SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") between Xxxxx Xxxxxxxxx and
American Italian Pasta Company (the "Company") sets forth the parties' mutual
agreement with respect to the resignation by Xx. Xxxxxxxxx as director of the
Company and concerning termination of the arrangement between Xx. Xxxxxxxxx and
the Company reflected in the Employment Agreement between the Company and Xx.
Xxxxxxxxx dated as of January 14, 2003 (the "Employment Agreement").
WHEREAS, there have been recent changes in senior management at the
Company;
WHEREAS, the parties to this Agreement agree that Xx. Xxxxxxxxx'x services
under the Employment Agreement are no longer required by the Company or desired
to be performed by Xx. Xxxxxxxxx;
WHEREAS, Xx. Xxxxxxxxx resigned as Chairman of the Board of the Company
effective October 17, 2005; and
WHEREAS, Xx. Xxxxxxxxx desires to spend more time with his family and
pursue other interests.
NOW, THEREFORE, in consideration of the mutual undertakings in this
Agreement, the parties agree as follows:
1. Position with Company. Xx. Xxxxxxxxx hereby resigns as a member of the
Board of Directors of the Company, effective as of the date of this Agreement.
2. Severance Payments. (a) Severance Payments. In consideration for the
release granted by Xx. Xxxxxxxxx pursuant to this Agreement and his compliance
with the obligations set forth in this Agreement, the Company will pay as
severance the amount due under the terms of the Employment Agreement, on or
before September 30, 2006 (the "Expiration Date"), less all applicable Federal,
State and local withholding taxes. In calendar 2005, Xx. Xxxxxxxxx was paid the
minimum amount due and he is not entitled to any additional compensation.¹ In
calendar 2006, Xx. Xxxxxxxxx is entitled to 30 days of Base Compensation (as
defined in the Employment Agreement), or $120,000, to be paid on or before the
Expiration Date. Xx. Xxxxxxxxx will be eligible to continue his current medical
coverage under the Company's medical plan at his own expense for the remaining
period applicable under COBRA, subject to the
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¹ However, the Company agrees to pay the invoices submitted in respect of
2005 in the amounts of $14,250 (for services rendered by Xx. Xxxxxxxxx for the
period October 1 through December 31, 2005) and $3,058 (for expenses incurred in
the same period).
applicable COBRA requirements and conditions, at his expense. Except as
otherwise provided in this Agreement, his participation in any and all other
benefit and compensation plans and arrangements of the Company (including,
without limitation, bonus and retirement plans, accident and disability
insurance programs and life insurance) ceased on the date of this Agreement (the
"Termination Date") in accordance with the terms of those plans.
(b) The Company's obligations to make any payments or provide any
benefits pursuant to this Section 2 or Section 3 of this Agreement are
expressly conditioned on Xx. Xxxxxxxxx'x continued compliance with the
provisions of this Agreement.
3. Certain Expenses. The Company agrees to reimburse HWS & Associates in
the amount of $40,500 for certain costs and expenses as set forth in the letter
agreements between the Company and HWS & Associates, Inc. dated as of October 1,
1999 and January 21, 2002 (the "HWS Agreements"). This amount covers all
expenses, including any costs associated with employing an administrative
assistant for Xx. Xxxxxxxxx, and satisfies in full any and all obligations of
the company to Xx. Xxxxxxxxx in respect of the HWS Agreements.
4. Stock Options. Xx. Xxxxxxxxx has outstanding stock options as set forth
on Schedule 1 hereto. To the extent any stock option was not vested as of the
Termination Date, it will terminate as to the unvested portion. All stock
options, as currently vested, will remain exercisable until three months
following the Termination Date in accordance with their terms.
5. Restricted Stock. Xx. Xxxxxxxxx also has restricted stock outstanding as
set forth on Schedule 1 hereto. Vesting of any unvested portion of such
restricted stock ceased as of the Termination Date in accordance with its terms.
6. Termination of Payment Obligations. (a) If at any time prior to the
Expiration Date the Board of Directors determines in good faith that Xx.
Xxxxxxxxx has breached any provision of this Agreement, (i) all payments and
eligibility for benefits under this Agreement shall immediately cease and the
Company shall have no further obligations of any kind under this Agreement, and
(ii) any Company stock options held by Xx. Xxxxxxxxx at such time shall cease to
be exercisable. In addition, the continued payment and eligibility for benefits
under this Agreement, and the right to exercise your Company stock options, are
contingent upon Xx. Xxxxxxxxx'x continuing to cooperate reasonably with the
Company and its Audit Committee in any investigations. The Company agrees that
it shall provide Xx. Xxxxxxxxx reasonable notice to comply with any such
requests to cooperate with the Company and its Audit Committee in any
investigations, that it shall accommodate Xx. Xxxxxxxxx'x schedule within reason
with respect to any such requests for cooperation, and that it shall reimburse
Xx. Xxxxxxxxx for any reasonable out-of-pocket expenses incurred in connection
with cooperating with the Company pursuant to such a request.
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(b) In the event that Xx. Xxxxxxxxx contests any determination by the
Board of Directors that he has breached a provision of this Agreement, the
Company agrees to advance any and all reasonable legal fees and related expenses
incurred by Xx. Xxxxxxxxx in connection with any action, suit, or arbitration he
might bring against the Company to recover the payments and benefits he is due
under this Agreement. In consideration of such advances, Xx. Xxxxxxxxx agrees to
provide the Company with an undertaking agreeing to repay immediately the
Company any and all payments advanced to cover his reasonable attorney's fees
and expenses in connection with such action, suit or arbitration in the event it
is ultimately determined by the fact-finder that Xx. Xxxxxxxxx materially
breached a provision of this Agreement.
7. Release. (a) Xx. Xxxxxxxxx agrees to and does fully and completely
release, discharge and waive any and all claims, complaints, causes of action or
demands of whatever kind which he has or may have against the Company, its
subsidiaries, affiliates, predecessors and successors and all its directors,
officers and employees by reason of any event, matter, cause or thing which has
occurred prior to the Termination Date (hereinafter "Executive Claims"). Xx.
Xxxxxxxxx understands and accepts that this Agreement specifically covers, but
is not limited to, any and all Executive Claims relating in any way to the
Employment Agreement or the HWS Agreement, or to compensation, or to any other
terms, conditions or circumstances of his former employment with the Company,
and to the resignation of such employment, whether for severance or based on
statutory or common law claims for employment discrimination (including claims
under the Age Discrimination in Employment Act), wrongful discharge, breach of
contract or any other theory, whether legal or equitable. Notwithstanding the
foregoing, Xx. Xxxxxxxxx does not waive any rights to which he may be entitled
(i) to seek to enforce this Agreement, (ii) to seek unemployment compensation
benefits or (iii) to seek indemnification and advancement of expenses with
respect to any claims asserting liability based on Xx. Xxxxxxxxx'x conduct or
performance of his duties as an officer, director, or employee of the Company
under the Indemnification Agreement dated June 1, 2005 (the "Indemnification
Agreement") which remains in full force and effect.
(b) Xx. Xxxxxxxxx further understands and acknowledges that:
(i) The release provided for in this Section 7, including claims
under the Age Discrimination in Employment Act, is in exchange for the
consideration provided for in this Agreement;
(ii) Xx. Xxxxxxxxx has been advised by the Company to consult
with legal counsel prior to executing this Agreement and the release
provided for in this Section 7, has had an opportunity to consult with
and to be advised by legal counsel of your choice, fully understands
the terms of this Agreement, and
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enters into this Agreement freely, voluntarily and intending to be
bound; and
(iii) Xx. Xxxxxxxxx has been given a period of twenty-one days to
review and consider the terms of this Agreement, and the release
contained herein, prior to its execution and that he may use as much
of the twenty-one day period as he desires.
8. Non-Competition and Confidentiality. The non-compete and confidentiality
provisions set forth in Sections 6 and 7 of the Employment Agreement shall
remain in full force and effect for two years from the date Xx. Xxxxxxxxx ceases
to serve as a director of the Company and in perpetuity, respectively.
9. Remedies. (a) Xx. Xxxxxxxxx acknowledges and agrees that the Company's
remedies at law for a breach or threatened breach of any of the provisions of
Section 8 of this Agreement would be inadequate and, in recognition of this
fact, he agrees that, in the event of a breach or threatened breach, in addition
to any remedies at law, the Company, without posting any bond, shall be entitled
to obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available.
(b) It is expressly understood and agreed that although Xx. Xxxxxxxxx
and the Company consider the restrictions contained in Section 8 of this
Agreement to be reasonable, if a final judicial determination is made by a
court of competent jurisdiction that the time or territory or any other
restriction contained in Section 8 is an unenforceable restriction against
you, the provisions of Section 8 shall not be rendered void but shall be
deemed amended to apply as to such maximum time and territory and to such
other maximum extent as such court may judicially determine or indicate to
be enforceable.
10. Entire Agreement; Amendment. Except as expressly set forth in Paragraph
9 hereof, and except for the Indemnification Agreement which survives, this
Agreement shall supersede any and all existing agreements between Xx. Xxxxxxxxx
and the Company or any of its affiliates relating to the terms of his
employment, including but not limited to the Employment Agreement and the HWS
Agreements, and contains the entire understanding of the parties with respect to
Xx. Xxxxxxxxx'x resignation as a director and employee of the Company. It may
not be altered, modified or amended except by a written agreement signed by both
parties hereto.
11. No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
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12. Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions of
this Agreement shall not be affected thereby.
13. Assignment. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, representatives, successors
and assigns. This Agreement shall not be assignable by Xx. Xxxxxxxxx and shall
be assignable by the Company only to a direct or indirect wholly owned
subsidiary of the Company; provided that no such assignment by the Company shall
relieve the Company of any liability hereunder, whether accrued before or after
such assignment.
14. Acknowledgement. Xx. Xxxxxxxxx acknowledges that he has carefully read
this Agreement, fully understands and accepts all of its provisions and signs it
voluntarily of his own free will. He further acknowledges that he has been
provided a full opportunity to review and reflect on the terms of this Agreement
and to seek the advice of legal counsel of his choice.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, without regard for the
conflicts of law principles thereof. Subject to Section 16, the parties
irrevocably agree that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by a party hereto or its successors or assigns may be brought and
determined in the Circuit Court of Xxxxxxx County, Missouri or the United States
District Court for the Western District of Missouri and each of the parties
hereby (a) irrevocably submits with regard to any such action or proceeding for
itself and in respect of its property, generally and unconditionally, to the
exclusive personal jurisdiction and venue of the aforesaid courts in the event
any dispute arises out of this Agreement, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction or venue by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any transaction contemplated hereby in any court
other than the abovementioned courts. Any service of process to be made in such
action or proceeding may be made by delivery of process in accordance with the
notice provisions contained in Section 17 of this Agreement. Each party hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason other than the failure to serve process
in accordance with this paragraph, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is
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improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts. This provision shall not be construed to negate
or limit the mandatory arbitration provision of Section 16.
16. Arbitration. Any dispute between the parties to this Agreement arising
from or relating to the terms of this Agreement shall be submitted to
arbitration in Kansas City, Missouri under the auspices of the American
Arbitration Association.
17. Notices. Except as otherwise explicitly provided in this Agreement, any
notice provided hereunder will be deemed to be given when delivered in writing
by hand or sent by overnight courier. All notices to the Company will be marked
confidential and addressed to Xxxxx X. Xxxxxxx, chief executive officer of the
Company, or a successor to his position, with a copy to Xxxxxxxx X. Xxxxxxxx of
Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000. All notices to
Xx. Xxxxxxxxx will be addressed to his most recent address as reflected on the
Company's payroll and sent to such other address as he may provide from time to
time by notice to the Company, with a copy to Xxxxxxx X. German, Esq. and
Xxxxxxx X. Xxxx, Esq. of Xxxxx Xxxxxxxxx German May PC, 0000 Xxxxxx, Xxx. 000,
Xxxxxx Xxxx, Xxxxxxxx 00000, or any other persons or addresses as you may
request from time to time by notice to the Company.
18. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
19. Right to Revoke Acceptance. If Xx. Xxxxxxxxx decides to accept this
Agreement, he may revoke his acceptance within seven days after the date he
signed and returned it to the Company. Xx. Xxxxxxxxx can make such a revocation
by providing a written and signed letter of revocation to the Company by the
means described in Section 17 within seven days after Xx. Xxxxxxxxx signed and
delivered this Agreement to the Company. If Xx. Xxxxxxxxx does so revoke, this
Agreement will be null and void.
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AMERICAN ITALIAN PASTA
COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Chairman
XXXXX X. XXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxx
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Date: January 25, 2006
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SCHEDULE 1
Xx. Xxxxxxxxx'x Company Stock Options as of the Date Hereof
Options to purchase 525,942 Company shares at the following exercise prices:
Number of Shares Exercise Price
275,942 $18.00
30,000 $18.50
100,000 $25.00
30,000 $26.73
75,000 $34.35
15,000 $38.90
Xx. Xxxxxxxxx'x Company Restricted Stock as of the Date Hereof
2,530 shares of Company restricted stock.
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