AGREEMENT
Agreement made this 31st day of August, 2005, by and between ConAgra
Foods, Inc., a Delaware corporation, hereinafter referred to as "ConAgra", and
Gary M. Rodkin, hereinafter referred to as "Employee".
WHEREAS, ConAgra and Employee have entered into an Employment Agreement
dated August 31, 2005 (the "Employment Agreement"), and
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
shall take any action requested by the Board with respect to any "Change of
Control" (as defined at Section 7 below) of ConAgra. If the Employee violates
the provisions of this Section, the Employee shall forfeit any payments due
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. 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 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.
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 the Employee's 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 the Employee 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 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 the 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 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,
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
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 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 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 Employee has substantial authority not
to report any Excise Tax on the Employee's 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 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 sue 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 sue 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:
(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. Code Section 409A. It is intended that any amounts payable under this
Agreement and the ConAgra and Employee exercise of authority or discretion
hereunder shall comply with the provisions of Section 409A of the Internal
Revenue Code and the treasury regulations relating thereto so as not to subject
Employee to the payment of interest and tax penalty which may be imposed under
Section 409A. In furtherance of this intent, to the extent that any regulations
or other guidance issued under Section 409A after the date of this Agreement
would result in the Employee being subject to the payment of such interest or
tax penalty, ConAgra and Employee agree to amend this Agreement in order to
bring this Agreement into compliance with Section 409A.
IN WITNESS WHEREOF, the parties have executed this Agreement.
CONAGRA FOODS, INC.
By: /s/ Carl E. Reichardt /s/ Gary M. Rodkin
----------------------------- -------------------------
Chairman, Human Resources Committee Gary M. Rodkin (Employee)