EXHIBIT 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement is made effective as of June 1st, 1999
between Cenex Harvest States Cooperatives, a Minnesota cooperative corporation
(together with all affiliates, the "Company") and Noel Estenson, who is
presently the Chief Executive Officer of the Company, ("Executive").
WHEREAS;
A. Executive is the principal officer of the Company and an
integral part of its management.
B. The Company is contemplating the possible full consolidation
of its business with the business of Farmland Industries, Inc.
("Farmland") through a merger or other similar transaction
(the "Consolidation") and desires to assure both itself and
Executive of continuity in the event of the Consolidation.
C. This Employment Agreement is intended to provide to Executive
either a severance benefit in the event that his employment
terminates under certain circumstances, as described herein,
prior to December 31, 2000 or a transaction incentive payment
if the Company successfully completes the Consolidation on or
before December 31, 2000.
NOW THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Employment. The Company hereby employs Executive 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, 2000, provided, however, that either
party may terminate the employment relationship prior to the
expiration date as hereinafter provided. In the event of the
Consolidation, Executive hereby agrees to tender his written
resignation effective December 31, 2000.
3. Position, Duties, Responsibilities. Executive shall be
employed as the Chief Executive Officer or, in the event of
the Consolidation, may be employed as a co-Chief Executive
Officer of the Consolidated Company. Executive shall exercise
such authority and perform such 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
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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.
5. Early Termination.
a. Death. Executive's employment shall terminate upon
Executive's death.
b. Termination by the Company.
(1) Without Cause. The Company, by action of the
Board, may terminate Executive's employment,
at any time and for any reason whatsoever,
without cause, effective upon delivery of
written notice of termination to Executive.
(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.
(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
reasonable accommodations, as defined and
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
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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.
(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.
(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. A demotion such that Executive does
not serve as the Chief Executive Officer, or
Co-Chief Executive Officer of the Company
shall constitute "Good Reason".
6. Compensation.
a. Base Salary. During his employment, the Company shall
pay Executive an initial "Base Salary" at the rate of
Five Hundred Twenty Thousand Dollars ($520,000) per
year, commencing on the effective date of this
Agreement, 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 and shall increase
the amount of Base Salary for each year at a rate of
not less than four percent (4%) per annum. 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, which is
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at least equal to amounts payable pursuant to the
terms of the Executive Compensation Plan currently in
effect for the Company. In calculating the amount of
incentive compensation under the Executive
Compensation Plan, it shall be assumed that the
Company has met the projected earnings in the Cenex
Long Range Business Plan in effect on January 1,
1998. 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.
(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 effective January 1, 1997;
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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. Terminations Without Cause or Resignation for Good
Reason. In the event that Executive's employment is
terminated prior to December 31, 2000 by the Company
without Cause or by Executive for Good Reason, and
the Executive 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 the termination, and
honors all of Executive's other obligations as
required by this Agreement, 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. In
addition, Executive will be entitled to a Severance
Payment ("Severance Pay") in an amount equal to 2.99
x 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 Pay shall be paid on or before January 31,
2001. In no event will the Severance Pay be of such
magnitude as to cause Executive to incur an excise
tax, and the Severance shall be reduced in such event
to the extent necessary to avoid the incurring of
excise tax. Severance Pay 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 no event will Executive be entitled to both a
Severance Pay and a Transaction Incentive.
b. Termination For Cause, or Voluntary Resignation. If
Executive's employment is terminated prior to
December 31, 2000 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
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accordance with the terms of such plans, and (f) to
continue certain health insurance at his expense
pursuant to COBRA.
c. Transaction Incentive. If the Company and Farmland
complete the Consolidation prior to December 31, 2000
and Executive remains actively employed through
December 31, 2000, Executive shall become entitled to
an incentive payment of 2.99 x his average annual
income from the Company includable in Executive's
gross income for the five calendar years ending
December 31, 1999 (the "Transaction Incentive"). In
no event will the Transaction Incentive be of such
magnitude as to cause Executive to incur an excise
tax, and the Transaction Incentive shall be reduced
in such event to the extent necessary to avoid the
incurring of excise tax. In the event that
Executive's employment is terminated by death or
disability after the Consolidation, Executive or
Executive's estate shall be paid the full Transaction
Incentive. In the event that Executive's employment
is terminated by death or disability prior to the
Consolidation, Executive, Executive's estate or any
beneficiary designated by Executive 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
Executive is terminated for one of these reasons on
November 30, 1999 and the Consolidation occurs on
June 1, 2000, Executive or Executive's estate would
be entitled to 7/13 of Transaction Incentive.) The
Transaction Incentive shall be paid on or before
January 31, 2001. The Transaction Incentive 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.
9. 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.
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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. Consulting. Executive agrees to make himself
generally available to the Company as needed for
consulting, on terms to be separately agreed upon
between the parties, through December 31, 2001.
e. 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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f. 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.
g. 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.
10. 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:
Noel Estenson
Cenex Harvest States Cooperatives
5500 CENEX Drive
Inver Grove Heights, MN 55077
If to the Company:
Chairman of the Board
Cenex Harvest States Cooperatives
5500 CENEX Drive
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Inver Grove Heights, MN 55077
With a Copy to:
General Counsel
Cenex Harvest States Cooperatives
5500 CENEX Drive
Inver Grove Heights, MN 55077
11. 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; provided, however, that the provisions hereof shall
inure to the benefit of, and be binding upon each successor in
a change of control of the Company, whether by merger,
consolidation, transfer of all or substantially all assets,
sale or otherwise (and such successor shall thereafter be
deemed the "Company" for purposes of this Agreement).
12. 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.
13. Minnesota Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Minnesota, unless otherwise preempted by federal law.
14. 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.
15. 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.
16. Waiver of Breach. The failure to enforce at any time any of
the provisions of this 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.
17. Entire Agreement. Except as provided in paragraph 9(d), 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
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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 CENEX HARVEST STATES
COOPERATIVES
By: /s/ Noel K. Estenson By: /s/ Elroy Webster
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Noel K. Estenson Office of the Chair
By: /s/ Gerald Kuster
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Office of the Chair
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