EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") dated the 1st day of April,
2002 (the "Commencement Date"), between MINNESOTA CORN PROCESSORS, LLC
("Company") and L. XXXXXX XXXXXXXX ("Employee").
The Company and the Employee agree as follows:
1. EMPLOYMENT CAPACITY; TERM OF AGREEMENT. The Employee will serve as
President and Chief Executive Officer of the Company for an initial term (the
"Initial Term") beginning on the Commencement Date and ending on March 31, 2005.
On April 1, 2005, and on each April 1 thereafter, the term of this Agreement and
the employment of the Employee pursuant to this Agreement shall be automatically
extended for successive one-year renewal periods (each a "Renewal Term") unless
and until the Company gives the Employee a written termination notice at least
12 months before the end of the Initial Term or the Renewal Term (and in that
case this Agreement shall terminate on the last day of the Initial Term or the
Renewal Term as applicable). For purposes of this Agreement, the "Employment
Term" means the Initial Term and each Renewal Term, subject to early termination
pursuant to Section 5 below.
2. DEVOTION TO RESPONSIBILITIES. Employee hereby confirms that he is
under no contractual commitments inconsistent with his obligations set forth in
this Agreement. During the Employment Term, the Employee shall devote all of his
time and attention during normal business hours to the business of the Company,
and he will not engage in or be employed by any other business activity or
business, whether or not such business activity or business is for gain, profit
or other pecuniary advantage, provided, however, that nothing herein shall
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prohibit the Employee from (i) serving as a member of a Board of Directors,
Board of Trustees or the like of any for profit or non-profit entity, or
performing services of any type for any civic or community entity, whether or
not the Employee receives compensation therefrom, (ii) investing his assets in
such form or manner as will require no more than nominal services on the part of
the Employee in the operation of the business of the entity in which such
investment is made, or (iii) serving in various capacities with, and attending
meetings of, industry or trade groups and associations, including without
limitation the industry or trade groups and associations with which the Employee
is currently involved, as long as the Employee's engaging in any one or more of
the activities permitted by virtue of clauses (i), (ii) and (iii) above does not
or do not materially and unreasonably interfere with the ability of the Employee
to perform the servies and discharge the responsibilities required of him under
this Agreement.
3. BASE SALARY; INCENTIVE COMPENSATION BENEFITS. The Company will
provide the Employee with the compensation and benefits described below:
a. BASE SALARY. An annual base salary during the Employment Term
of $330,000.00 ("Annual Base Compensation"), payable to the Employee in
accordance with the Company's normal payroll cycle. Salary and performance
reviews will be conducted by the Company's Board of Directors on or about April
1st of each year for possible salary increases.
b. VACATION. Employee shall be entitled to four (4) weeks
vacations per year.
c. ANNUAL INCENTIVE PAYMENTS & BONUS. Employee shall be eligible
for an annual incentive payments for each fiscal year in which the Company is
profitable, in an amount equal to (i) 1/4% of the first $50 million of the
Company's Net Proceeds for the fiscal year plus (ii) 1/8% of the Company's Net
Proceeds for the fiscal year in excess of $50 million. For this purpose, "Net
Proceeds" shall mean the Company's net income for the fiscal year as shown on
the Company's audited financial statements for the fiscal year, determined
without regard to extraordinary income items. The annual bonus, if any, payable
to the Employee for any fiscal year in which the Company is unprofitable, shall
be determined at the sole discretion of the Company's Board of Directors. The
annual bonus, if any, shall be determined by the Board of Directors and paid to
the Employee as soon as practicable and in any event within 90 days after the
end of each fiscal period.
d. ANNUITY. The Company shall annually invest $20,000 in a fully
vested annuity with Employees as full owner. The terms of the annuity to be
purchased shall be as mutually agreed upon from time to time by the Company's
Board of Directors and the Employee, and to the extent practicable, the parties
will select an annuity providing that no taxable income will be realized by the
Employee until payments are actually made to the Employee.
e. OTHER BENEFITS. Employee shall entitled to participate in
Company's 401(k) plan and all other employee benefit plans or programs of the
Company to the extent that his position, title, tenure, salary, age, health and
other qualifications make him eligible to participate. The Company does not
guarantee the adoption or continuance of any particular employee benefit plan or
program during the term of this agreement, and Employee's participation in any
such plan or program shall be subject to the provisions, rules and regulations
applicable thereto; provided, however, that the Company shall not establish
rules for participation in any such plans or programs that unfairly discriminate
against Employee.
4. EXPENSES. The Employee will be reimbursed for reasonable
out-of-pocket expenses incurred from time to time on behalf of the Company or
any subsidiary in the performance of his duties under this Agreement, upon the
presentation of such supporting invoices, documents and forms as the Company
reasonably requests.
5. TERMINATION.
a. GROUNDS FOR TERMINATION DURING THE EMPLOYMENT TERM. This
Agreement and the Employee's employment by the Company shall terminate prior to
the expiration of the Employment Term in the event that at any time during such
Employment Term:
(1) Employee dies, or
(2) The Board of Directors of the Company notifies Employee in
writing that this Agreement is being terminated for "cause", or
(3) The Board of Directors of the Company elects to terminate
this Agreement without "cause" and notifies the Employee in writing of
such election or,
(4) Employee elects to terminate this Agreement and notifies
the Company in writing of such election.
If this Agreement is terminated pursuant to subsection (1), (2), or (3) of this
Section, such termination shall be effective immediately. If this Agreement is
terminated pursuant to subsection (4) of this Section, such termination shall be
effective thirty (30) days after the Employee delivers a written notice of
termination to the Company.
b. DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
(1) "Cause" shall mean Employee (i) has engaged in any willful
and material misconduct, including willful and material failure to
perform his duties as an officer or employee of the Company, and has
failed to cure such default within thirty (30) days after receipt of
written notice of such conduct from the Company, or (ii) has committed
fraud, misappropriation or embezzlement with the Company's business
assets, or (iii) has been convicted of criminal misconduct (excluding
misdemeanor or traffic violations), or (iv) has used narcotics, liquor
or illicit drugs in a manner having a detrimental effect on the
performance of his employment responsibilities.
c. EFFECT OF TERMINATION. If this Agreement terminates at the end of
the Employment Term or earlier as provided in this Section, all of the rights
and obligations of Employee and Company hereunder shall terminate as of the
effective date of such termination. However, notwithstanding the termination of
this Agreement and Employee's employment hereunder (i), if applicable, Employee
shall be entitled to the benefits provided in Sections 5 (e) and (f) below, and
(ii) Employee, in consideration of his employment hereunder to the date of such
termination, shall remain bound by Sections 6 and 7 hereof and any other
provisions of this Agreement which specifically relate to periods, activities or
obligations upon subsequent to the termination of Employee's employment.
x. XXXXXXXX RESIDENCE. MCP will compensate the Employee for up to
$200,000 financial loss suffered on the sale of his residence in the Xxxxxxxx
area in the event that his employment is terminated for any reason other than
for cause.
x. XXXXXXXXX PAYMENT. If Employee's employment is terminated by the
Company during the Employment Term pursuant to Section 5 (a) (4) above (i.e.,
without cause), the Company shall pay to Employee (within 30 days after such
termination), a cash severance payment equal to,
(A) if the employment is terminated during the Initial Term, an amount
equal to (i) $330,000 or (ii) greater, the product of $6,346.15
multiplied by then number of weeks remaining from the date of
termination of employment to the end of the Initial Term, but not more
than $500,000, or
(B) if the employment is terminated at any time after the end of the
Initial Term, an amount equal to $330,000.
It is understood and agreed that no severance payment shall be due in the event
the employment is terminated during the Employment Term as provided in Section 5
(a) (1), (2), or (4).
f. CHANGE IN CONTROL. In the event there is a Change in Control, then
Employee shall, on the date of the Change in Control receive an amount being the
greater of: 1) Employee's Annual Base Compensation of $330,000 as stated in
Section 3.a. of this Agreement, or 2) the full amount of the unpaid balance of
this Agreement. Said amount, shall be immediately paid in a lump sum in United
States currency.
"CHANGE IN CONTROL" shall mean the occurrence of one or all of the
following events:
(i) the consummation of any consolidation, merger,
reorganization, or similar transaction involving the Company whether or
not the Company is the continuing or surviving entity, including
consolidation, merger, reorganization, or similar transaction involving
the Company that would result in the holders of the Company's Class A
Units, (as defined in the Third Amended and Restated Operating
Agreement of Minnesota Corn Processors, LLC, a Colorado limited
liability company, hereinafter referred to as "OA") immediately prior
to such transaction having the same proportionate ownership of the
Class A Units (or their functional equivalent) of the surviving entity
immediately after the consolidation, merger, reorganization or similar
transaction; or
(ii) any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) who is or becomes the "Beneficial Owner" (as defined
in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended), directly or indirectly, of Class A Units of
the Company representing more than 50% of the Company's then
outstanding Class A Units; or,
(iii) A change in ownership of the Company where any
"person" as defined in the OA owns 35% or more of the Class A
Units; or,
(iv) Any sale, lease, disposition, exchange, or
transfer of all or substantially all of the assets of the
Company; or,
(v) The liquidation of the Company; or,
(vi) Any dissolution of the Company.
6. TRADE SECRETS, ETC. The Employee shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data (including without limitation all financial information) relating to the
Company or any of its subsidiaries or affiliates and their respective businesses
and operations, which shall have been obtained by the Employee during the
Employee's employment (whether prior to or after the Commencement Date) and
which shall not have become public knowledge (other than by acts of the Employee
or any of his representatives in violation of this Agreement). Employee
acknowledges that the above-described knowledge or information constitutes a
unique and valuable asset of the Company and represents a substantial investment
of time and expense by the Company, and that any disclosure or other use of such
knowledge or information other than for the sole benefit of the Company would be
wrongful and would cause irreparable harm to the Company. At the end of the
Employment Term, the Employee agrees (i) not, without the prior written consent
of the
company or as may be otherwise required by law or legal process, to communicate
or divulge any such information, knowledge or data to any party other than the
Company, and (ii) to deliver promptly to the Company any confidential
information, knowledge or data in his possession, whether produced by the
Company or any of its subsidiaries and corporate affiliates or any past, current
or prospective activity of the Company or any of its subsidiaries or affiliates.
In either event, the Employee shall be permitted to retain copies of such data
as are necessary in order to enable the Employee to assert any rights under this
Agreement, provided that such data shall be used solely for such purpose.
7. CUSTOMER LISTS. The Employee recognizes and acknowledges that any
written list or lists of the customers of the Company or any of its subsidiaries
or affiliates ("customer lists"), as such customer lists may exist from time to
time, are valuable, special and unique assets of the Company. The Employee
agrees that he will not use such customer lists for his own personal benefit or
disclose such customer lists to any person, firm, corporation, association or
other entity for his own personal benefit.
8. INJUNCTIVE RELIEF. In the event of a breach or threatened breach by
the Employee of the provisions of Sections 6 or 7 of this Agreement during or
after the Employment Term, the Company shall be entitled to injunctive relief
restraining the Employee from violation of such provision. Nothing herein shall
be construed as prohibiting the Company from pursuing any other remedy at law or
in equity it may have in the even of breach or threatened breach of this
Agreement by the Employee.
9. BINDING EFFECT.
a. This Agreement shall be binding upon and inure to the benefit
of the Company and any of its successors, or assigns, or purchasers.
b. This Agreement is personal to the Employee and shall not be
assignable by the Employee without consent of the Company (there being no
obligation to give such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
c. The Company will require any successor or assignee (whether
direct or indirect, by purchase, merger, consolidation or otherwise) of all or
substantially all of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to agree to perform all of
the Company's obligations under this Agreement in the same manner and to the
same extent as would have been required of the Company had no assignment or
succession occurred, such assumption to be set forth in a writing reasonably
satisfactory to the Employee. In the event of any such assignment or succession,
the term "Company" as used in this Agreement shall refer also to such successor
or assignee.
10. EXPENSES RELATING TO ENFORCEMENT OF RIGHTS. If either party shall
successfully seek to enforce any provision of this Agreement or to collect any
amount claimed to be due hereunder, the successful party shall be entitled to be
reimbursed by the other party for any and all of its out-of-pocket expenses,
including reasonable attorneys' fees, insured in connection with such
enforcement and/or collection.
11. NOTICES. Any notice or other communication required under this
Agreement shall be in writing, shall be deemed to have been given and received
when delivered in person, or, if mailed, shall be deemed to have been given when
deposited in the United States mail, first class,
registered or certified, return receipt requested, with proper postage prepaid,
and shall be deemed to have been received on the third business day thereafter,
and shall be addressed as follows:
If to the Company addressed to:
Minnesota Corn Processors, LLC
000 X Xxxxxxx 00
Xxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Chairman of the Board
If to the Employee, addressed to:
L. Xxxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
or such other address as to which any party thereto may have notified the other
in writing.
12. GOVERNING LAW. This Agreement shall be governed by an interpreted
in accordance with the laws of
the State of Minnesota.
13. ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire arrangement or understanding between the Employee
and the Company relating to the employment of the Employee by the Company and
supersedes and replaces all previous agreements and discussions relating to
similar subjects between the Employee and the Company. No provision of this
Agreement may be modified or amended except by an instrument in writing signed
by the Employee and the Chairman or Vice Chairman of the board on behalf of the
Company.
14. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall at any time or to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term of the provisions of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
15. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
16. BENEFICIARIES. Whenever this Agreement provides for any payment to
be made to the Employee or his estate, such payment may be made instead to such
beneficiary or beneficiaries as the Employee may have designated in writing and
filed with the Company's Secretary. The Employee shall have the right to revoke
any such designation from time to time and redesignate any beneficiary or
beneficiaries by written notice to the Company's Secretary and Vice President of
Human Resources.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, all of which
together shall constitute one and the same instrument.
MINNESOTA CORN PROCESSORS, LLC
By: /s/ Xxxxx Xxxxxx
__________________________
Xxxxx Xxxxxx
Chairman of the Board of Directors
EMPLOYEE
By: /s/ L. Xxxxxx Xxxxxxxx
__________________________
L. Xxxxxx Xxxxxxxx
