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EXHIBIT 10.5
XXXXXXX X. XXXXXXX
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made effective for all
purposes and in all respects as of the Effective Date (as defined below) by and
between AMERICAN ITALIAN PASTA COMPANY, a Delaware corporation (hereinafter
referred to as "Employer"), and XXXXXXX X. XXXXXXX, an individual (hereinafter
referred to as "Employee") and supersedes any and all prior oral or written
agreements between the parties with respect to the subject matter hereof,
including the Employment Agreements dated as of October 30, 1992, June 6, 1991,
the Letter Agreement dated August 20, 1991 regarding payments in the event of a
sale or a change in control of Employer and the Employment Agreement dated
October 30, 1995. For purposes of this Agreement, the term "Effective Date"
shall mean the date the Employer's initial public offering (the "Offering") of
its common stock ("Common Stock") is consummated.
RECITALS
A. Employer is engaged in the business of Durum wheat milling and
pasta production/marketing and maintains its principal place of business at
0000 Xxxxxxx Xxx, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000.
B. In connection with such business, Employer desires to continue
to employ Employee in the capacity of President and Chief Executive Officer.
C. Employee desires to be employed by Employer in the aforesaid
capacities.
D. Employer and Employee desire to set forth, in writing, the
terms and conditions of their agreements and understandings.
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In consideration of the foregoing, the mutual promises herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:
1. Term of Employment. Employee's term of employment by Employer
under this Agreement (the "Employment Term") shall commence on the Effective
Date and terminate at midnight on September 30, 2002 (the termination date
being hereinafter referred to as the "Normal Termination Date"), unless sooner
terminated in accordance with the provisions of Section 7 hereof. Subject to
the provisions of Section 7.7, below, upon the Normal Termination Date,
Employee shall not become entitled to any severance payments pursuant to
Section 7, below, or otherwise.
2. Duties of Employee.
(a) In accepting such employment, Employee shall
undertake and assume the responsibility of performing for and on behalf of
Employer such duties as shall be assigned to Employee by the Board of Directors
of Employer (the "Board") at any time and from time to time. It is understood
and agreed that Employee's principal duties on behalf of Employer at the date
of execution hereof are and shall be direction of overall operations; it is
further understood and agreed that any modification in or expansion of
Employee's duties hereunder shall not, unless specifically agreed to by
Employee in a duly-executed amendment of this Agreement in accordance with
Section 8.6 hereof, result in any decrease of Employee's compensation referred
to in Section 3 hereof.
(b) Employee covenants and agrees that he will,
at all times, faithfully, industriously, and to the best of his ability,
experience and talents, perform all of the duties that may be required of and
from Employee pursuant to the express and implicit terms hereof.
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(c) Employee shall devote substantially all of
his professional time, attention, knowledge and skills solely to the business
and interests of Employer; provided, however, that Employee shall be entitled
annually to twenty-five (25) business days of vacation, and Employer shall be
entitled to all of the benefits and profits arising from or incident to all
professional work, services and advice of Employee reasonably related to the
business of Employer. Up to 10 days of unused vacation may be carried over
from one year to the next or, at the option of Employee, may be redeemed by
Employer at year end for cash at the per diem amount equal to the Base Salary,
defined in Section 3, below, divided by 260.
(d) Employer will nominate Employee for election
to its Board of Directors in accordance with the terms of the Amended and
Restated Shareholders' Agreement to which Employer and Employee are parties
(the "Shareholders' Agreement).
3. Compensation.
(a) Employer shall pay Employee, and Employee
shall accept from Employer, in payment for Employee's services rendered to
Employer hereunder an annual base salary ("Base Salary"). The Base Salary as
of the Effective Date shall be at the initial annual rate of $330,000.00,
payable in equal bi-weekly installments or otherwise in accordance with the
payroll and personnel practices of the Employer from time to time. Base Salary
shall be reviewed annually by the Board for possible adjustment. In
considering any possible adjustment to the Base Salary, the Board will consider
the reports and/or methodology of the Hay Group or a similar consultant as
reasonably selected by the Board, with the intent that the Base Salary will be
competitive with salaries for similar executive officers at comparable
companies of similar size and scope of operations to Employer, but no less than
the mid-point of the range of salaries indicated by the consultant for such
comparable executives.
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3.1. Bonuses. During the term of this Agreement, Employee
will be entitled to participate in an equitable manner with other senior
executive employees of Employer in discretionary bonuses authorized and
declared from time to time by the Board or its Compensation Committee. In
addition, Employee will be entitled to participate in Employer's 1996 Salaried
Executive Bonus Plan (the "Bonus Plan") attached hereto as Exhibit A, as the
same may be amended, modified or terminated. The "norm bonus" under the Bonus
Plan will be 50% of Base Salary and the Bonus Plan will have a "target bonus"
of up to 75% of Base Salary.
3.2. Reimbursement of Business Expenses. Reasonable
travel, entertainment and other business expenses incurred by Employee in the
performance of his duties hereunder shall be reimbursed by Employer in
accordance with Employer's policies on terms no less favorable than those
policies in effect immediately prior to the date hereof.
3.3. Use of Automobile. Employee shall be entitled to the
exclusive use of an automobile and Employer shall pay or reimburse Employee for
any expense reasonably incurred by him in maintaining and operating such
automobile, including without limitation, any lease payments; provided,
however, that Employee obtains Employer's reasonable consent as to such
automobile and the financing arrangements. Such expenses shall also include
insurance, car phone, fuel, lubricants, repairs, tires, and body work.
3.4. Benefits. (a) Employee shall be entitled to
participate in an equitable manner with other senior executive employees of
Employer in all welfare benefit, incentive compensation or other plans or
arrangements authorized and adopted from time to time by Employer, including,
without limitation, the following: pension plan, profit sharing plan, medical
reimbursement plan, group life insurance plan and long-term disability income
plan. In addition, Employer shall provide to Employee at no cost to Employee
long-term disability insurance on terms mutually agreeable to Employer and
Employee.
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(b) In addition to group life insurance, Employer
will maintain split-dollar life insurance policy on the life of the Employee
with a death benefit of $3 million; provided Employer can maintain such a
policy on the life of Employee without any substantial increase in the standard
premiums from those as of the date hereof due to any "rating" of the Employee;
and further provided that if there is such a substantial premium increase,
Employee will have the right to pay such increase personally and Employer would
then maintain such insurance.
(c) Employer will also provide to Employee such
other perquisites and fringe benefits as necessary to keep the Employee's total
compensation package competitive with those of similar executive officers at
comparable companies of similar size and scope of operations to Employer.
(d) Employer will also reimburse Employee for the
costs incurred by Employee in negotiating this Agreement not to exceed
$10,000.00 plus up to Five Thousand Dollars ($5,000) annually for the cost of
tax preparation and financial and legal consulting services.
3.5 Stock Options. At the Effective Date, Employee shall
be granted an option to purchase such number of shares of Common Stock equal to
three percent (3%) of the aggregate number of shares of Common Stock
outstanding immediately prior to the Offering on a fully diluted basis. The
option price will be equal to the per share price at which the Common Stock is
sold to the public in the Offering, the shares will vest 20% on each
anniversary of the grant date, and the option will terminate no earlier than on
the tenth anniversary of the grant date.
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4. Non-Competition. (a) Employee acknowledges and recognizes
the highly competitive nature of the business of Employer and its affiliates
and accordingly agrees as follows: during the Employment Term and until the
date that is two years after Employee ceases employment with Employer (such
time period hereinafter referred to as the "Noncompetition Period"), Employee
will not, within North America, directly or indirectly, own, manage, operate,
control, be employed by or be connected in any matter with the ownership (other
than ownership of securities of publicly held corporations of which Employee
own less than 1% of any class of outstanding securities), management,
operation, or control of any business engaged in the production and/or
marketing of dry pasta for human consumption. Notwithstanding any provision of
this Agreement to the contrary, if Employee is employed by Employer, any breach
of the provisions of this Section 4(a) shall permit Employer to terminate the
employment of Employee for Cause, and, whether or not Employee is employed by
Employer, from and after any breach by Employee of the provisions of this
Section 4(a), Employer shall cease to have any obligations to make payments to
Employee under this Agreement.
(b) During any period of continued payment
provided in Section 7 hereof, Employee will be available, consistent with other
responsibilities that he may then have, to answer questions and provide advice
to Employer.
(c) During the Noncompetition Period, Employee
will not directly or indirectly induce any employee of Employer or any of its
affiliates to engage in any activity in which Employee is prohibited from
engaging by Section 4(a) above or to terminate his employment with Employer or
any of its affiliates, will not directly or indirectly assist others in
engaging in any of the activities in which Employee is prohibited from engaging
by Section 4(a) above, and will not directly or indirectly employ or offer
employment to any person who
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was employed by Employer or any of its affiliates unless such person shall have
ceased to be employed by Employer or any of its affiliates for a period of at
least 12 months.
(d) The applicability of the provisions of this
Section 4 is in all cases dependent upon the receipt, when due pursuant to the
terms hereof, by Employee of the appropriate Elective Payment or portion of the
Severance Payment described in Section 7, below.
5. Confidentiality. Employee acknowledges that, in and as a
result of his employment by Employer, he has been and will be making use of,
acquiring and/or adding to confidential information of a special and unique
nature and value relating to such matters as Employer's trade secrets, systems,
procedures, manuals, confidential reports and lists of customers and/or other
services rendered by Employer, the equipment and methods used and preferred by
Employer's customers, and the prices paid by such customers. As a material
inducement to Employer to enter into this Agreement, and to pay to Employee the
compensation referred to in Section 3 hereof, including any additional benefits
referred to in Section 3.4 hereof, Employee covenants and agrees that he shall
not, at any time during or after the Employment Term, directly or indirectly,
disclose, divulge or use, for his own benefit or purposes or the benefit or
purposes of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise other than
Employer and any of its subsidiaries or affiliates, any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, prices, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of Employer generally, or
of any subsidiary or affiliate of Employer, provided that the foregoing shall
not apply to information which is not
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unique to Employer or which is generally known to the industry or the public
other than as a result of breach of this covenant. Employee agrees that upon
termination of his employment with Employer for any reason, he will return to
Employer immediately all memoranda, books, manuals, training materials,
records, computer software, papers, plans, information, letters and other data,
and all copies thereof or therefrom, in any way relating to the business of
Employer and its affiliates, except that he may retain personal notes,
notebooks, diaries, and mementoes and may retain copies of (i) documents
related directly to the course and scope of his employment relationship, (ii)
documents that may relate to the basis for the termination of such
relationship, and (iii) all governmental filings signed by Employee or on his
behalf under which Employee may incur personal liability pursuant to law in the
absence of fraud or other misconduct by Employee. Employee further agrees that
he will not retain or use for his account at any time any trade names,
trademark or other proprietary business designation used or owned in connection
with the business of Employer or its affiliates.
6. Specific Performance. Employee acknowledges and agrees that
Employer's remedies at law for a breach or threatened breach of any of the
provisions of Section 4 or Section 5 would be inadequate and, in recognition of
this fact, Employee agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, Employer, 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.
7. Termination and Severance.
7.1 Termination by Employer for Cause or Without Cause.
(a) Employer may terminate Employee's employment and
(except as provided below) all of Employer's
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obligations hereunder, either for Cause (as defined below) or without Cause.
In the event of termination for Cause, Employee shall be entitled to receive
his Base Salary earned through the date of termination, and, except as
otherwise expressly provided herein, all other rights of Employee shall
terminate as of the effective date of termination. Also, in the event of a
termination for Cause, the provisions of Sections 4(a) and (c) shall apply only
for so long as Employer continues to pay Employee an amount each month equal to
one-twelfth of Employee's Base Salary (an "Elective Payment"), but in no event
longer than two years. The decision whether to make any such Elective Payment
is in the sole discretion of the Employer.
For purposes of this Agreement, "Cause" shall mean (i)
Employee's willful and continued failure substantially to perform his duties
hereunder (other than as a result of Disability, as defined below) which
failure is uncorrected for a period of 30 days following receipt by the
Employee of written notice thereof from Employer; (ii) Employee's failure to
comply with any of the material terms of this Agreement which failure is
uncorrected for a period of 30 days following receipt by Employee of written
notice of noncompliance from Employer; (iii) an act or acts on Employee's part
resulting in a felony conviction of Employee under the laws of the United
States or any state thereof; or (iv) any other willful act or omission on
Employee's part which is materially injurious to the financial condition or
business reputation of Employer or any of its subsidiaries or affiliates. For
purposes of this Subsection, no act or failure to act on the part of Employee
shall be deemed "willful" unless done, or omitted to be done, by Employee in
bad faith and without reasonable belief that the act or omission of Employee
was in the best interest of Employer.
(b) If Employee's employment is terminated by
Employer without Cause or by Employee for "Good Reason" as defined below,
(other than due to death),
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Employee, upon the effective date of such termination, shall become entitled to
receive, in the manner and at the times described below, an aggregate payment
(a "Severance Payment") equal to two times the aggregate of his then current
Base Salary plus his bonus for the year in which such termination occurs
(calculated as if the Norm Bonus, as defined in the Bonus Plan, for that year
is earned) and shall continue to be covered by all health insurance plans of
Employer, at Employer's expense, for a period of one year commencing on the
date of termination, which shall be in partial satisfaction of the Employer's
continuation coverage obligations under Section 601 of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder, and ending on the first anniversary thereof. As an
example, the Severance Payment is calculated as follows: assuming a Base
Salary of $330,000.00 and a Norm Bonus of 50%, the total payment would be 2 x
($330,000.00 + $165,000.00) = $990,000.00. The Severance Payment will be paid
in equal installments over the 24 month period following such termination of
employment in accordance with the standard payroll practices of Employer. The
termination of Employee's employment due to the occurrence of the Normal
Termination Date shall not entitle Employee to receive any Severance Payment
pursuant to this Agreement, except as may be payable pursuant to Section 7.7,
below. All other benefits due Employee following Employee's termination of
employment by Employer without Cause or for Good Reason shall be determined in
accordance with the plans, policies and practices of Employer. For purposes of
this Agreement "Good Reason" means any of the following actions taken by
Employer without Employee's consent: (i) the failure of Employer to pay
compensation due to Employee; (ii) substantial diminishment in the
responsibilities or authority of Employee from that set forth in Section 2
hereof, including no longer serving on the Board of Directors, which
diminishment in responsibilities or authority is uncorrected for a period of 30
days
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following receipt by the Employer of written notice thereof from the Employee;
(iii) Employee no longer retaining his position as Chief Executive Officer (or
a position of equivalent title) of the Company (or a successor business); (iv)
relocation of Employer's executive offices or of Employee's primary workplace
outside of the United States.
7.2 Resignation of Employee. In the event that Employee
resigns or otherwise terminates his employment with Employer for any reason
(other than due to Disability, death or for Good Reason) during the Employment
Term (a "Voluntary Termination"), Employee shall be entitled to receive his
Base Salary earned through the date of such Voluntary Termination, and, except
as otherwise expressly provided herein, all other rights of Employee hereunder
shall terminate as of the date of Employee's resignation. In the event of a
Voluntary Termination, the provisions of Sections 4 shall apply only for so
long as Employer, in its sole discretion, continues to pay Employee an Elective
Payment but in no event longer than two years.
7.3 Employee's Disability. In the event that Employee's
employment is terminated by Employer or by Employee due to Employee's
"Disability", as defined below, Employee shall be deemed to have been
terminated by Employer without Cause. As used herein, "Disability" means any
physical or mental ailment which substantially prevents Employee from
performing the duties incident to Employee's employment with Employer which has
continued for a period of six consecutive months or for an aggregate of six
months in any 24-month period.
7.4 Death. (a) In the event that Employee dies during
the Employment Term, Employee's estate shall be entitled to receive all salary
and incentive bonuses earned and accrued through the date of death (including a
pro rata portion of any incentive bonus payable for the year in which
Employee's death occurs which shall be payable at the time such bonus would
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have otherwise been payable had Employee not died), as well as any other
benefits payable under any then-current life insurance policy provided to
Employee pursuant to Section 3.4 hereof, but all other rights of Employee
hereunder shall terminate.
(b) If at the time of Employee's death, the stock of
the Employer is not publicly traded on any nationally recognized exchange,
including NASDAQ, then, at the request of Employee's Estate, Employer will
redeem all (or such lesser part as may be requested by Employee's estate) of
the stock of the Employer then owned by Employee's estate, including stock
attributable to the Employee's In the Money Options, in exchange for a cash
payment equal to the fair value per share (without any adjustment based on a
discount for illiquidity or related to a minority interest) as determined by
Xxxxxx X. Xxxx & Company. For the purposes of this paragraph, "In the Money
Options" means the options to acquire Employer stock owned by Employee at the
time of his death, if the redemption price per share, as determined above,
exceeds the exercise price for such options. Employer will make a payment
equal to the net value of those In the Money Options exercised hereunder, in
lieu of a payment for the underlying stock. The Employee's estate must
exercise the rights set forth in this paragraph within one hundred twenty (120)
days from the date of Employee's death, or otherwise Employee's estate waives
the right to require the Employer to redeem the Employee's stock and in the
Money Options under this paragraph.
(c) Nothing in Section 7.4(b) to the contrary, it
is understood and agreed that the obligation of the Employer to pay a lump sum
to re-purchase stock is subject to the Employer's financial ability to do so.
The determination as to the Employer's financial ability to do so shall be
determined by the Board, exercising its reasonable business judgment in good
faith. If the Board determines that the Employer is not able to pay in a lump
sum the
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amount needed to re-purchase the stock options as described above at the time
such re-purchase is called for by Section 7.4(b), then the Employer shall act
in good faith to re-purchase as many of said shares as possible in a lump sum
and, to the fullest extent permissible under other debt instruments of
Employer, will deliver a negotiable promissory note for the remaining amount
due, which note will bear interest at Kansas City prime rate plus 1% and
require monthly payments of principal and interest that will fully amortize the
balance of the note over a term of not more than five years. The payee or
payees of the note will be required to deliver the shares to be re-purchased by
such note only as payments are made.
7.5 Change of Control.
(a) For purposes of this Agreement, "Change of
Control" means any one of the following (i) any person or group (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act")), other than Xxxxxx Xxxxxxx Leverage Equity Fund II, L.P.
("MSLEF") or any of MSLEF's Permitted Transferees (as defined in the Employer's
October 30, 1992 Shareholders' Agreement, as amended, (herein the
"Shareholders' Agreement")) or any group consisting solely of such persons,
acquiring beneficial ownership of 50% or more (30% or more once the ownership
of MSLEF and its Permitted Transferees is 10% or less of Employer's outstanding
Common Stock) of the Employer's then outstanding Common Stock or 50% or more
(30% or more once the ownership of MSLEF and its Permitted Transferees is 10%
or less of Employer's outstanding Common Stock) of the combined voting power of
the Employer's then outstanding securities entitled generally to vote for the
election of the Employer's Directors; (ii) the consummation of the merger or
consolidation of the Employer with any other corporation, other than a merger
with a wholly-owned subsidiary, the sale of substantially all of the assets of
the Employer or the liquidation or dissolution of the
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Employer, unless, in the case of a merger or consolidation, (x) Continuing
Directors will constitute at least majority of the Board of Directors of the
surviving corporation of such merger or consolidation and any parent (as such
term is defined in Rule 12b-2 under the Exchange Act) of such corporation or
(y) the voting securities of the Employer outstanding immediately prior thereto
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than a majority of the combined voting
power of the voting securities of the Employer or such surviving entity and are
owned by all or substantially all of the persons who were the holders of the
voting securities of the Employer immediately prior to the transaction in
substantially the same proportions as such holders owned such voting securities
immediately prior to the transaction; or (iii) Continuing Directors no longer
constitute at least a majority of the Board or a similar body of any successor
to the Employer.
(b) "Continuing Directors means any individual
who either (i) is a member of the Employer's Board of Directors on the
Effective Date (the "Incumbent Directors"), (ii) becomes a director after the
Effective Date whose election or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Continuing
Directors (either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as nominee for director, without
objection to such nomination), or (iii) is designated by any party pursuant to
its rights under Section 2.1 of the Shareholders' Agreement.
7.6 Stock Options. The Employer has awarded to Employee
a number of Options to acquire Common Shares of the Employer under stock option
agreements dated October 31, 1992, July 1, 1995, and April 15, 1997
(collectively, the "Xxxxxxx Option Agreements") which are subject to the
American Italian Pasta Company 1992 Stock Option Plan
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(the "Plan"). Employer desires to and does hereby amend the Xxxxxxx Option
Agreements to waive the Employer's rights under (i) each option and Section
6(g)(ii) of the Plan to repurchase the Employee's vested Options following his
termination of employment for any reason, other than by the Employer for Cause
or due to a Voluntary Termination and (ii) Section 6(h) of the Plan to
repurchase all Common Shares acquired by the Employee upon exercise of Options
granted under the Plan before a Public Offering, provided the Employee was not
terminated by the Employer for Cause or due to a Voluntary Termination, in
which case Employer retains all rights to repurchase those Common Shares.
Notwithstanding anything to the contrary herein or in the Plan, all of the
stock options awarded to Employee under the Xxxxxxx Option Agreements and
subsequent stock option grants immediately vest (i) upon a termination of
Employee by the Employer without Cause or by Employee for Good Reason, (ii) if
Employer allows the term of this Employment Agreement (or any renewal or
extension thereof) to expire without offering Employee a new employment
agreement on terms no less favorable to Employee than those in this Agreement,
or (iii) upon a Change of Control, at and to the extent of Employee's choice.
In addition, notwithstanding anything to the contrary herein, in the Plan, or
in any option agreement issued to Employee by Employer, all stock option grants
awarded to Employee under the Xxxxxxx Option Agreements and subsequent stock
option grants shall, to the extent vested at the time of any termination of
Employee's employment with Employer for any reason whatsoever, not be subject
to any forfeiture, lapse or reduction in time to exercise. This Section 7.6.
will in all cases be construed as an amendment to the Xxxxxxx Option
Agreements.
7.7 Applicability of Section 4 upon Expiration of
Agreement. In the event that on or before March 31, 2002, Employer and
Employee have not agreed to an extension of this Agreement or to a new
employment agreement to take effect upon the termination of this
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Agreement, Employer shall have a period of 48 hours within which to notify
Employee that Employer elects to have the provisions of Section 4 be applicable
after the Normal Termination Date. If Employer makes such election, it may do
so only for the full two year period and must pay an Elective Payment
periodically throughout the full two year period. If Employer does not make
such election on a timely basis, the provisions of Section 4 shall be null and
void from and after the Normal Termination Date.
8. Miscellaneous.
8.1 Assignment of Employee Benefits. Absent the prior
written consent of Employer, and subject to will and the laws of descent and
distribution, Employee shall have no right to exchange, convert, encumber, or
dispose of the rights of Employee to receive benefits and payments under this
Agreement, which payments, benefits, and rights thereto are non-assignable and
non-transferable.
8.2 Burden and Benefit. This Agreement shall be binding
upon, and shall inure to the benefit of, Employer and Employee, their
respective heirs, personal and legal representatives, successors and assigns.
8.3 Governing Law. In view of the fact that the
principal office of Employer is located in the State of Missouri, it is
understood and agreed that the construction and interpretation of this
Agreement shall at all times and in all respects be governed by the laws of the
State of Missouri.
8.4 Severability. It is expressly understood and agreed
that although Employee and Employer consider the restrictions contained in 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 this Agreement is an unenforceable restriction against
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Employee, the provisions of this Agreement shall not be rendered void but shall
be deemed amended to apply as to such maximum time and territory and to such
maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that
any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained
herein.
8.5 Headings. The headings of the Sections of this
Agreement are for reference only and not to limit, expand, or otherwise affect
the contents of this Agreement.
8.6 Entire Agreement; Modification. Except as to
Employer's applicable Stock Option Plan, any instrument relating to an Option
granted thereunder and written agreements signed by both of the parties hereto
from time to time after the date hereof, this Agreement contains the entire
agreement and understanding by and between Employer and Employee with respect
to the employment herein referred to, and any representations, promises,
agreements, or understandings, written or oral, not herein contained shall be
of no force or effect. It is expressly understood and agreed by the parties
hereto that the Letter Agreement dated August 20, 1991 relating to payments in
the event of sale or a change in control of Employer has been terminated and
shall have no force or effect. No change, waiver or modification of any
provision of this Agreement shall be valid or binding unless the same is in
writing and duly executed by both parties and no evidence of any waiver or
modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid, and the parties further agree that the provisions of this Section
8.6 may not be waived except as set forth herein.
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8.7 Waiver of Breach. The waiver by Employer of a breach
of any provision of this Agreement by Employee shall not operate or be
construed as a waiver of any subsequent breach by Employee.
8.8 Notice. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the execution page of this Agreement,
provided that all notices to Employer shall be directed to the attention of the
Board with a copy to the Secretary of Employer, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
8.9 Withholding Taxes. Employer may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as may
be required to be withheld pursuant to any applicable law or regulation.
8.10 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.
8.11 Mitigation. The Employee shall have no duty to attempt
to mitigate the level of benefits payable by the Employer to him hereunder
other than as required pursuant to the benefit plans of Employer and Employer
shall not be entitled to set off against the amounts payable hereunder any
amounts received by the Employee from any other source including any subsequent
employer.
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8.12 Enforcement Costs. In the event Employee deems it
necessary to seek counsel or to institute legal proceedings to enforce his
rights hereunder, Employer shall pay all professional fees and expenses
incurred by the Employee related thereto in the event Employee substantially
prevails in his claim or litigation and, in any event, Employer shall reimburse
Employee for up to $10,000 of such fees and expenses.
8.13 Loan Deferral. So long as Employee is subject to any
restrictions on his ability to transfer any shares of Common Stock owned by him
pursuant to the Shareholders' Agreement or any "lock-up" or "hold back"
agreement entered in connection with the Offering, all payment obligations
otherwise existing under any loans to Employee from Employer shall be deferred
and shall be added to the principal amount of such loans and the lengths of
said loans shall be extended one payment period for each deferred payment.
8.14 Savings Clause. Although the parties do not intend
that any payments provided hereunder are to be related to a change in control
of Employer, as defined in the Internal Revenue Code of 1986 (the "Code"),
nevertheless, if any payment or the receipt of any benefit under this Agreement
shall be deemed to constitute an "excess parachute payment" as such term is
described in Section 280G of the Code, so as to result in the loss of a
deduction to Employer under Code Section 280G or the imposition of an excise
tax on Employee under Code Section 4999, or any successor sections thereto,
then the amounts payable or the benefits provided under this Agreement shall be
reduced to the minimum extent necessary so that no such deduction will be lost
by Employer and no such excise tax will be imposed on Employee.
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IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the day and year first above written.
EMPLOYER:
AMERICAN ITALIAN PASTA COMPANY,
a Delaware Corporation
0000 Xxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
By /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxxx
Chairman
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxxx Xxxxxxx, XX 00000
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