EXHIBIT 10.14
EMPLOYMENT
AGREEMENT
This Employment Agreement is
effective the 1 st day of February, 2004, between South
Dakota Soybean Processors, LLC, a South Dakota limited liability
company, and Rodney G. Christianson
(“Employee”).
THE PARTIES AGREE AS
FOLLOWS:
1.
Definitions
. The following terms shall have
these meanings:
a.
“Affiliate” or
“Affiliates” shall mean any Person who controls, is
controlled by, or is under common control with, either directly or
indirectly, or through one or more intermediaries, the Employer.
For purposes of this Agreement, the term Affiliate shall include
Urethane Soy Systems Co. and Minnesota Soybean Processors
Coop.
b.
“Base Salary” shall mean
Employee’s annual compensation as set forth in paragraph 6 of
this Agreement.
c.
“Confidential
Information” shall mean any and all information disclosed by
Employer or Affiliate to Employee, whether prior to or during the
term of this Agreement, relating to those matters not generally
known to the public or the industry in which Employer and/or an
Affiliate is or may become engaged and which pertain to the
operations, processes, methods, and accumulated experience
incidental to the manufacture, processing, sale, and distribution
of Employer’s and/or an Affiliate’s Products,
regardless of whether Employer and/or an Affiliate provides such
information to Employee in tangible form or the information is
retained in the memory of Employee. Confidential Information
includes, for example, and without limitation: (i) sales records,
pricing manuals, training manuals, selling and pricing procedures,
and financing methods, (ii) trade secrets and other know-how
regarding businesses, products and services, (iii) personnel and
salary information, including wages, bonuses, commissions, and
fringe benefits, (iv) production and processing procedures,
formulae and systems, (v) vendor and supplier information, (vi)
Customer lists and Prospective Customer Lists including, without
limitation, names of contacts, products and services purchased,
quantities purchased, credit histories, timing of purchases,
payment histories, special demands of particular Customers, and
current and anticipated requirements of Customers generally for
products or services, (vii) marketing information, including
without limitation, research, development, testing and customer
surveys, and any specifications of any new products or services
under development, and (viii) business projections, strategic
plans, marketing systems and procedures, and inventory procedures
and systems.
d.
“Control,”
“Controlled by” and “under common control
with” shall mean the power, directly or indirectly, to direct
or cause the direction of the management and policies of a Person
whether through the ownership of voting securities or by contract
or otherwise.
e.
“Customer” shall mean an
individual, business or entity with which Employer or an Affiliate
did business during the two (2) year period preceding the
termination of Employee’s employment as provided in this
Agreement.
f.
“Incentive Compensation”
shall mean compensation paid to Employee as set forth in paragraph
7 of this Agreement.
g.
“Person” means an
individual, partnership, limited partnership, limited liability
company, trust, estate, corporation, cooperative, custodian,
trustee, executor, administrator, nominee or entity in a
representative capacity.
h.
“Products” shall mean
all products manufactured and/or sold by Employer or an Affiliate,
including polyurethane, plastics, resins, soybeans, soybean meal,
soybean oil and other soybean products.
i.
“Prospective Customer”
shall mean a potential customer of Employer or an Affiliate, which
has been contacted by Employer or an Affiliate and for which
Employer or an Affiliate has made a financial investment, such as
time, travel, equipment or material during the two (2) year period
preceding the termination of Employee’s employment as
provided in this Agreement.
2.
Employment
. Employer agrees to employ
Employee and Employee accepts employment upon the terms and
conditions set forth in this Agreement.
3.
Duties and Review
. Employee shall be engaged in
full-time employment by Employer as its Chief Executive Officer and
shall devote sufficient time and attention to the business of
Employer, including general management and oversight of Affiliates,
as shall be necessary to complete Employee’s obligations.
Employer, through its Board of Managers, shall have the power to
determine the specific duties to be performed by Employee and the
time of performance. Employee shall undergo performance reviews
from time to time during the term of this Agreement at the request
of Employer’s Board of Managers.
4.
Other Activities
. Employee shall devote
substantially all of his working time and efforts during
Employer’s normal business hours to the business of Employer,
including the general management and oversight of Affiliates.
Employee shall be free to invest his assets in a manner that will
not require any substantial services by Employee in the conduct of
the business of the entities or in the management of the properties
in which he invests.
5.
Term . This Agreement is for a term of four (4)
years commencing on the 1 st day of February, 2004, and
terminating on the 31 st day of January, 2008, unless
sooner terminated pursuant to the provisions of this
Agreement.
6.
Base Salary
. For all services to be rendered by
Employee pursuant to this Agreement, Employer agrees to pay
Employee compensation at an annual rate of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) until August 31,
2005, and at an annual rate of Three Hundred Thousand and No/100
Dollars ($300,000.00) for the remaining term of this Agreement.
This Base Salary shall be paid in periodic installments in
accordance with the Employer’s regular payroll practices.
Each installment shall be reduced by deductions for the
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withholding of federal income tax, FICA
contributions, and all other deductions required by law or agreed
to by Employee.
7.
Incentive Compensation
. In addition to the Base Salary,
Employee shall be paid a bonus equal to one-half (1/2) of one
percent (1%) of Employer’s net income before taxes and member
distributions on net income up to $5,000,000.00, or if the net
income exceeds $5,000,000.00, Employee shall be paid a bonus equal
to one percent (1%) of Employer’s net income. Examples:
$4,386,000.0 net income x .5% = $21,930.00; or $6,500,000.00 net
income x 1% = $65,000.00. This incentive bonus may be paid directly
or deferred at Employee’s option. The calculation of
Employer’s net income shall include the net income of all of
Employer’s subsidiaries for which combined and audited
financial statements must be prepared for GAAP (“Generally
Accepted Accounting Principles”) purposes. Net income shall
be calculated under the GAAP method of accounting utilized by
Employer for its audited financial statements and shall exclude any
items of income or expense that would be considered to be
extraordinary and not arising in the ordinary course of business.
Such items could include but are not limited to the
following:
i.
Capital gains or losses from the
sale of marketable securities or other investments of
Employer.
ii.
Gains or losses on the sales or
dispositions of fixed assets.
iii.
Insurance proceeds received by
Employer for the loss of property, capital assets, or other assets
of Employer.
iv.
Investment income from securities
held by Employer, e.g., interest income, dividend income,
etc.
v.
Payment of a legal settlement, or
receipt of monies relating to Employer’s involvement in
litigation or other disputes.
Such items shall be determined by
Employer’s Financial Audit Committee and subsequently
adjusted out of net income for purposes of the calculation of this
incentive bonus. The incentive bonus shall be paid in full within
thirty (30) days following completion of Employer’s audited
financial statements in the year following the year for which the
net income is calculated.
8.
Holidays and Vacations
. Employee shall be entitled to
seven (7) paid holidays: New Year’s Day, Easter, Memorial
Day, Fourth of July, Labor Day, Thanksgiving and Christmas.
Employee shah be entitled to twenty (20) days paid vacation during
each fiscal year of employment. Employee shall take his vacation at
such time or times as shall be approved by Employer’s Board
of Managers. Vacation time shall not be cumulative. Employee shall
not be entitled to payment for any unused vacation at year end or
upon termination of this Agreement.
9.
Benefits . Employee shall receive the benefits, including
participation in insurance benefits and retirement plans, that are
provided to Employer’s employees, provided Employee meets the
qualification provisions of each plan.
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10.
Life Insurance
. Employer may, in its discretion,
purchase or renew insurance on the life of Employee. Employee
agrees to submit to reasonable medical examinations and otherwise
reasonably cooperate with Employer in connection with obtaining
such insurance.
11.
Expenses . During the term of this Agreement, Employee
shall be entitled to prompt reimbursement by Employer of all
reasonable travel, entertainment, and other expenses incurred by
Employee in accordance with the policies and procedures established
by Employer’s Board of Managers and in the performance of his
duties and responsibilities under this Agreement; provided, that
Employee shall properly account for such expenses and present
receipts as required by IRS guidelines.
12.
Vehicle . During the term of this Agreement, Employee
shall be provided a vehicle for use for company business. The type
and cost of the vehicle as well as its replacement date will be
determined by Employer’s Board of Managers.
13.
Termination and Severance
Pay .
a.
Termination
. This Agreement shall terminate
immediately: (i) upon Employee’s death, (ii) upon Employee
becoming disabled, which determination shall be made by
Employer’s Board of Managers on the basis of medical evidence
satisfactory to it, in its sole discretion, that Employee is so
mentally or physically disabled as to be unable to fulfill
Employee’s duties and responsibilities and that such
disability is likely to be permanent; (iii) upon written notice
from Employer that Employee’s employment is being terminated
for “Cause” as defined in paragraph 13(c) below; (iv)
upon written notice from Employer that Employee’s employment
is being terminated without “Cause” as defined in
paragraph 13(c) below; or (v) upon Employee’s resignation of
employment. In the event of Employee’s termination under this
paragraph 13(a), he or his estate shall be entitled to receive the
Base Salary and other benefits to which he is entitled under this
Agreement up to the date of termination. Employee or his estate
shall have no rights pursuant to this Agreement to any benefits or
compensation for any period after the date of
termination.
b.
Severance Pay
. If Employer terminates the
employment of Employee for any reason other than as provided below
in this subparagraph b, Employer shall pay Employee a sum equal to
1.5 times Employee’s Base Salary (at the annual rate then
existing under paragraph 6) calculated for a one year period.
Payment shall be made in eighteen (18) equal monthly installments
or as otherwise mutually agreed by the parties beginning on the
first day of the month following termination of employment. For
example, if Employer terminates Employee’s employment without
“Cause” on August 1, 2005, Employee shall be
entitled to severance pay of $375,000.00 ($250,000.00 x 1.5) to be
paid in 18 equal monthly installments of $20,833.33 each. For
example, if Employer terminates Employee’s employment without
“Cause” on September 1, 2007, Employee shall be
entitled to severance pay of $450,000.00 ($300,000.00 x 1.5) to be
paid in 18 equal monthly installments of $25,000.00 each. Despite
anything in this Agreement to the contrary, Employee shall not be
eligible to receive the severance pay described in this paragraph
13(b) if: (i) Employee’s employment is terminated due to
Employee’s death; (ii) Employee’s employment is
terminated due to Employee’s disability; (iii)
Employee’s
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employment is terminated for
“Cause”; (iv) Employee voluntarily resigns his
employment with Employer, (v) Employee’s employment is
terminated because Employer has ceased all business activities,
become insolvent and/or has filed a voluntary petition in
bankruptcy, or has had filed against it an involuntary petition in
bankruptcy; (vi) Employee is employed in a similar position by a
successor company that has purchased substantially all of the
assets of Employer, or (vii) Employer is merged into another
company and Employee is retained by the surviving company in a
similar position.
c.
For “Cause”
Termination .
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