EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made effective as of April 8, 1996, by and between
American Crystal Sugar Company, Inc., a Minnesota cooperative (the "Company"),
and Daniel McCarty ("Executive").
WHEREAS, the Company desires to employ Executive, and Executive desires to
be employed by the Company, pursuant to terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive, and Executive
accepts such employment and agrees to perform services for the Company, upon the
terms and conditions set forth in this Agreement.
2. TERM. Unless terminated at an earlier date in accordance with Section
6.01 of this Agreement, the term of Executive's employment hereunder shall be
for an initial period of three (3) years, commencing as of the date of this
Agreement (the "Initial Term"). Thereafter, Executive shall serve as an "at
will" employee of the Company and at the pleasure of the Company's Board of
Directors.
3. POSITION AND DUTIES.
3.01 SERVICE WITH COMPANY. During the term of his employment,
Executive shall act as the Company's president and chief executive officer
and, in such capacity, shall perform such reasonable employment duties as the
Board of Directors of the Company shall assign to him from time to time.
3.02 PERFORMANCE OF DUTIES. Executive agrees to serve the
Company faithfully and to the best of his ability, and to devote his full
time, attention and efforts to the business and affairs of the Company during
the term of his employment. Executive hereby confirms that he is under no
contractual commitments inconsistent with his obligations set forth in this
Agreement, and that during the term of his employment, he will not render or
perform services for any other corporation, firm, entity or person which are
inconsistent with the interests of the Company.
4. COMPENSATION.
4.01 BASE SALARY. As base compensation for all services to be
rendered by the Executive under this Agreement during the first year of the
Initial Term, the Company shall pay to Executive an annual base salary of
$410,000, which salary shall be paid on a bi-weekly basis in accordance with
the Company's normal payroll procedures and policies. The base salary
payable to Executive during the second and any subsequent years shall be
established by the Company's Board of Directors following an annual
performance review.
4.02 INCENTIVE COMPENSATION. In addition to the base salary
described in section 4.01, Executive shall be eligible to participate in the
"Short Term Incentive Plan with respect to the fiscal year beginning
September 1, 1996 and ending August 31, 1997. Any bonus paid under such plan
shall be based on the accomplishment of specific performance objectives and
company performance as mutually established by Executive and the Company's
Board of Directors.
4.03 SIGNING BONUS. Executive shall be paid a signing bonus of
$70,000 (less applicable deductions) which shall be paid by the Company to
Executive within three (3) days following the execution of this Agreement by
Executive. Said signing bonus shall be in lieu of Executive's participation
in the annual management incentive plan during the fiscal year beginning
September 1, 1995 and ending August 31, 1996.
4.04 LONG TERM INCENTIVE PLAN. Executive shall be eligible to
participate in "Executive Long Term Incentive Plan" maintained by the Company
pursuant to the terms of such Plan. The account of Executive under such Plan
shall be credited with 155 contract rights (shares) as of the date hereof,
such contract rights to be held subject to terms of such Plan. Executive
understands and agrees that notwithstanding the terms of the Plan, during the
fiscal year ending on August 31, 1996 he will not receive any annual profit
payments with respect to the 155 contract rights.
4.05 PARTICIPATION IN BENEFIT PLANS. Executive shall be
entitled to participate in all employee benefit plans or programs of the
Company to the extent that his position, title, tenure, salary, age, health
and other qualifications make him eligible to participate. The Company does
not guarantee the adoption or continuance of any particular employee benefit
plan or program during the term of this Agreement, and Executive's
participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto; provided, however, that the Company
shall not establish rules for participation in any such plans or programs
that unfairly discriminate against Executive.
4.06 OTHER BENEFITS. During the term of his employment the
Company will (i) provide Executive with the use of a company furnished
automobile; (ii) will pay or reimburse Executive for all reasonable and
necessary out-of-pocket expenses incurred by him in the performance of his
duties under this Agreement, subject to the presentment of appropriate
vouchers in accordance with the Company's normal policies for expense
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verification; and (iii) will provide Executive with a membership at the Fargo
Country Club at the Company's expense.
5. CONFIDENTIAL INFORMATION. Except as permitted or directed by the
Company's Board of Directors, during the term of his employment or at any
time thereafter, Executive shall not divulge, furnish or make accessible to
anyone or use in any way (other than in the ordinary course of the business
of the Company) any confidential or secret knowledge or information of the
Company which Executive has acquired or become acquainted with or will
acquire or become acquainted with prior to the termination of his employment
by the Company, whether developed by himself or by others, concerning any
trade secrets, confidential or secret designs, processes, formulae, plans,
devices or material (whether or not patented or patentable) directly or
indirectly useful in any aspect of the business of the Company, any customer
or supplier lists of the Company, any confidential or secret development or
research work of the Company, or any other confidential information or secret
aspects of the business of the Company. Executive acknowledges that the
above-described knowledge or information constitutes a unique and valuable
asset of the Company and represents a substantial investment of time and
expense by the Company and its predecessors, and that any disclosure or other
use of such knowledge or information other than for the sole benefit of the
Company would be wrongful and would cause irreparable harm to the Company.
Both during the term of his employment and thereafter, Executive will refrain
from any acts that would reduce the value of such knowledge or information to
the Company. The foregoing obligations of confidentiality, however, shall
not apply to any knowledge or information which is now published or which
subsequently becomes generally publicly known, other than as a direct or
indirect result of the breach of this Agreement by Executive. Executive
specifically agrees that Company shall be entitled to injunctive relief to
enforce the provisions of this Section 5 and such relief may be granted
without necessity of proving actual damages. Such injunctive or equitable
relief shall be in addition to, not in lieu of, the right to recover monetary
damages from any breach of this Section 5.
6. TERMINATION.
6.01 GROUNDS FOR TERMINATION DURING THE INITIAL TERM. This
Agreement shall terminate prior to the expiration of the Initial Term in the
event that at any time during such Initial Term:
(a) Executive dies, or
(b) Executive becomes "disabled", or
(c) The Board of Directors of the Company notifies Executive in
writing that the Agreement is being terminated for "cause," or
(d) The Board of Directors of the Company elects to terminate this
Agreement without "cause" and notifies Executive in writing of
such election, or
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(e) Executive elects to terminate this Agreement and notifies the
Company in writing of such election.
If this Agreement is terminated pursuant to subsection (a), (b), (c) or (d) of
this Section, such termination shall be effective immediately. If this
Agreement is terminated pursuant to subsection (e) of this section, such
termination shall be effective thirty (30) days after delivery of the notice of
termination.
6.02 DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
(a) "Cause" shall mean Executive (i) has engaged in any willful
and material misconduct, including willful and material
failure to perform his duties as an officer or employee of
the Company, and has failed to cure such default within
thirty (30) days after receipt of written notice of such
conduct from the Company, or (ii) has committed fraud,
misappropriation or embezzlement with the Company's business
or assets, or (iii) has been convicted or pleaded nolo
contendere to criminal misconduct (excluding misdemeanors or
traffic violations), or (iv) has used narcotics, liquor or
illicit drugs resulting in a detrimental effect on the
performance of his employment responsibilities.
(b) "Disability" shall mean that this Agreement and Executive's
employment shall terminate if Executive sustains a
disability which is serious enough that he is not able to
perform the essential functions of his job, with or without
reasonable accommodations, as defined by various state and
federal disability laws. Executive shall be presumed to
have such a disability for the purpose of this Agreement if
Executive qualifies, because of injury, 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 its
officers generally. If there is no such policy in effect at
the date of Executive's injury, illness or incapacity,
Executive shall be presumed to have such a disability for
the purpose of this Agreement if Executive is substantially
incapable of performing his duties for a period of more than
twelve (12) weeks.
6.03 TERMINATION OF EMPLOYMENT AFTER THE INITIAL TERM. Upon
expiration of the Initial Term, Executive's employment by the Company may be
terminated with or without cause by the Board of Directors of the Company by
providing notice to Executive.
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6.04 EFFECT OF TERMINATION. Notwithstanding the termination of
employment hereunder, Executive, in consideration of his employment hereunder
to the date of such termination, shall remain bound by the provisions of this
Agreement which specifically relate to periods, activities or obligations
upon or subsequent to the termination of Executive's employment.
6.05 SEVERANCE PAYMENT. If Executive's employment is terminated
by the Company during the Initial Term pursuant to subsection 6.01(d), the
Company shall pay to Executive a cash severance payment equal to $7,884.62
times the number of weeks between the date of termination of employment and
April 7, 1999. It is understood and agreed that no severance payment shall be
due in the event employment is terminated (i) during the initial term as
provided in Section 6.01(a), (b), (c), or (e), or (ii) for any reason on or
after April 7, 1999, in which case Executive's right to salary and benefits
shall immediately terminate, except as may be otherwise provided by
applicable law.
6.06 SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, memoranda,
notes, notebooks, reports, data, tables, calculations or copies thereof,
which are the property of the Company or which relate in any way to the
business, products, practices or techniques of the Company, and all other
property, trade secrets and confidential information of the Company,
including, but not limited to, all documents which in whole or in part
contain any trade secrets or confidential information of the Company, which
in any of these cases are in his possession or under his control.
7. MISCELLANEOUS.
7.01 GOVERNING LAW. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
Minnesota.
7.02 COMPLETE AGREEMENT. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understandings with respect to such subject matter
(including, without limitation, that offer letter dated March 8, 1996), and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this agreement which are not set forth
herein.
7.03 WITHHOLDING TAXES. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
7.04 AMENDMENTS. No amendment or modification of this Agreement
shall be deemed effective unless made in writing and signed by the parties
hereto.
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7.05 NO WAIVER. No term or condition of this Agreement shall be
deemed to have been waived except by a statement in writing signed by the
party against whom enforcement of the waiver is sought.
7.06 SEVERABILITY. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of this Agreement shall be unaffected and shall
continue in full force and effect.
IN WITNESS WHEREOF, this Agreement has been executed by the Company
and Executive as of the date set forth in the first paragraph.
AMERICAN CRYSTAL SUGAR COMPANY
By /s/ Robert Nyquist
-----------------------
Robert Nyquist
Chairman of the Board
/s/ Daniel McCarty
-------------------------
Daniel McCarty
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