This Employment
Agreement is made effective as of March 1, 2000 between Farmland Industries,
Inc., a Kansas cooperative corporation (the “Company”) and H. D.
Xxxxxxx, who is presently the President and Chief Executive Officer of the
Company, (“Executive”) and supersedes the Employment Agreement between
the parties dated May 1, 1999, which is hereby terminated in its entirety.
WHEREAS,
Executive is the principal officer of the Company and an integral part of its
management and the Company desires to retain the services of Executive.
NOW THEREFORE,
it is hereby agreed by and between the parties as follows:
| 1. |
Employment.
The Company hereby employs Executive as Chief Executive Officer and Executive
hereby
accepts employment with the Company, subject to the terms and conditions
hereinafter provided. |
| 2. |
Term. The
employment of Executive hereunder will be for the period commencing on the
effective date of
this Agreement and ending on December 31, 2002, provided, however, that
either party may terminate the employment relationship prior to the expiration
date as hereinafter provided. |
| 3. |
Position, Duties,
Responsibilities. The employment of Executive
hereunder will be for the period commencing on the effective date of Executive
shall be employed as the Chief Executive Officer. Executive shall exercise
authority and perform duties and services consistent with such position as may
be assigned to him from time to time by the Board of Directors (the
"Board"). |
| 4. |
Devotion of Time and Best Efforts. Except for
vacations and absences due to temporary illness, Executive shall devote his full
time, best efforts and undivided attention and energies during his employment to
the performance of his duties and to advance the Company’s interests, as
determined by the Board. During his employment, Executive shall not, without the
prior approval of the Board, be engaged in any other business activity which
conflicts with the duties of Executive hereunder, whether or not such business
activity is pursued for gain, profit or other pecuniary advantage. Executive may
continue his current civic and charitable activities and his current service on
various boards. |
5.
Early Termination.
(a)
Death. Executive's employment shall terminate upon Executive's
death.
(b)
Termination by the Company.
.
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(1)
Request For Resignation. The Company, by
action of the Board, may request Executive’s resignation at any time and
for any reason whatsoever, without cause, effective in accordance with the
delivery of a written request for resignation to Executive or in accordance with
the terms of a Board-approved Chief Executive Officer succession decision. |
| |
(2)
For Cause. The Company, by action of the
Board, may terminate the Executive’s employment at any time for Cause,
effective upon delivery of written notice of termination to Executive. If such
termination by the Company is asserted to be for Cause, such termination notice
shall state the grounds that the Board claims constitute Cause. |
| |
As
used herein, “Cause” shall mean (a) willful misconduct by Executive
which is damaging or detrimental to the business and affairs of the Company,
monetarily or otherwise, as determined by the Board in the exercise of its good
faith business judgment; (b) a material breach of this Agreement by Executive,
(c) chronic alcoholism or any other form of substance addiction on the part of
Executive, (d) the commission by Executive of any act involving fraud or
dishonesty or moral turpitude, (e) the indictment for, being bound over for
trial following a preliminary hearing, or the conviction of Executive of any
felony in either a state or federal court proceeding, or (f) willful refusal to
implement policies promulgated by the Board. |
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(3)
Disability. The Company, by action of the
Board, may terminate the Executive’s employment if Executive sustains a
disability which is serious enough that Executive is not able to perform the
essential functions of Executive’s job, with or without reasonable
accommodations, as defined and if required by applicable state and federal
disability laws. Executive shall be presumed to have such a disability for
purpose of this Agreement if Executive qualifies, because of illness or
incapacity, to begin receiving disability income insurance payments under the
long-term disability income insurance policy that Company maintains for the
benefit of Executive. If there is no such policy in effect at the date of
Executive’s potential disability, or if Executive does not qualify for such
payments, Executive shall nevertheless be presumed to have such a disability if
Executive is substantially incapable of performing Executive’s duties for a
period of more than twelve (12) weeks. |
(c)
Termination by Executive.
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(1) Voluntary Resignation. Executive may terminate the Employment Period and Executive's
employment at any time and for any reason whatsoever, effective upon delivery of written notice
of termination to the Company. |
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(2)
Good Reason Resignation. Executive may
terminate the Employment Period and Executive’s employment at any time for
Good Reason, effective upon delivery of written notice of termination to the
Company. If such termination by Executive is asserted to be for “Good
Reason”, such termination notice shall state the grounds that Executive
claims constitute Good Reason. As used herein “Good Reason” shall mean
a material breach of this Agreement by the Company, or a demotion such that
Executive does not serve as the Chief Executive Officer of the Company. |
6.
Compensation.
|
(a) |
Base Salary. During his employment, the
Company shall pay Executive an initial “Base Salary” at the rate of
Six Hundred, Thirty-Five Thousand, Six Hundred Dollars ($635,600) per year,
payable in accordance with the Company’s regular payroll practices and
policies which are in effect from time to time. The Board shall annually review
the amount of Base Salary. Such review and any increase shall occur on the
current customary schedule. Any such upward adjustment shall not require a
written amendment to this Agreement and shall not affect any other provisions of
this Agreement, which shall remain in effect unless changed by a written
amendment to this Agreement or terminated by either party as provided herein. |
|
(b) |
Annual Variable and Long-Term Incentive
Compensation. During his employment, Executive shall
be entitled to receive compensation under the annual Variable Compensation Plan
and the Management Long-Term Incentive Plan payable within the current customary
time frame on terms that are no less favorable to Executive than the terms
currently in existence. In the event that either of these plans is discontinued
or amended effective during his employment, and the amount of variable
compensation due Executive under the replacement or amended plans is less than
Executive would have received under the current plans, the Executive shall be
entitled to receive the amount of variable compensation that would have been
payable under the current plans. |
7.
Benefit Plans.
|
(a) |
General. During the Employment Period,
Executive shall be eligible to participate in all executive compensation and
employee benefit plans or programs generally applicable to senior management
employees of the Company pursuant to the terms and conditions of such plans and
programs. Nothing contained in this Agreement shall preclude the Company from
terminating or amending any such plan or program. |
|
(b) |
Qualified Plans. Executive shall be entitled
to Company contributions and benefits with respect to Base Salary under the
Company’s qualified pension plans determined in the same manner as for
other participants in those plans, subject to any contribution or benefit
limitations. However, if such plans as in effect on the date of execution of
this Agreement are modified in a manner, which will reduce future benefits under
those plans for Executive, then, as a means to make up for those reductions, the
Company shall establish a new nonqualified plan or amend an existing
nonqualified plan which shall provide for any lost benefits under the
Company’s pension plan. |
(c)
Nonqualified Plans.
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(1)
Deferred Compensation Plan. Executive shall
continue to be eligible to participate in the Deferred Compensation Plan. If
this plan should be amended or terminated prior to the end of the Employment
Period, the terms of the plan will be maintained with respect to Executive,
unless Executive agrees to accept the modified provisions of a revised plan or a
new plan intended to replace the plan. |
| |
(2)
Supplemental Executive Retirement Plan.
Executive will be entitled to benefits under this plan on terms no less
favorable than those set forth in the restatement of the plan that became
effective in 1999; however, if this plan should be amended or terminated prior
to the completion of payments under it to Executive, the terms of the plan will
be maintained with respect to Executive, unless Executive agrees to accept the
modified provisions of a revised plan or a new plan intended to replace that
restatement. |
8.
Post-Termination Payments by the Company.
|
(a) |
Resignation Requested by Company or Resignation for Good Reason. In the event that Executive's
employment is terminated prior to December 31, 2002 by the Company through a Request for
Resignation or by Executive for Good Reason, and the Executive: |
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|
|
1) |
signs (and does not rescind, as allowed by law) a Release of Claims in a form
satisfactory to the Company which assures, among other things, that Executive
will not commence any type of litigation or other claims as a result of his
employment or termination of employment; |
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|
|
2) |
agrees to be available to consult with the
Company at no additional compensation, other than reimbursement of costs, an
average of forty (40) hours per month for one year following his termination;
and |
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|
|
3) |
honors all of Executive's other obligations as
required by this Agreement. |
The Company will provide Executive a severance benefit ("the
Severance
Benefit”)
by assisting Executive in purchasing life insurance under a split dollar
agreement. Under the split dollar agreement, the Company will pay premiums
having a present value cost to the Company (calculated using an 8% discount
rate) equal to two times Executive’s average annual income from the Company
included in Executive’s gross income for the five calendar years ending
December 31, 1999. The Severance Benefit shall not be considered as income or
compensation in determining Executive’s benefits under any non-qualified
benefit plan, including the Supplemental Executive Retirement Plan. In addition,
if such Request for Resignation or Good Reason Resignation results in
termination prior to December 31, 2000, the Company will continue to pay
Executive all of the compensation provided for in Paragraph 6 of this Agreement
as if he had remained employed through December 31, 2000 provided that Executive
agrees to be available for consulting on a regular, full time basis through
December 31, 2000..
|
(b) |
Termination For Cause, or Voluntary
Resignation. If Executive’s employment is
terminated prior to December 31, 2002 by the Company for Cause or by Executive
as a Voluntary Resignation, Executive shall be entitled only to his rights (a)
to receive the unpaid portion of his Base Salary, prorated to the date of
termination, (b) to receive reimbursement for any ordinary and reasonable
business expenses for which he had not yet been reimbursed, (c) to receive
payment for accrued and unused vacation days, (d) to receive his incentive
compensation for each full or partial (on a pro rata basis) year during which he
was employed, to the extent earned and accrued, pursuant to the terms and
conditions of the applicable incentive compensation plan(s), (e) to receive
payments under the Company’s pension, profit sharing, deferred compensation
or other benefit plans in which the Executive has participated, all to the
extent and in accordance with the terms of such plans, and (f) to continue
certain health insurance at his expense pursuant to COBRA. |
| 9. |
Consulting. If Executive qualifies for the
Severance Benefit , Executive agrees to make himself available to the Company as
needed to consult for a period of one year following termination of employment.
Such consulting shall be without additional compensation, other than
reimbursement of expenses, up to an average of forty (40) hours per month.
Executive shall be entitled to reasonable compensation for his time in providing
such consulting services to the extent he provides services in excess of an
average of forty (40) hours per month. |
| 10. |
Other Executive Obligations. Executive agrees
that the following provisions will apply throughout Executive’s period of
active or inactive employment, and will continue to apply even if
Executive’s employment and the Employment Period are terminated under
Paragraph 5, regardless of the reason for termination: |
|
(a) |
Nondisclosure of Confidential Information.
Except to the extent required in furtherance of the Company’s business in
connection with matters as to which Executive is involved as an employee,
Executive will not, during the term of his employment and for an unlimited
period thereafter, directly or indirectly: (1) disclose or furnish to, or
discuss with, any other person or entity any confidential information concerning
the Company or its business or employees, acquired during the period of his
employment by the Company; (2) individually or in conjunction with any other
person or entity, employ or cause to be employed, any such confidential
information in any way whatsoever or (3) without the written consent of the
Company, publish or deliver any copies, abstracts or summaries of any papers,
documents, lists, plans, specifications or drawings containing any such
confidential information. |
|
(b) |
Non-Interference. Executive will not, during
the term of his employment and for an unlimited period thereafter, directly or
indirectly attempt to encourage, induce or otherwise solicit any employee or
other person or entity to breach any agreement with the Company or otherwise
interfere with the advantageous business relationship of the Company with any
person or entity. Executive specifically agrees not to solicit, on
Executive’s own behalf or on behalf of another, any of the Company’s
employees to resign from their employment with the Company in order to go to
work elsewhere. Executive further specifically agrees not to make any
disparaging remarks of any sort or otherwise communicate any disparaging remarks
about the Company or any of its members, equity holders, directors, officers or
employees, directly or indirectly, to any of the Company’s employees,
members, equity holders, directors, customers, vendors, competitors, or other
people or entities with whom the Company has a business or employment
relationship. |
|
(c) |
Non-Competition. 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. |
|
(d) |
Cooperation in Claims. During the term of his
employment and for an unlimited period thereafter, at the request of the
Company, Executive will cooperate with the Company with respect to any claims or
lawsuits by or against the Company where Executive has knowledge of the facts
involved in such claims or lawsuits. Executive shall be entitled to reasonable
compensation for Executive’s time and expense in rendering such
cooperation. Further, Executive will decline to voluntarily aid, assist or
cooperate with any party who has claims or lawsuits against the Company, or with
their attorneys or agents. The Company and Executive both acknowledge, however,
that nothing in this paragraph shall prevent Executive from honestly testifying
at an administrative hearing, arbitration, deposition or in court, in response
to a lawful and properly served subpoena in a proceeding involving the Company. |
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(e) |
Remedies. The parties recognize and agree
that, because any breach by Executive of the provisions of this Paragraph 9
would result in damages difficult to ascertain, the Company shall be entitled to
injunctive and other equitable relief to prevent a breach or threatened breach
of the provisions of this Paragraph 9. Accordingly, the parties specifically
agree that the Company shall be entitled to temporary and permanent injunctive
relief to enforce the provisions of this Paragraph 9, that such relief may be
granted without the necessity of proving actual damages. The parties further
agree that the right to such relief shall be in lieu of any right to recover
money damages for any such breach. |
|
(f) |
Enforceability. Executive agrees that
considering Executive’s relationship with the Company, and given the terms
of this Agreement, the restrictions and remedies set forth in Paragraph 9 are
reasonable. Notwithstanding the foregoing, if any of the covenants set forth
above shall be held to be invalid or unenforceable, the remaining parts thereof
shall nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts have not been included therein. In the event the provisions
relating to time periods and/or areas of restriction shall be declared by a
court of competent jurisdiction to exceed the maximum time periods or areas of
restriction permitted by law, then such time periods and areas of restriction
shall be amended to become and shall thereafter be the maximum periods and/or
areas of restriction which said court deems reasonable and enforceable.
Executive also agrees that the Company’s action in not enforcing a
particular breach of any part of Paragraph 9 will not prevent the Company from
enforcing any other breaches that the Company discovers, and shall not operate
as a waiver by the Company against any future enforcement of a breach. |
| 11. |
Notices. Notices hereunder shall be in writing and shall be delivered personally or sent return receipt
requested and postage prepaid, addressed as follows: |
If to Executive: H.D. Xxxxxxx
c/o Farmland Industries, Inc.
0000 Xxxxx Xxx Xxxxxxxxxx
Xxxxxx Xxxx, XX 00000
If to the Company: Chairman of the Board
c/o Corporate Secretary
Farmland Industries, Inc.
0000 Xxxxx Xxx Xxxxxxxxxx
Xxxxxx Xxxx, XX 00000
with a copy to: Vice President and General Counsel
Farmland Industries, Inc.
0000 Xxxxx Xxx Xxxxxxxxxx
Xxxxxx Xxxx, XX 00000
| 12. |
Assignment. This Agreement is personal in its nature and the parties hereto shall not, without the
consent of the other, assign or transfer this Agreement or any rights or obligations hereunder. |
| 13. |
Binding Agreement. The provisions of this Agreement shall be binding upon, and shall inure to the
benefit of, the respective heirs, legal representatives and successors of the parties hereto. |
| 14. |
Missouri Law. This Agreement shall be governed by and construed in accordance with the laws of the
State of Missouri, unless otherwise pre-empted by federal law. |
| 15. |
Captions and Section Headings. Captions and paragraph headings used herein are for convenience only and
are not a part of this Agreement and shall not be used in construing it. |
| 16. |
Invalid Provisions. If any provision of this Agreement shall be unlawful, void, or for any reason
unenforceable, it shall be deemed severable from, and shall in no way affect the validity or
enforceability of, the remaining provisions of this Agreement. |
| 17. |
Waiver of Breach. The failure to enforce at
any time any of the provisions of the Agreement, or to require at any time
performance by the other party of any of the provisions hereof, shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Agreement or any part hereof or the right of either party thereafter to
enforce each and every provision in accordance with the terms of this Agreement. |
| 18. |
Entire Agreement. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, representations and
understandings of the parties with respect thereto. No modification or amendment
of any of the provisions of this Agreement shall be effective unless in writing
specifically referring hereto and signed by Executive and a member of the Board
upon authorization of the Board to do so. |
IN WITNESS
WHEREOF, the parties have executed this Agreement effective as of the date set
forth above.
EXECUTIVE FARMLAND INDUSTRIES, INC.
________________________________ By: ______________________________
H. D. Xxxxxxx Xxxxxx Xxxxxxx, Chairman of the
Board of Directors
By: ______________________________
Xxxx Xxxxxx, Vice-Chairman of the
Board of Directors
