Exhibit 10.3
------------
AGREEMENT
Agreement made this ____ day of ____________, ____, by and between
ConAgra, Inc., a Delaware corporation, hereinafter referred to as "ConAgra",
and __________________, hereinafter referred to as "Employee".
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 the chief executive officer, and shall take any action requested by
the Board or the chief executive officer with respect to any "Change of
Control" (as defined at Section 7 below) of ConAgra. If the Employee
violates the provisions of this Section, he shall forfeit any payments due to
him 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. In addition, in the event
of Involuntary Termination at any time, Employee shall receive payment of the
base and incentive compensation described in Section 3(a) for one year. 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 his 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 his 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
25
(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 he 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 his 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 his 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 his or her 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).
26
(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
27
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 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 his
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.
28
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 he has
substantial authority not to report any Excise Tax on his 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,
29
(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 ▇▇▇ 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
▇▇▇ 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:
30
(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) Approval of the shareholders of ConAgra 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. PRIOR AGREEMENTS. This Agreement supersedes, restates and replaces
any and all prior agreements to which both ConAgra and the Employee are parties
with respect to the Change of Control of
31
ConAgra.
IN WITNESS WHEREOF, the parties have executed this Agreement.
EMPLOYEE: CONAGRA, INC.
______________________________ ________________________________
32