Exhibit 10.1
AGREEMENT
Agreement made this ____ day of ____________, ____, by and between ConAgra
Foods, Inc., a Delaware corporation, hereinafter referred to as "ConAgra", and
____________________, hereinafter referred to as "Employee".
WHEREAS, the Board of Directors of ConAgra ("Board") has determined that
the interests of ConAgra stockholders will be best served by assuring that all
key corporate executives of ConAgra will adhere to the policy of the Board with
respect to any event by which another entity would acquire effective control of
ConAgra, including but not limited to a tender offer, and
WHEREAS, the Board has also determined that it is in the best interests of
ConAgra stockholders to promote stability among key executives and employees.
NOW, THEREFORE, it is agreed as follows:
1. DUTIES OF EMPLOYEE. Employee shall support the position of the Board
and the chief executive officer, and shall take any action requested by the
Board or the chief executive officer with respect to any "Change of Control" (as
defined at Section 7 below) of ConAgra. If the Employee violates the provisions
of this Section, he shall forfeit any payments due to him under the terms of
this Agreement.
2. EMPLOYMENT CONTRACT. If a Change of Control of ConAgra occurs, and if
at the initiation of the Change of Control attempt Employee is then employed by
ConAgra, ConAgra hereby agrees to continue the employment of Employee for a
period of three years from the date the Change of Control effectively occurs.
During said three year period, Employee shall receive annual base and incentive
compensation in an amount not less than that specified in Section 3(a) below.
If Employee is Involuntarily Terminated (as defined at Section 7 below), at
any time during the three year period, ConAgra shall pay to Employee an amount
equal to that which Employee would have received pursuant to Section 3(a) below
for the remainder of the three year period, and shall also make the payments
specified in Sections 3(b) and 3(c) and, if applicable, any additional payments
specified in Section 5 below. In addition, in the event of Involuntary
Termination at any time, Employee shall receive payment of the base and
incentive compensation described in Section 3(a) for one year. Any such
termination payment of base and incentive compensation shall be made to Employee
in a lump sum within thirty (30) days after termination.
If Employee voluntarily terminates his employment at any time during the
three year period, the Acquiror (as defined below), ConAgra, and their
subsidiaries will not be obligated to pay the Employee any amount that might be
due for the remainder of the three year period, or for any termination pay;
however, they shall make any additional payments specified in Sections 3(b),
3(c) and 5 (if applicable) below.
26
Exhibit 10.1 (continued)
3. DESCRIPTION OF PAYMENTS. The payments to be made to Employee are:
(a) ANNUAL BASE AND INCENTIVE COMPENSATION. Employee shall
receive for the three year period described in Section 2 above
an annual amount equal to his current annual rate of
compensation, which current annual compensation shall be
computed as follows: twenty-six times the Employee's highest
bi-weekly salary payment received during the one year period
ending immediately prior to the Change of Control of ConAgra. In
addition, Employee shall receive (i) an amount for short term
incentive equal to the larger of (I) the short term incentive
target, if any, most recently approved by the Human Resources
Committee of the Board ("Committee"), and (II) the highest of
the three actual short term incentive awards (including deferred
amounts) made to Employee for the three fiscal years immediately
preceding such Change of Control, plus (ii) an amount for the
Long Term Senior Management Incentive Plan Award equal to the
highest per unit award made during the three fiscal years
immediately preceding such Change of Control multiplied by the
number of units of participation approved by the Committee for
the current fiscal year.
(b) RETIREMENT BENEFITS. Employee shall receive an amount
equal to that which he would have received as retirement
benefits under the provisions of the ConAgra Pension Plan for
Salaried Employees ("Qualified Pension Plan") and the ConAgra
Retirement Income Savings Plan ("CRISP") in effect immediately
prior to the Change of Control of ConAgra, had Employee
continued his employment until age 65 at the current annual rate
of base and short term incentive compensation as determined
above and assuming no limitations under Sections 401(a)(17) and
415 of the Internal Revenue Code of 1986, as amended ("Code").
(i) The supplemental pension benefit hereunder shall be
equal to the result of subtracting (x) the benefit
the Employee will receive under the Qualified
Pension Plan from (y) the pension benefit the
Employee would obtain under the Qualified Pension
Plan if the Employee remained in the employ of
ConAgra until the Employee attained age 65. The
supplemental pension benefit is to be computed
assuming the Employee is to receive an unreduced
normal retirement pension benefit payable beginning
at the later of the date the Employee attains age 60
or the date of the Employee's termination of
employment. If the Employee begins to receive his
supplemental pension benefit at a time other than as
described in the preceding sentence, an actuarial
adjustment shall be made to reflect such event. The
supplemental pension benefit shall be reduced by the
amount of benefit received from the ConAgra
Nonqualified Pension Plan (or any successor plan)
which relates to periods following the Employee's
termination of employment.
(ii) The supplemental CRISP benefit shall be equal to the
amount computed, as follows:
A. The additional years of service that the
Employee would receive if his or her
employment was not terminated prior to
attaining age 65 is multiplied by the
Employee's current annual base and short term
incentive compensation (as described in
Section 3(a)).
B. The result in A, immediately above, is
multiplied by 3%.
C. The result in B, immediately above, is
present valued to the date of the Employee's
termination of employment. The discount
factor for such present value shall be the
discount factor used by the Qualified Pension
Plan at the time of such termination of
employment. The present value shall be
computed based on the assumption that the
result in B,
27
Exhibit 10.1 (continued)
immediately above, is paid ratably (and
monthly) over the additional years of service
of the Employee.
D. The present value amount determined pursuant
to C, immediately above, shall be funded
pursuant to Subsection (iv) of this Section
3(b).
(iii) For purposes of computing the amounts described in
Sections 3(b)(i)(y) and 3(b)(ii)A, the following
shall apply:
A. The total amount of current annual base pay
and short term incentive pay (as described in
Section 3(a)) shall be used without any
reduction for the limitation imposed upon
compensation by Code Section 401(a)(17) (or
any successor section thereto).
B. The limitations imposed by Code Section 415
shall not apply.
C. If, at the time of termination, the Employee
is not eligible to participate in the
Qualified Pension Plan, the amount computed
under Section 3(b)(1) shall be based solely
on the years after termination of employment.
D. If, at the time of termination, the Employee
is not eligible to participate in the
Qualified Plan, but does participate in a
defined benefit plan of ConAgra, its
successor, or one of their affiliates ("Other
Defined Benefit Plan"), the Employee shall
receive an additional supplemental benefit
equal to the result of subtracting (x) the
benefit the Employee will receive from the
Other Defined Benefit Plan from (y) the
benefit the Employee would receive from the
Other Defined Benefit Plan assuming the
Employee is to receive an unreduced normal
retirement pension benefit payable beginning
at the later of the date the Employee attains
age 60 or the date of the Employee's
termination and assuming the Employee's pay,
for purposes of calculating the Employee's
Other Defined Benefit Plan benefit, is, and
always has been, equal to the Employee's
current annual base pay and short term
incentive (as described in Section 3(a)).
(iv) The actuarial assumptions and methods used by this
Section 3(b) shall be the same as those used by the
Qualified Pension Plan. The timing of payment and
the form of the supplemental pension benefit under
this Section 3(b) shall be the same as elected by
the Employee under the Qualified Pension Plan and
the timing of payment and the form of the
supplemental CRISP benefit shall be the same as
elected by the Employee under CRISP. If the Employee
does not participate in the Qualified Pension Plan
and/or CRISP, the Employee shall elect (from the
respective options under the Qualified Pension Plan
and CRISP) the timing and form of the supplemental
pension and CRISP benefits;
(v) The supplemental pension and CRISP benefits payable
under this Section 3(b) shall be unfunded until a
Voluntary Termination or Involuntary Termination
following a Change of Control. Within 60 days
following such a termination, the supplemental
pension and CRISP benefits shall be funded, in one
lump sum payment, through a trust in the form
attached to the ConAgra Supplemental Pension and
CRISP Plan for Change of Control and which trust is
incorporated by reference. The transferred amount
for the supplemental CRISP benefit shall be held in
a separate account and separately invested by the
trustee. The amount accumulated in such account
shall be the sole source of payment of the
28
Exhibit 10.1 (continued)
supplemental CRISP benefit, and shall be the amount
of the supplemental CRISP benefit hereunder. The
Acquiror, ConAgra and their subsidiaries shall make
up any supplemental pension benefit payments the
Employee does not receive under the trust, e.g., if
the funds in the trust are insufficient to make the
payments due to insufficient earnings in the trust.
The trustee of such trust shall be a national or
state chartered bank. If funding of the trust is not
made within the sixty day period described in this
Subsection (iv) of this Section 3(b), the Employee's
supplemental pension and CRISP benefits shall then
be equal to the product of 150% multiplied by the
amount of supplemental pension and CRISP benefits
described in this Section 3(b) above; provided,
however, this increase in benefits is not intended
to remove or detract from the obligation to fund the
trust. The supplemental pension and CRISP benefits
shall not be paid from the assets of the Qualified
Pension Plan or CRISP.
(c) ADDITIONAL PAYMENT. If a Change of Control of ConAgra
occurs, Employee shall receive an amount equal to the excess, if
any, of the highest per share price offered (valued in U.S.
currency) by the successful Acquiror for ConAgra common stock
(which stock will then be treated for purposes of this Agreement
as converted into equivalent shares of such Acquiror's or the
surviving company's capital stock as of the date of the Change
of Control of ConAgra) over the closing per share price of such
Acquiror's or the surviving company's ("Acquiror") stock quoted
on an established securities market (or if applicable, the
closing bid price for the Acquiror's stock that is quoted on a
secondary market or substantial equivalent thereof) on the date
of termination (or if the date of termination is not a business
day, on the next preceding business day), multiplied by the
highest number of shares of the Acquiror's capital stock owned
by the Employee at any time during the period beginning on the
date of the Change of Control of ConAgra and ending on the date
of termination. For purposes of this Section 3(c), the
additional amount due hereunder shall be computed as if Employee
owned all of the Acquiror's stock with respect to which Employee
has an option to purchase in connection with his employment with
the Acquiror, ConAgra or any of their subsidiaries. Said amount
shall be paid to Employee within ten days after termination. In
addition, if Employee sells any of the Acquiror's stock within
one year following said termination, Employee shall receive the
amount by which the closing price of such stock per share on the
date of termination (determined as aforesaid) exceeds the per
share actual net sales price of the Acquiror's stock on the date
of sale realized by Employee, multiplied by the number of shares
sold by Employee. Said amount shall be paid in immediately
available funds to Employee within ten days after the sale. In
addition, to the extent any of ConAgra's common stock remains
outstanding after a Change of Control, then Employee shall
receive additional amounts computed and payable in a manner
similar to that provided in this Section 3(c) for Acquiror's
stock owned, or subject to an option held, by Employee. These
provisions shall be appropriately modified or adjusted to take
into account the fact that the computations pursuant to the
preceding sentence are with respect to ConAgra common stock and
related options rather than the Acquiror's capital stock and
options related thereto. The computations and payments under
this Section 3(c) shall include appropriate adjustments for any
stock splits, stock dividends, recapitalizations or similar
share restructurings that may occur from time to time.
4. MERGER. ConAgra shall not merge, reorganize, consolidate
or sell all or substantially all of its assets, to or with any
other corporation until such corporation and its subsidiaries,
if any, expressly assume the duties of ConAgra set forth herein.
5. CERTAIN ADDITIONAL PAYMENTS BY CONAGRA.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that
any payment or distribution by ConAgra to or for the
benefit of the Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise (a "Payment"), would be subject to
the excise tax imposed by
29
Exhibit 10.1 (continued)
Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the
Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in any amount such that
after payment by the Employee of all taxes (including any
interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up
Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Subsection (c) below,
all determinations required to be made under this Section,
including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by the
certified public accounting firm then representing ConAgra
(the "Accounting Firm") which shall provide detailed
supporting calculations both to ConAgra and the Employee
within 15 business days of the date of termination, if
applicable, or such earlier time as is requested by
ConAgra or Employee. If the Accounting Firm determines
that no Excise Tax is payable by the Employee, it shall
furnish the Employee with an opinion that he has
substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the
Accounting Firm shall be binding upon ConAgra and the
Employee. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have
been made by ConAgra should have been made
("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that ConAgra
exhausts its remedies pursuant to Subsection (c) below and
the Employee thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by ConAgra to or for
the benefit of the Employee.
(c) The Employee shall notify ConAgra in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by ConAgra of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after
the Employee knows of such claim and shall apprise ConAgra
of the nature of such claim and the date on which such
claim is requested to be paid. The Employee shall not pay
such claim prior to the expiration of the thirty-day (30
day) period following the date on which it gives such
notice to ConAgra (or such shorter period ending on the
date that any payment of taxes with respect to such claim
is due). If ConAgra notifies the Employee in writing prior
to the expiration of such period that it desires to
contest such claim, the Employee shall:
(i) give ConAgra any information reasonably
requested by ConAgra relating to such claim,
(ii) take such action in connection with
contesting such claim as ConAgra shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation with respect
to such claim by an attorney reasonably
selected by ConAgra,
(iii) cooperate with ConAgra in good faith in order
to effectively contest such claim,
(iv) permit ConAgra to participate in any
proceedings relating to such claim; provided,
however, that ConAgra shall bear and pay
directly all costs and expenses (including
additional interest and penalties) incurred
in connection with such contest and shall
indemnify and hold the Employee
30
Exhibit 10.1 (continued)
harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest
and penalties with respect thereto, imposed
as a result of such representation and
payment of costs and expenses. Without
limitation on the foregoing provisions of
this Subsection (c), ConAgra shall control
all proceedings taken in connection with such
contest and, at its sole option, may pursue
or forego any and all administrative appeals,
proceedings, hearings and conferences with
the taxing authority in respect of such claim
and may, at its sole option, either direct
the Employee to pay the tax claimed and xxx
for a refund or contest the claim in any
permissible manner, and the Employee agrees
to prosecute such contest to a determination
before any administrative tribunal, in a
court of initial jurisdiction and in one or
more appellate courts, as ConAgra shall
determine; provided, however, that if ConAgra
directs the Employee to pay such claim and
xxx for a refund, ConAgra shall advance the
amount of such payment to the Employee, on an
interest-free basis and shall indemnify and
hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax,
including interest or penalties with respect
thereto, imposed with respect to such advance
or with respect to any imputed income with
respect to such advance; and further provided
that any extension of the statute of
limitations relating to payment of taxes for
the taxable year of the Employee with respect
to which such contested amount is claimed to
be due is limited solely to such contested
amount. Furthermore, ConAgra's control of the
contest shall be limited to issues with
respect to which a Gross-Up Payment would be
payable hereunder and the Employee shall be
entitled to settle or contest, as the case
may be, any other issue raised by the
Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Employee of an amount
advanced by ConAgra pursuant to Subsection (c) above, the
Employee becomes entitled to receive any refund with respect to
such claim, the Employee shall (subject to ConAgra's complying
with the requirements of Subsection (c)) promptly pay to ConAgra
the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the
receipt by the Employee of an amount advanced by ConAgra
pursuant to Subsection (c), a determination is made that the
Employee shall not be entitled to any refund with respect to
such claim and ConAgra does not notify the Employee in writing
of its intent to contest such denial of refund prior to the
expiration of thirty days after such determination, then such
advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
6. TERM AND BINDING EFFECT. This Agreement shall bind ConAgra and
Employee as long as Employee remains in the employ of ConAgra;
provided, however, ConAgra may terminate this Agreement at any time by
giving notice to Employee; and provided further, however, that ConAgra
may not terminate this Agreement at any time subsequent to the
announcement of an event that could result in a Change of Control of
ConAgra. This Agreement shall be binding upon the parties hereto,
their heirs, executors, administrators and successors.
7. CERTAIN DEFINITIONS. The following definitions shall apply for
the purposes of this Agreement:
(a) CHANGE OF CONTROL OF CONAGRA. The term "Change of Control"
shall mean:
31
Exhibit 10.1 (continued)
(i) The acquisition (other than from ConAgra) by any
person, entity or "group", within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act"),
(excluding, for this purpose, ConAgra or its
subsidiaries, or any employee benefit plan of
ConAgra or its subsidiaries, which acquires
beneficial ownership of voting securities of
ConAgra) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of
30% or more of either the then outstanding shares of
common stock or the combined voting power of
ConAgra's then outstanding voting securities
entitled to vote generally in the election of
directors; or
(ii) Individuals who, as of the date hereof, constitute
the Board (as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least
a majority of the Board, provided that any person
becoming a director subsequent to the date hereof
whose election, or nomination for election by
ConAgra's shareholders, was approved by a vote of at
least a majority of the directors then comprising
the Incumbent Board shall be, for purposes of this
Agreement, considered as though such person were a
member of the Incumbent Board; or
(iii) Consummation of a reorganization, merger,
consolidation, in each case, with respect to which
persons who were the shareholders of ConAgra
immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own
more than 50% of the combined voting power entitled
to vote generally in the election of directors of
the reorganized, merged or consolidated company's
then outstanding voting securities, or a liquidation
or dissolution of ConAgra or of the sale of all or
substantially all of its assets.
(b) INVOLUNTARY TERMINATION. The term "Involuntary
Termination" or any variation thereof shall mean either (i) the
actual involuntary termination of Employee's employment with the
Acquiror, ConAgra and their subsidiaries after a Change of
Control (with or without cause) or (ii) the constructive
involuntary termination of the Employee's employment with the
Acquiror, ConAgra and their subsidiaries after a Change of
Control. The term "constructive involuntary termination" shall
include (w) a reduction in the Employee's compensation
(including applicable fringe benefits); (x) a substantial change
in the location of the Employee's job without the Employee's
written consent; (y) the Employee's demotion or diminution in
the Employee's position, authority, duties or responsibilities
without the Employee's written consent; or (z) the sale or
disposition of the stock of Employee's immediate employer, which
was a subsidiary of the Acquiror, ConAgra, or their other
subsidiaries immediately prior to such sale or disposition,
provided Employee is not employed after such sale or disposition
by the Acquiror, ConAgra, or any of their subsidiaries that are
retained after such sale or disposition. "Substantial change in
location" means any location change in excess of 35 miles from
the location of the Employee's job with ConAgra or its
subsidiaries at the time of the Change of Control of ConAgra.
8. COSTS. All costs of litigation necessary for the Employee to
defend the validity of this contract are to be paid by ConAgra
or its successors or assigns.
9. PRIOR AGREEMENTS. This Agreement supersedes, restates and
replaces any and all prior agreements to which both ConAgra and
the Employee are parties with respect to the Change of Control
of ConAgra.
32
Exhibit 10.1 (continued)
IN WITNESS WHEREOF, the parties have executed this Agreement.
EMPLOYEE: CONAGRA FOODS, INC.
------------------------------ ------------------------------
Chairman and
Chief Executive Officer
33
