	 	Participant:	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Sign Name)	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Print Name)	 	 
	 
	 	 	 	 
	Date:                     

	 	Participant Spouse	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Sign Name)	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Print Name)	 	 

A-1

 

 

EXHIBIT B

ELECTION PURSUANT TO SECTION 83(b) OF THE

INTERNAL REVENUE CODE TO INCLUDE IN GROSS INCOME

THE EXCESS OVER THE PURCHASE PRICE, IF ANY, 

OF THE VALUE OF PROPERTY TRANSFERRED 

IN CONNECTION WITH SERVICES

     The undersigned hereby elects pursuant to Section 83(b) of the Internal Revenue Code of 1986,
as amended, to include in the undersigned’s gross income for the
2___ taxable year the excess (if
any) of the fair market value of the property described below, over the amount the undersigned paid
for such property, if any, and supplies herewith the following information in accordance with the
Treasury regulations promulgated under Section 83(b):

     1. The undersigned’s name, address and taxpayer identification (social security)
number are:

          Name:                                                             

          Address:                                                                                                    

          Social Security #:

     2. The property with respect to which the election is made consists of                     
shares of Common Stock (the “Restricted Stock”) of Premium Standard Farms, Inc., a Delaware
corporation (the “Company”).

     3. The date on which the above property was transferred to the undersigned was
                     and the taxable year to which this election relates is 2___.

     4. The above property is subject to the following restrictions: (a) forfeiture of
the Restricted Stock if the Participant ceases to be an employee of the Company or an affiliate of
the Company, and (b) certain restrictions should the undersigned wish to transfer the Restricted
Stock.

     5. The fair market value of the above property at the time of transfer (determined
without regard to any restrictions other than those which by their terms will never lapse) is
$
                      per share.

     6. The
amount paid for the above property by the undersigned was $
                      per share.

     7. A copy of this election has been furnished to the Company, and a copy will be
filed with the income tax return of the undersigned to which this election relates.

	 	 	 	 	 
	Date:                     

	 	          Participant:	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Sign Name)	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Print Name)	 	 
	 
	 	 	 	 
	Date:                     

	 	          Participant Spouse	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Sign Name)	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 

	 	          (Print Name)	 	 

B-1EX-10.2

 

Exhibit 10.2

PREMIUM STANDARD FARMS, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

     THIS NONQUALIFIED STOCK OPTION AGREEMENT (the “Agreement”), dated as of                      is made by
and between Premium Standard Farms, Inc., a Delaware corporation (the “Company”), and                     ,
an                      of the Company (the “Optionee”).

W I T N E S S E T H:

     WHEREAS, the Company adopted that certain 2005 Long Term Incentive Plan, dated as of June 17,
2005 (the “Plan”); and

     WHEREAS, among other things, the Plan provides for the granting of stock options by the
Compensation Committee of the Board of Directors of the Company (the “Committee”) to eligible
employees of the Company or an Affiliate to purchase shares of the common stock of the Company, par
value $.01 per share (the “Common Stock”), in accordance with the terms and provisions thereof; and

     WHEREAS, the Committee considers the Optionee to be an employee who is eligible for a grant of
stock options pursuant to the Plan, and has determined that it would be in the best interests of
the Company to grant the option documented herein; and

     WHEREAS, the Optionee wishes to accept such award, subject to the terms and conditions
hereinafter set forth.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     1. Definitions. Unless otherwise provided herein, the capitalized terms
have the same definition and meaning as provided in the Plan.

     2. Grant of Option. Subject to the terms and conditions of the Plan and the
terms, conditions and restrictions set forth in this Agreement, the Committee hereby grants to the
Optionee the right and option to purchase from the Company on or before the tenth anniversary of
the Grant Date (or such shorter period as provided for in the Plan or elsewhere in this
Agreement)(the “Option Period”) all or any part of an aggregate of                        shares of Common Stock
(the “Shares”), at an exercise price of $                     per share (the “Exercise Price”). This option
(the “Option”) is not intended to be and will not be treated as an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

     The number of Shares and the Exercise Price are each subject to adjustment under certain
circumstances, as more fully set forth in the Plan and in Sections 3 and 8 hereof. The term
“Common Stock” as used herein shall include any other class of stock or other securities resulting
from such adjustment.

     3. Vesting of Options. The Options issued to the Optionee shall vest over
the period of time, contingent on the Optionee’s continuing to be a full-time employee of the
Company or an Affiliate as of each vesting date, in accordance with the following schedule:

     (a)                     percent (                    %) of the Options shall be vested and become
exercisable on and after the first anniversary of the Grant Date; and

     (b) An additional                      percent (                    %) of the Options shall be vested
and become exercisable on and after each of the                     ,                      and                      anniversaries
of the Grant Date.

 - 1 -

 

     4. No Shareholder Rights. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock subject to this Option prior to the date of
issuance to him of a certificate for such shares.

     5. Option Exercise Procedure. Subject to the limitations set forth in the
Plan and in Section 3 hereof, the Optionee may exercise Options, in whole or in part, during the
Option Period by giving written notice of exercise on a Notice of Exercise of Nonqualified Stock
Option, in the form attached hereto as Exhibit A, specifying the number of shares of Common Stock
subject to the Option to be purchased. The Notice of Exercise of Nonqualified Stock Option shall
be accompanied by payment of the Exercise Price for the shares of Common Stock with respect to
which the Option is being exercised, together with payment of any necessary withholding taxes.

     6. Payment of the Exercise Price. The Exercise Price shall be paid by:

     (a) cash or certified check payable to the order of the Company;

     (b) delivering Common Stock already owned by the Optionee (provided that
until FASB Statement 123(R) goes into effect, such Common Stock must have either (i) been
owned by the Optionee for more than six months and have been paid for within the meaning of
SEC Rule 144 or (ii) been obtained by the Optionee in the public market), duly endorsed and
free of any restrictions and encumbrances, having a total Fair Market Value on the date of
such delivery equal to the Exercise Price;

     (c) the delivery of cash by a broker-dealer as a “cashless” exercise,
provided such method of payment may not be used by an executive officer of the Company or a
member of the Board to the extent such payment method would violate the Sarbanes-Oxley Act
of 2002;

     (d) withholding by the Company of Common Stock subject to the Option having a
total Fair Market Value as of the date of delivery equal to the Exercise Price; or

     (e) any combination of the foregoing.

     7. Restrictions on Transfer. The Optionee may not sell, assign, margin,
transfer, encumber, convey, gift, alienate, hypothecate, pledge or otherwise dispose of all or any
part of the Option, except for transfer by will or the laws of descent and distribution. Any
attempt to sell, assign, margin, transfer, encumber, convey, gift, alienate, hypothecate, pledge or
otherwise dispose of the Option, or to subject the Option to execution, attachment or similar
process, contrary to the provisions hereof, shall be void and ineffective, shall give no right to
any purported transferee, and may, at the discretion of the Committee, result in forfeiture of the
Option.

     8. Adjustments. In the event that the number of outstanding shares of
Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital structure of the
Company without consideration, then the Exercise Price of and number of Shares subject to this
Option will be proportionately adjusted, subject to any required action by the Board or the
shareholders of the Company and compliance with any securities laws; provided, however, that any
resulting fractions of a share will not be issued pursuant to such adjustment but will be rounded
down to the nearest whole share.

     9. Other Option Conditions.

     (a) Termination of Employment. If the Optionee incurs a Termination
of Employment for Cause or that is voluntary on the part of the Optionee, all unexercised
Options, whether vested or unvested, shall expire on the date of such Termination of
Employment. If the Optionee incurs a Termination of Employment on the part of the Company
without Cause, all unvested Options shall expire on the date of such Termination of
Employment and all unexercised vested Options shall expire on the 30th day after the

 - 2 -

 

date of such Termination of Employment. Notwithstanding the foregoing, the effect of a
Termination of Employment for death or Disability of the Optionee shall be governed by the
Plan.

     (b) Change in Control. In the event of a Change of Control, all
unvested Options shall become fully vested on the date of such Change of Control.

     (c) Definitions. For purposes of this Agreement, the following terms
shall have the following meanings (unless expressly indicated to the contrary) and the term
shall be capitalized when the meaning is intended:

     (i) “Cause” means, as to the Optionee, any of the following:

          (A) the Optionee’s conviction of any felony, or any other crime
involving misuse or misappropriation of money, or entering a plea of no contest in a
court of law to a felonious crime or other crime involving a misuse or
misappropriation of money or property, which (I) results in material and
demonstrable damage to the Company or (II) materially and demonstrably impairs the
value of the Optionee’s services to the Company; or

          (B) the Optionee’s engaging in one or more acts of dishonesty which
(I) result in material and demonstrable damage to the Company or (II) materially and
demonstrably impair the value of the Optionee’s services to the Company; or

          (C) a fraudulent certification under Section 302 or Section 906 of
the Sarbanes-Oxley Act of 2002, as amended from time to time; or

          (ii) the Optionee, either directly or indirectly, alone or in
conjunction with any other party, takes any action in furtherance of or in
conjunction with a Competitive Position with a Competitor of the Company.

Notwithstanding the foregoing, the Optionee will not be deemed to have been
terminated for Cause unless there shall have been delivered to the Optionee a copy
of a notice specifying the nature of the grounds for such termination.

          (iii) “Competitive Position” means any employment, consulting,
partnership, advisory, directorship, agency, promotional or independent contractor
arrangement between the Optionee and any Competitor whereby the Optionee is required
to perform Optionee level services substantially similar to those that the Optionee
performs for the Company.

          (iv) “Competitor” refers to any person or entity, other than the
Company or its subsidiaries, engaged, wholly or partly, in the meat processing or
meat production industry.

     10. Government Regulations, Registration and Listing of Stock.

     (a) This Agreement, the grant and exercise of the Option, and the Company’s
obligation to sell and deliver Common Stock pursuant to the exercise of the Option, shall be
subject to all applicable federal, state and local laws, rules and regulations and to such
approvals which may be required by regulatory or governmental agencies.

     (b) Whether or not a registration statement under the Securities Act of 1933
(the “Securities Act”) is then in effect with respect to shares of Common Stock
distributable upon the exercise of the Option, or the offer and sale of such shares is
exempt from the registration provisions of the Securities Act, the Company may in its
discretion require that, as a condition precedent to the exercise of the Option, the

 - 3 -

 

person exercising the Option give to the Company a written representation and
undertaking, satisfactory in form and substance to the Company, that he is acquiring the
shares for his own account for investment and not with a view to the distribution or resale
thereof and otherwise establish to the Company’s satisfaction that the offer or sale of the
shares issuable upon exercise of the Option will not constitute or result in any breach or
violation of the Securities Act or any similar act or statute or any rules or regulations
thereunder. In the event a registration statement under the Securities Act is not then in
effect with respect to shares of Common Stock issuable upon exercise of the Option, the
Company may place upon any stock certificate an appropriate legend referring to the
restrictions on disposition under the Securities Act.

     (c) In the event the class of shares issuable upon exercise of the Option is
listed or quoted on any national securities exchange or quotation system, the Company shall
not be required to issue or deliver any certificate for shares upon the exercise of the
Option prior to the listing or quotation of the shares so issuable on such national
securities exchange or quotation system and prior to the registration of the same under the
Securities Act.

     11. Withholding Taxes. The Company’s obligation to deliver shares of Common
Stock upon the exercise of the Option shall be subject to the Optionee’s satisfaction of all
applicable federal, state and local tax withholding requirements arising out of the exercise of the
Option. The Optionee may satisfy the minimum withholding tax obligation by electing, on the
Notice of Exercise of Nonqualified Stock Option, to (i) have the Company withhold from the shares
to be issued or (ii) deliver to the Company (with a proper endorsement and free of any restrictions
and encumbrances) that number of shares of Common Stock having a fair market value equal to the
minimum amount required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. To the extent the Optionee fails to satisfy the above withholding
obligation, the Company shall, to the extent permitted by law, have the right to deduct from any
payments of any kind otherwise due to the Optionee, any such withholding taxes.

     12. No Other Rights Created. Neither this Agreement nor the Option herein
granted shall constitute an employment agreement nor shall confer upon the Optionee any right to
remain in the employ of the Company or any subsidiary thereof. The Optionee shall remain subject
to termination of his employment to the same extent as though this Agreement did not exist.

     13. Beneficiaries. The Optionee may, in a form provided by the Company,
file with the Committee the written designation of one or more persons as the beneficiary (the
“Beneficiary”) who shall be entitled to exercise the Optionee’s Options, if any, exercisable
hereunder upon his or her death. An Optionee may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any prior Beneficiary by filing a new designation
with the Committee. The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation hereto, shall be effective unless
received by the Committee prior to the Optionee’s death, and in no event shall be effective as of a
date prior to such receipt.

     If such Beneficiary designation is not in effect at the time of the Optionee’s death, or if no
designated Beneficiary survives the Optionee, or such designation conflicts with law, the Options
exercisable hereunder upon his or her death may be exercised by the Optionee’s estate. If the
Committee is in doubt as to the right of any person to exercise such Options, the Committee may
postpone the exercise, without liability or any interest thereon, until the rights thereon are
determined.

     14. Binding Effect. The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all of the terms and provisions thereof. The terms of the Plan
as it presently exists, and as it may hereafter be amended, are deemed incorporated herein by
reference, and any conflict between the terms of this Agreement and the terms and provisions of the
Plan shall be resolved by the Committee, whose determination shall be final and binding on all
parties. In general, and except as otherwise determined by the Committee, the provisions of the
Plan shall be deemed to supersede the provisions of this Agreement to the extent of any conflict
between the Plan and this Agreement.

 - 4 -

 

     15. Notices. Any notice hereunder to the Company shall be addressed to it
at 805 Pennsylvania Avenue, Suite 200, Kansas City, Missouri 64105, to the attention of Vice
President, Human Resources. Any notice hereunder to the Optionee shall be addressed to the
Optionee at the address set forth below, subject to the right of either party at any time hereafter
to designate at any time hereafter in writing a different address.

     16. Amendment. The Committee may at any time unilaterally amend the terms
and conditions pertaining to the Option, provided, however that any such amendment which is adverse
to the Optionee shall require the Optionee’s written consent. Any other amendment of this
Agreement shall require a written agreement executed by both parties.

     17. Miscellaneous. This Agreement contains a complete statement of all the
arrangements between the parties with respect to its subject matter. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed exclusively in the State of Delaware. The
headings in this Agreement are solely for convenience of reference and shall not affect its meaning
or interpretation.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and the Optionee has executed this Agreement as of the day and year first above
written. 

	 	 	 	 	 	 	 
	 	 	PREMIUM STANDARD FARMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Optionee:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name:	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

 - 5 -

 

EXHIBIT A

NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION

     Reference is hereby made to the Nonqualified Stock Option Agreement dated as of
                     concerning the granting of that certain option (the “Option”) by Premium Standard Farms,
Inc., a Delaware corporation (the “Company”), to                      (the “Option Agreement”). I, the
undersigned hereby notify the Company that I elect to purchase                      shares of the Company’s
Common Stock (the “Purchased Shares”) at the Exercise Price (as such term is defined in the Option
Agreement) pursuant to the Option to purchase up to                      shares of the Company’s Common Stock.

     Concurrently with the delivery of this Exercise Notice to the Secretary of the Company, I
shall hereby pay to the Company the Exercise Price for the Purchased Shares in accordance with the
provisions of my agreement with the Company evidencing this Option and shall deliver whatever
additional documents may be required by such agreement as a condition for exercise.

     Method of Payment of Exercise Price:                                                                                                                         

     I understand and agree that the determination of the Fair Market Value of the Purchased Shares
(and the shares of Company Common Stock, if any, used in the payment of the Exercise Price and/or
withholding taxes) shall be made as of the day this Notice of Exercise of Nonqualified Stock Option
is received by the Company in accordance with Sections 2.18, 6.3(4) and 12.5 of the Premium
Standard Farms, Inc. 2005 Long Term Incentive Plan and Sections 6 and 11 of the Option Agreement.
Concurrently herewith, I hereby pay, in the manner indicated immediately below, the amount required
to be withheld to satisfy the applicable tax withholding as a result of the exercise of my Option:

     Method of Payment of Withholding Taxes:                                                                                                     

Date:                                        

	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Optionee	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

	 	 	 	 	 	 	 
	Print name in exact manner that it is

to appear on the stock certificate:
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Address to which certificate is to be sent,

if different from address above:
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Social Security Number
	 	 	 	 	 	 
	 	 	 	 	 	 	 

 A-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]