EXHIBIT 10.29
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of June 16, 1999 by and between
Xxxx X. Xxxxxxx (hereafter "Xxxxxxx") and Cenex Harvest States Cooperatives, a
Minnesota cooperative corporation (together with all affiliates, the "Company").
WHEREAS, Xxxxxxx is an integral part of the Company's management; and
WHEREAS, the Company is contemplating the possible full consolidation
of its business with the business of Farmland Industries, Inc. through
a merger or other similar transaction (the "Consolidation") and desires
to assure both itself and Xxxxxxx of continuity in the event of the
Consolidation;
NOW, THEREFORE, it is hereby agreed to by and between the parties as
follows:
1. Employment
The Company hereby agrees to and does hereby employ Xxxxxxx as
President and General Manager, and Xxxxxxx hereby agrees to accept
employment with the Company as President and General Manager, for the
period set forth in Paragraph 2 below (the period of employment) upon
the other terms and conditions set forth in this Agreement. It is
understood that the Company or its successor may appoint Xxxxxxx to a
different position, and that Xxxxxxx may accept such a position,
subject to the other terms and conditions set forth in this Agreement.
2. Period of Employment; Termination of Agreement
The period of employment shall commence on the date of this Agreement
and, subject to the provisions of Paragraphs 5 and 6 below, shall
continue for a rolling three (3) year period, provided that Xxxxxxx'x
employment may be earlier terminated by either party subject to the
rights and obligations of the parties set forth herein.
3. Performance
Throughout the period of employment, Xxxxxxx agrees to devote his full
time and attention during normal business hours to the business of the
Company, except for earned vacations and except for illness or
incapacity.
4. Compensation
(a) For all services to be rendered by Xxxxxxx in any capacity
during the period of employment, Xxxxxxx shall be paid as
annual compensation a base salary of at least $575,000. The
Board will annually review Xxxxxxx'x annual compensation and
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determine what is appropriate for a cost of living increase,
merit increase, and/or increase in responsibilities or duties.
(b) During the term of his employment hereunder, Xxxxxxx shall be
eligible to participate in all of the Company's variable pay
programs. Xxxxxxx shall further be entitled to any additional
employee benefits separately made available to him from time
to time by the Board in its discretion.
(c) The Company shall bear such ordinary and necessary business
expenses incurred by Xxxxxxx in performing his duties
hereunder as the Company determines from time to time,
provided that Xxxxxxx accounts promptly for such expenses to
the Company in the manner prescribed from time to time by the
Company.
5. Termination with Severance Allowance
(a) Termination by the Company Not for Cause. In the event of
termination of the employment of Xxxxxxx by the Company during
the period of employment for any reason other than for cause,
as defined in paragraph 6(a), death or disability, the Company
shall:
(i) pay Xxxxxxx a severance allowance in the amount of 2.99
times the greater of
(A) his then-current base salary plus
short-term and long-term target bonus ("Target
Bonus"), or
(B) the amount payable in base salary plus
Target Bonus for calendar year 1999;
(ii) continue his family health insurance for one (1) year;
(iii) continue his family health insurance thereafter up to
age 65 (or any revised age for Medicare eligibility), upon
Xxxxxxx'x payment of the retiree premium rate, except for any
period during which Xxxxxxx is eligible for coverage, without
any exclusions for preexisting conditions, through another
employee group plan; and
(iv) continue his existing executive perquisites for a period
of three (3) years.
Said severance allowance shall be in lieu of all other severance
payable to Xxxxxxx under Company severance policies.
(b) Termination by Xxxxxxx if the Consolidation is closed on or
before December 31, 2000. If the Consolidation is closed on or
before December 31, 2000; and if (i) Xxxxxxx is not offered
the position of Chief Executive Officer of the Company or its
successor on or before June 1, 2001, or (ii) the Company or
its successor names
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someone other than Xxxxxxx as its new Chief Executive Officer;
and if Xxxxxxx thereafter resigns his employment on or before
June 1, 2002, the Company shall:
(i) pay Xxxxxxx a xxxxxxxxx allowance in the amount of 1.99
times the greater of
(A) his then-current base salary plus Target
Bonus, or
(B) the amount payable in base salary plus
Target Bonus for calendar year 1999;
(ii) continue his family health insurance for one (1) year;
(iii) continue his family health insurance thereafter up to
age 65 (or any revised age for Medicare eligibility), upon
Xxxxxxx'x payment of the retiree premium rate, except for any
period during which Xxxxxxx is eligible for coverage, without
any exclusions for preexisting conditions, through another
employee group plan; and
(iv) continue his existing executive perquisites for a period
of two (2) years.
Said severance allowance shall be in lieu of all other severance
payable to Xxxxxxx under Company severance policies.
(c) Termination by Xxxxxxx if the Consolidation is not closed on
or before December 31, 2000. If the Consolidation is not
closed on or before December 31, 2000 and Xxxxxxx is not
offered the position of Chief Executive Officer of the Company
on or before December 31, 2000, this shall be deemed an event
of termination without cause. In that event, the Company
shall:
(i) pay Xxxxxxx a xxxxxxxxx allowance in the amount of 2.99
times the greater of
(A) his then-current base salary plus Target Bonus,
or
(B) the amount payable in base salary plus Target
Bonus for calendar year 1999;
(ii) continue his family health insurance for one (1) year;
(iii) continue his family health insurance thereafter up to
age 65 (or any revised age for Medicare eligibility), upon
Xxxxxxx'x payment of the retiree premium rate, except for any
period during which Xxxxxxx is eligible for coverage, without
any exclusions for preexisting conditions, through another
employee group plan; and
(iv) continue his existing executive perquisites for a period
of three (3) years.
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Said severance allowance shall be in lieu of all other severance
payable to Xxxxxxx under Company severance policies.
(d) Additional Payments. In the event that Xxxxxxx becomes
entitled to payments under paragraph 5(a), 5(b), or 5(c) of
this Agreement, the Company shall cause its independent
auditors promptly to review, at the Company's sole expense,
the applicability of Section 4999 of the Code to such
payments. If such auditors shall determine that any payment or
distribution of any type by the Company to Xxxxxxx or for his
benefit, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise (the "Total Payments"), would be subject to the
excise tax imposed by 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
collectively referred to as the "Excise Tax"), then Xxxxxxx
shall be entitled to receive an additional cash payment (a
"Gross-Up Payment") within 30 days of such determination equal
to an amount such that after payment by Xxxxxxx of all taxes
(including any interest or penalties imposed with respect to
such taxes), including any Excise Tax, imposed upon the
Gross-Up Payment, Xxxxxxx would retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Total Payments. For purposes of the foregoing determination,
Xxxxxxx'x tax rate shall be deemed to be the highest statutory
marginal state and Federal tax rate (on a combined basis)
(including Xxxxxxx'x share of F.I.C.A. and Medicare taxes)
then in effect. If no determination by the Company's auditors
is made prior to the time a tax return reflecting the Total
Payments is required to be filed by Xxxxxxx, he will be
entitled to receive a Gross-Up Payment calculated on the basis
of the Total Payments reported by Xxxxxxx in such tax return,
within 30 days of the filing of such tax return. In all
events, if any tax authority determines that a greater Excise
Tax should be imposed upon the Total Payments than is
determined by the Company's independent auditors or reflected
in Xxxxxxx'x tax return pursuant to this Section 6, Xxxxxxx
shall be entitled to receive the full Gross-Up Payment
calculated on the basis of the amount of Excise Tax determined
to be payable by such tax authority from the Company within 30
days of such determination.
(e) Request and Release. In order to obtain the severance
allowance provided for in this Agreement, Xxxxxxx must submit
a request for severance and must sign a complete release of
all claims. The Company shall have no obligation to pay any
severance allowance unless and until Xxxxxxx shall have
submitted the request for severance and signed a full and
complete release of all claims, to be drafted by Legal Counsel
for the Company.
6. Termination without Severance Allowance
(a) Termination by the Company for Cause. The Company may
terminate Xxxxxxx'x employment for cause without incurring
further obligation. For the purpose of this Agreement,
termination of Xxxxxxx'x employment shall be deemed to have
been for cause only:
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(i) if termination of Xxxxxxx'x employment shall have
been the result of an act or acts of fraud, theft or
embezzlement on the part of Xxxxxxx which, if
convicted, would constitute a felony and which
results or which is intended to result directly or
indirectly in gain or personal enrichment of Xxxxxxx
at the expense of the Company; or
(ii) if termination of Xxxxxxx'x employment results from
Xxxxxxx'x willful and material misconduct, including
willful and material failure to perform his duties,
and Xxxxxxx has been given written notice by the
Board of Directors with respect to such and Xxxxxxx
does not cure within a reasonable time; or
(iii) if there has been a breach by Xxxxxxx during the
period of employment of the provisions of Paragraph 3
above, relating to the time to be devoted to the
affairs of the Company, and with respect to any
alleged breach of Paragraph 3 hereof, Xxxxxxx shall
have substantially failed to remedy such alleged
breach within thirty days from Xxxxxxx'x receipt of
notice from the Board of Directors.
(b) Nonrenewal of Agreement. Except as otherwise provided in
paragraph 5(b) and/or 5(c) above, the Company may elect not to
renew this Agreement, and thereby to terminate Xxxxxxx'x
employment hereunder without any severance obligations, upon
at least three (3) years' prior written notice to Xxxxxxx.
(c) Termination by Xxxxxxx. Xxxxxxx shall have the right to
terminate his employment in his sole discretion, with or
without cause, by providing thirty (30) days notice of his
intent to resign. Except as otherwise provided in paragraph
5(b) and/or 5(c) above, Xxxxxxx shall in that event receive no
further compensation or severance allowance.
(d) Death. In the event of Xxxxxxx'x death during the period of
employment, the legal representative of Xxxxxxx shall be
entitled to the base or fixed salary provided for in Paragraph
4(a) above for the month in which death shall have occurred,
at the rate being paid at the time of death, and the period of
employment shall be deemed to have ended as of the close of
business on the last day of the month in which death shall
have occurred but without prejudice to any benefits, such as
life insurance, otherwise due in respect of Xxxxxxx'x death.
(e) Disability
(i) In the event of Xxxxxxx'x disability during the
period of employment, Xxxxxxx shall be entitled to an
amount equal to the base or fixed salary provided for
in Paragraph 4(a) above, at the rate being paid at
the time of the commencement of disability, for the
period of such disability but not in
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excess of twelve (12) months from the beginning of
the period that establishes such disability, as
described in Paragraph 6(e)(iii) below.
(ii) The amount of any payments due under Paragraph
6(e)(i) shall be reduced by any payments to which
Xxxxxxx may be entitled for the same period because
of disability under any disability or pension plan of
the Company or of any division, subsidiary, or
affiliate thereof, or as the result of workers'
compensation or nonoccupational disability payments
received from any government entity.
(iii) The term "Disability" as used in this Agreement,
shall mean an illness or accident occurring during
the period of employment which prevents Xxxxxxx from
performing the essential functions of his job under
this Agreement, with reasonable accommodations (as
defined by federal and Minnesota disability laws),
for a period of six consecutive months. The period of
employment shall be deemed to have ended as of the
close of business on the last day of such six-month
period but without prejudice to any payments due
Xxxxxxx from any disability policy or disability
insurance.
7. Transaction Incentive
If the Company and Farmland Industries, Inc. complete the Consolidation
prior to December 31, 2000, and Xxxxxxx has not by then resigned or
been terminated for cause, Xxxxxxx shall become entitled to a
Transaction Incentive payment in the amount of his base salary plus
Target Bonus for calendar year 1999. In the event that Xxxxxxx'x
employment is terminated by death or disability after the
Consolidation, Xxxxxxx or his estate shall be paid the full Transaction
Incentive. In the event that Xxxxxxx'x employment is terminated by
death or disability prior to the Consolidation, Xxxxxxx, his estate or
any beneficiary designated by Xxxxxxx shall be entitled to a partial
Transaction Incentive, prorated for the period of his employment
between May 1, 1999 and the closing of the Consolidation. (For example,
if Xxxxxxx is terminated for one of these reasons on November 30, 1999
and the Consolidation occurs on June 1, 2000, Xxxxxxx or his estate
would be entitled to 7/13 of Transaction Incentive.) The Transaction
Incentive shall be paid on or before January 31, 2001.
8. Noncompetition
Executive agrees that during the term of his employment and thereafter
for a period of two (2) years, Executive will not directly or
indirectly engage in or carry on a business that is in direct
competition with any significant business unit of the Company as
conclusively determined by the Board of Directors. Further, Executive
agrees that during this same period of time he will not act as an
agent, representative, consultant, officer, director, independent
contractor or employee of any entity or enterprise that is in direct
competition with any significant business unit of the Company as
conclusively determined by the Board of Directors. If Xxxxxxx'x
employment with the Company terminates
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pursuant to paragraph 5(b), the foregoing restrictions shall extend
only for a period of one (1) year thereafter.
9. Successor in Interest
This Agreement and the rights and obligations hereunder shall be
binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, and shall also bind and inure to the
benefit of any successor of the Company by merger or consolidation or
any purchaser or assignee of all or substantially all of its assets,
but, except to any such successor, purchaser, or assignee of the
Company, neither this Agreement nor any rights or benefits hereunder
may be assigned by either party hereto.
10. Construction
Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
11. Governing Laws
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Minnesota.
12. Notices
Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing, sent by Certified Mail, Return Receipt
Requested:
If to Xxxxxxx: Xxxx X. Xxxxxxx
00 Xxxx Xxxx Xxxx.
Xxxxxxxxx, XX 00000
If to the Company: Chairman of the Board
Cenex Harvest States Cooperatives
0000 XXXXX Xxxxx
Xxxxx Xxxxx Xxxxxxx, XX 00000
With a copy to: General Counsel
Cenex Harvest States Cooperatives
0000 XXXXX Xxxxx
Xxxxx Xxxxx Xxxxxxx, XX 00000
13. Entire Agreement
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This Agreement shall constitute the entire agreement between the
parties, superseding all prior agreements, and may not be modified or
amended and no waiver shall be effective unless by written document
signed by the Chairman of the Board and Xxxxxxx.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date set forth above.
CENEX HARVEST STATES COOPERATIVES
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
------------------------------------- ----------------------------------
Xxxx X. Xxxxxxx
Its: Chief Executive Officer
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