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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
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This Employment Agreement (the "Agreement") made between Xxxxx X.
Xxxx, (the "Executive") and Ralcorp Holdings, Inc., a corporation with
its principal place of business at 000 Xxxxxx Xxxxxx, Xx. Xxxxx,
Xxxxxxxx, and its subsidiaries and affiliates (the "Company"),
WITNESSETH THAT:
RECITALS
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WHEREAS, the Company was incorporated on October 23, 1996; and
WHEREAS, the Company was spun-off from its former parent company,
Ralcorp Holdings, Inc. ("Old Ralcorp") on January 31, 1997; and
WHEREAS, Executive is presently employed by the Company and has
substantial experience as an executive level manager for the Company;
and
WHEREAS, the Company desires to secure Executive's employment for
a definite period of time; and
WHEREAS, Executive desires to be employed by the Company in the
executive capacity described in SECTION TWO of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the Company and Executive hereby agree as
follows:
SECTION ONE
DEFINITIONS
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The following terms shall have the meanings set forth below:
A. "Involuntary Termination" shall be any termination of the
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Executive's employment with the Company, other than a
Termination for Cause, (a) to which the Executive objects orally
or in writing or (b) which follows any of the following:
(i) without the express written consent of the Executive,
(a) the assignment of the Executive to any duties
materially inconsistent with the Executive's positions,
duties, responsibilities and status on the effective
date of this Agreement or (b) a material change in the
Executive's titles, offices, or reporting
responsibilities as in effect on the effective date of
this Agreement and with respect to either (a) or (b) the
situation is not remedied within thirty (30) days after
receipt by the Company of written notice by the
Executive; provided, however, (a) and (b) herein shall
not constitute an "Involuntary Termination" if either
situation is in connection with the Executive's death or
disability; or
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(ii) without the express written consent of the Executive, a
reduction in the Executive's annual salary or
opportunity for total annual compensation, in effect on
the effective date of this Agreement which is not
remedied within thirty (30) days after receipt by the
Company of written notice by the Executive; or
(iii) without the express written consent of the Executive,
the Executive is required to be based more than 100
miles from Executive's office location on the effective
date of this Agreement, except for required travel on
business to an extent substantially consistent with the
business travel obligations of the Executive on the
effective date of this Agreement; or
(iv) without the express written consent of the Executive,
(a) failure by the Company to continue in effect benefit
and compensation plans which may include a stock
ownership plan, a stock purchase plan, a stock option
plan, a defined benefit pension plan, a defined
contribution pension plan, a life insurance plan, a
health and accident plan, and/or a disability plan which
are, in the aggregate, substantially equivalent in value
to those in which the Executive is participating or
entitled to participate on the effective date of this
Agreement; or (b) the taking of any action by the
Company that would (1) adversely affect the
participation in or materially reduce the aggregate
value to the Executive of benefits under such plans
either in terms of the amount of benefits provided or
the level of the Executive's participation relative to
other participants; or (2) cause a failure to provide
the number of paid vacation days to which the Executive
was then entitled in accordance with the Company's
normal vacation policy in effect on the effective date
of this Agreement, which in either situation (a) or (b)
is not remedied within thirty (30) days after receipt by
the Company of written notice by the Executive; or
(v) the liquidation, dissolution, consolidation, or merger
of the Company or transfer of all or substantially all
of its assets, unless a successor or successors (by
merger, consolidation, or otherwise) to which all or a
significant portion of its assets have been transferred
expressly assumes in writing all duties and obligations
of the Company as here set forth.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to any
circumstances set forth above.
B. "Termination for Cause" shall be a termination because of:
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(i) the continued failure by the Executive to devote
reasonable time and effort to the performance of the
Executive's duties (other than any such failure
resulting from the Executive's incapacity due to
physical or mental illness) after written demand
therefor has been delivered to the Executive by the
Company that specifically identifies how the Executive
has not devoted reasonable time and effort to the
performance of the Executive's duties; or
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(ii) the willful engaging by the Executive in misconduct
which is materially injurious to the Company, monetarily
or otherwise; or
(iii) the Executive's conviction of a felony or a crime
involving moral turpitude;
in any case as determined by the Board of Directors of the
Company (the "Board") upon the good faith vote of not less than
a majority of the Directors then in office, after reasonable
notice to the Executive specifying in writing the basis or bases
for the proposed Termination for Cause and after the Executive
has been provided an opportunity to be heard before a meeting of
the Board held upon reasonable notice to all Directors;
provided, however, that a Termination for Cause shall not
include a termination attributable to:
(i) bad judgment or negligence on the part of the Executive
other than habitual negligence; or
(ii) an act or omission believed by the Executive in good
faith to have been in, or not opposed to, the best
interests of the Company and reasonably believed by the
Executive to be lawful.
C. "Voluntary Termination" shall be any termination of the
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Executive's employment with the Company other than an
Involuntary Termination or a Termination for Cause.
SECTION TWO
EMPLOYMENT
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The Company hereby employs Executive as its Corporate Vice
President and President, Xxxxxxx. Executive's day-to-day reporting
responsibilities shall be to the Company's Chief Executive Officer.
Subject to SECTION EIGHT, the Company may modify or realign Executive's
duties and responsibilities as it deems necessary during the term of
this Agreement.
SECTION THREE
BEST EFFORTS OF EXECUTIVE
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Executive agrees that the Executive will at all times faithfully
and to the best of the Executive's ability, experience and talent,
perform all of the duties that may be required of or from the Executive
pursuant to the express and implicit terms hereof. Executive
acknowledges that the Executive is obligated to manage the business of
the Company in a sound and businesslike manner and in material
conformity with all laws and regulations governing the conduct of the
business of the Company.
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SECTION FOUR
TERM
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The term of this Agreement shall be three years beginning on
February 1, 1997 and ending on January 31, 2000 (the "Term"). This
Agreement may be extended for additional periods upon the mutual
written agreement of the parties.
SECTION FIVE
COMPENSATION
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During the Term of this Agreement, Executive shall be entitled to
the following:
A. The Company shall pay Executive a minimum monthly base salary
of $11,667.00, payable on the last day of each month. The base salary
may be increased by the Company at any time during the Term of this
Agreement; provided, however, that until January 31, 2000, Executive's
monthly base salary shall not be less than the amount set forth above.
B. The Company shall pay Executive a minimum annual bonus of
$35,000.00, payable in October of each year. The annual bonus may be
increased by the Company at any time during the Term of this Agreement;
provided, however, that until January 31, 2000, Executive's annual
bonus shall not be less than the amount set forth above.
C. Executive shall be provided with an executive level benefit
program including stock options and/or stock grants as determined by
the Company. Any such stock options shall become immediately
exercisable, and such stock grants shall vest immediately, upon
Executive's Involuntary Termination during the Term of this Agreement.
D. Executive shall be eligible for coverage under such pension
plan, group health insurance plan, 401(k) plan, vacation, holiday and
other programs or policies in effect from time to time for salaried
Executives of the Company.
SECTION SIX
OLD RALCORP STOCK OPTIONS
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It is understood that Old Ralcorp previously granted Executive
certain Non-Qualified Stock Options. It is further understood and
agreed that Old Ralcorp paid Executive a lump sum payment that
represents fair compensation for these Non-Qualified Stock Options.
Executive understands and agrees that Executive received this lump sum
payment in lieu of these options and that Executive forfeits all Old
Ralcorp Non-Qualified Stock Options, and rights thereunder, which
Executive had not exercised at the time Executive received the lump sum
payment.
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SECTION SEVEN
CHANGE OF CONTROL
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Contemporaneously with the execution of this Agreement, the
Executive and the Company will enter into a Management Continuity
Agreement providing benefits under certain circumstances in the event
of a Change-in-Control of the Company, as defined in such Management
Continuity Agreement. Such benefits will be in addition to those
provided under this Agreement; provided, however, that any benefits
paid under said Management Continuity Agreement shall be reduced by
amounts paid hereunder in respect of periods after Executive's
termination of employment following a Change-in-Control. Executive
agrees that the previous Management Continuity Agreement entered into
by Executive with Old Ralcorp is null and void and Executive releases
any claims to benefits under the previous Management Continuity
Agreement.
SECTION EIGHT
TERMINATION
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A. The Company reserves the right to terminate the employment of
Executive at any time with or without cause. However, in the event of
Executive's Involuntary Termination prior to January 31, 2000,
Executive shall be entitled to the following:
(i) payment within sixty (60) days after Executive's
Involuntary Termination of Executive's minimum base
salary under this Agreement for the remainder of the
three-year term, in cash in a lump sum without discount
or pro-ration; and
(ii) payment within sixty (60) days after Executive's
Involuntary Termination of the minimum annual bonuses
which Executive would have been entitled to receive
under this Agreement during the remainder of the three-
year term, in cash in a lump sum without discount or
pro-ration; and
(iii) continuation for the remainder of the three-year term of
the Executive's participation in each life, health,
accident and disability plan in which the Executive was
entitled to participate immediately prior to the
Executive's termination, upon the same terms and
conditions, including those with respect to spouses and
dependents, applicable at such time; provided, however,
that if the terms of any such benefit plan do not permit
continued participation by the Executive, then the
Company will arrange, at the Company's sole cost and
expense, to provide the Executive a benefit
substantially similar to, and no less favorable than, on
an after-tax basis, the benefit the Executive was
entitled to receive under such plan immediately prior
the Executive's termination; provided further, however,
that the benefit to be provided or payments to be made
hereunder may be reduced by the benefits provided or
payments made (in either case on an after-tax basis) by
a subsequent employer for the same occurrence or event;
and
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(iv) payment in cash in a lump sum, within sixty (60) days
after the Executive's termination, of the difference
between the present values as of the date of the
termination of (a) the benefits under the Company's
Retirement Plan and Supplemental Retirement Plan which
the Executive and the Executive's beneficiary, if
applicable, would have been entitled to receive had the
Executive remained employed by the Company at a
compensation level equal to that provided in this
Agreement for the entirety of the three-year term, and
(b) the actual benefit, if any, to which the Executive
and the Executive's beneficiary are entitled under the
Retirement Plan and the Supplemental Retirement Plan.
For purposes of this subparagraph, present value shall
be calculated in accordance with Section 417(e)(3) of
the Internal Revenue Code of 1986, as amended (the
"Code"); no reduction factors for early retirement shall
be applied in the calculation of benefits; and
(v) payment, on a current basis, of any actual costs and
expenses of litigation incurred by the Executive,
including costs of investigation and reasonable
attorney's fees, in the event the Executive is a party
to any legal action to enforce or to recover damages for
breach of this Agreement, or to recover or recoup from
the Executive or the Executive's legal representative or
beneficiary any amounts paid under or pursuant to this
Agreement, regardless of the outcome of such litigation,
plus interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code.
B. The Executive may file with the Secretary or any Assistant
Secretary of the Company a written designation of a beneficiary or
contingent beneficiaries to receive the payments described above in the
event of the Executive's death following the Executive's Involuntary
Termination but prior to payment by the Company. The Executive may
from time to time revoke or change any such designation of beneficiary
and any designation of beneficiary pursuant to this Agreement shall be
controlling over any other disposition, testamentary or otherwise;
provided, however, that if the Company shall be in doubt as to the
right of any such beneficiary to receive such payments, it may
determine to pay such amounts to the legal representative of the
Executive, in which case the Company shall not be under any further
liability to anyone. In the event that such designated beneficiary or
legal representative becomes a party to a legal action to enforce or to
recover damages for breach of this Agreement, or to recover or recoup
from the Executive or the Executive's estate, legal representative or
beneficiary any amounts paid under or pursuant to this Agreement,
regardless of the outcome of such litigation, the Company shall pay
their actual costs and expenses of such litigation, including costs of
investigation and reasonable attorneys' fees, plus interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that the Company shall not be required to pay such
costs and expenses in connection with litigation to determine the
proper payee, among two or more claimants, of the payments pursuant to
this Agreement.
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C. In the event of Executive's Voluntary Termination or
Termination for Cause, Executive shall not be entitled to receive any
of the pay or benefits that would have been provided pursuant to this
Agreement except for pay already earned and benefits already vested at
the time of such termination.
D. In the event that Executive's employment is terminated for
any reason during the Term of this Agreement, Executive shall not be
eligible to participate in any other severance pay plan established by
the Company for its Executives unless such severance pay plan provides
benefits of greater value in the aggregate than those available under
this Agreement, in which case Executive shall be entitled to benefits
under such severance pay plan but not under this Agreement.
SECTION NINE
CONFIDENTIALITY
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Executive agrees that, in addition to any other limitations
contained in this Agreement, regardless of the circumstances of
Executive's termination of employment, Executive will not take, or
communicate or disclose to any person, firm, corporation or other
entity, any information relating to the Company's customer lists,
prices, trade secrets, methods, systems, advertising, or any other
confidential knowledge or secrets that Executive might from time to
time acquire with respect to the business of the Company or any of its
affiliates or subsidiaries, unless Executive obtains written consent of
the Company. Executive also specifically acknowledges the continued
validity and effect of any Agreement as to Confidentiality and
Inventions previously signed by Executive and that the terms of any
such agreement are incorporated into this Agreement by this reference.
SECTION TEN
NON-COMPETITION
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In the event Executive's employment terminates pursuant to SECTION
EIGHT, Executive will not, for the duration of this Agreement, on
Executive's own behalf, or on behalf of any other person, firm,
partnership or corporation, engage in the private label biscuit
(cracker or cookie) business as either a proprietor, officer, director,
partner, employee or consultant.
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SECTION ELEVEN
ARBITRATION
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As additional consideration for this Agreement, Executive agrees
that any differences, claims, or matters in dispute arising between the
Company and Executive out of or in connection with the Executive's
employment or the termination of the Executive's employment by the
Company including, but not limited to the terms and conditions of this
Agreement, allegations of wrongful termination, allegations of
employment discrimination or allegations of discriminatory or
retaliatory discharge under any federal, state or local discrimination
law shall be submitted by them to arbitration by the American
Arbitration Association, or its successor, and the determination of the
American Arbitration Association, or its successor, shall be final and
absolute. The arbitrator shall be governed by the duly promulgated
rules and regulations of the American Arbitration Association, or its
successor, and the pertinent provisions of the laws of the State of
Missouri relating to arbitration. The decision of the arbitrator may
be entered as a judgment in any court of the State of Missouri or
elsewhere.
SECTION TWELVE
MISCELLANEOUS PROVISIONS
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A. The Company shall be entitled to withhold from any payments
made pursuant to this Agreement, including SECTION EIGHT hereof, any
federal, state or local taxes required to be withheld by law or
regulation.
B. This Agreement represents the entire agreement between the
parties and any prior understandings or representations of any kind
preceding the effective date of this Agreement shall not be binding on
either party except to the extent incorporated into this Agreement.
This Agreement shall not be altered, amended or modified except in
writing signed by the Chief Executive Officer of the Company and by the
Executive.
C. This Agreement shall be binding upon and shall inure to the
benefit of the assigns, heirs, legatees or personal representatives of
Executive and the successors or assigns of the Company.
D. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. The Company may not assign this
Agreement other than to a successor to all or substantially all of the
business and/or assets of the Company. Neither this Agreement nor any
right or
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interest hereunder shall be assignable or transferable by Executive,
the Executive's beneficiaries or Executive's legal representatives
without the Company's prior written consent; provided, however, that
nothing in this Section shall preclude (i) Executive from designating
a beneficiary to receive any benefit payable hereunder upon the
Executive's death, or (ii) the executors, administrators, or other
legal representatives of the Executive's estate from assigning or
transferring any rights hereunder to the person or persons entitled
thereunto.
E. The headings of sections are included solely for convenience
of reference and shall not control the meaning or interpretation of any
of the provisions of this Agreement.
F. This Agreement shall be construed according to the laws of
the State of Missouri without giving effect to the conflict of laws
provisions thereof.
G. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically
stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a wavier of
such term or condition for the future or of any act other than that
specifically waived.
H. If, for any reason, any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of the
Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect.
The parties have entered into this Agreement based solely upon the
terms and conditions set forth herein. THIS AGREEMENT CONTAINS A
BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the --------- day of May, 1997.
RALCORP HOLDINGS, INC.
---------------------------- By:-------------------------
Executive J. R. Xxxxxxxxxx
Chief Executive Officer
and President
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