EXHIBIT 10.1
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 4th day
of September, 2002, by and among INTERSTATE BAKERIES CORPORATION ("Bakeries"),
INTERSTATE BRANDS CORPORATION ("Brands") and INTERSTATE BRANDS WEST CORPORATION
("West"), each a Delaware corporation (Bakeries, Brands and West collectively
are referred to as the "Companies"), and Xxxxx X. Xxxxxxxx ("Employee").
The Companies and Employee hereby mutually agree as follows:
1. Employment.
(a) The Companies shall employ Employee, and Employee shall serve the
Companies on the terms and subject to the conditions set forth herein for a
period commencing on October 1, 2002, and terminating on October 1, 2005 (the
"Expiration Date"), except as provided in Section 1(b) below. Employee shall
serve in the capacity of Chief Executive Officer of the Companies. The duties,
responsibilities and authority of Employee shall be those that are normally
incident to the office to be held by Employee. Employee shall devote his best
efforts and abilities and all his business time to the affairs and interests of
the Companies (except as may be otherwise authorized by the Board of Directors
of the Companies). Employee's principal office shall be at Kansas City,
Missouri.
(b) On the "Expiration Date" of the Employment Agreement and each
subsequent anniversary of the Expiration Date, the Employment Agreement shall be
automatically renewed for an additional one year period unless terminated by
either the Companies or Employee, by delivery, on or prior to April 1 of such
year, of a termination notice to the other party.
2. Compensation. For his services to the
Companies, Employee shall be entitled:
(a) To receive (i) commencing October 1, 2002, an aggregate base
annual salary in the amount not less than seven hundred thousand dollars
($700,000) and (ii) commencing with the fiscal year beginning June 2, 2002
("Fiscal 2003"), an annual bonus pursuant to the terms of the Incentive
Compensation Plan ("Plan") at the level available to the Chairman of the Board
and Chief Executive Officer of the Companies immediately prior to October 1,
2002; provided, however, that Employee shall be guaranteed a minimum bonus for
Fiscal 2003 equal to one-half of the target level bonus payable under the Plan
for Fiscal 2003, regardless of actual results of Fiscal 2003. At annual or
approximate annual intervals, Bakeries shall conduct, or cause to be conducted,
a review of Employee's salary, giving attention to all pertinent factors,
including without limitation the performance of the Companies, the performance
of Employee and compensation practices inside and outside the Companies.
Bakeries shall, after such review, determine Employee's base salary to be paid
until the completion of the next review.
(b) To be covered by noncash benefit plans and programs of the
Companies that are the same as those that were provided to the Chairman of the
Board and Chief Executive Officer immediately prior to October 1, 2002, by each
such Company, including without limitation retirement plans and programs, health
and medical insurance coverage, long-term disability insurance coverage and life
insurance coverage.
(c) To participate in any other benefit programs that are made
available to other executives of the Companies.
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(d) To receive from Bakeries the deferred share award and option
grant described in Section 3.
(e) To receive perquisites that are the same as those that were
provided to the Chairman of the Board and Chief Executive Officer immediately
prior to October 1, 2002, by the Companies, including without limitation a club
membership (including initiation fees and monthly dues), a new company car every
three (3) years comparable in style and cost to any sedan or SUV model of
Cadillac or Lincoln, a $7,500 annual allowance for financial counseling (any
unused amount may be rolled over to the next succeeding year provided that the
amount available in any given year will not exceed $15,000) and paid vacations.
3. Deferred Share Award and Option Grant. As soon as practical after
the Effective Time (as defined in Section 16), as authorized by the Interstate
Bakeries Corporation 1996 Stock Incentive Plan and in accordance with its terms,
Bakeries will grant to Employee (i) the right to receive in the future 150,000
shares of Bakeries' Common Stock vesting over three (3) years at the rate of
50,000 shares per year and subject to the additional terms set forth in the
Deferred Share Award Notice attached hereto as Exhibit A and (ii) a
non-qualified option grant for 250,000 shares of Common Stock, vesting over
three years, with an exercise price equal to the closing sales price of the
Common Stock on the New York Stock Exchange on the date of the grant, and
subject to the additional terms set forth in the form of Award Notice and
Non-Qualified Stock Option Agreement attached hereto as Exhibit B.
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4. Termination; Effect of Termination.
(a) Employee's employment hereunder shall be
terminated prior to the Expiration Date if Employee dies or becomes permanently
disabled under circumstances in which he would be entitled to the benefits
therefor under the long-term disability insurance coverage referred to in
Section 2(b), in which case the Companies and Employee shall be released from
all further obligations and liabilities hereunder (except as provided in this
Section 4, for obligations accrued but not yet paid, for those set forth in
Section 6, for liability arising from any breach of this Agreement occurring
prior to such termination and except that Employee and his beneficiaries shall
be entitled to receive all disability and other benefits payable upon his death
or disability).
(b) If Employee's employment hereunder is terminated by any of the
Companies without his consent or for any reason specified in Section 4(a) or for
his failure to consent under Section 13 (each a "Termination Event"), then the
Companies shall be obligated for a period of time equal to the longer of (A) the
balance of the three (3) year term of this Employment Agreement as set forth in
Section 1 remaining as of such Termination Event and (B) one (1) year from the
date of such Termination Event (the "Severance Period") to continue to (i) make
the full salary payments to Employee required by Section 2 and (ii) provide to
Employee all health, medical, disability and insurance coverage provided for in
Section 2(b).
(c) For purposes hereof, during the Severance Period Employee shall
be deemed to be in service and shall continue to accrue benefits under any
retirement plan of the Companies and any supplemental retirement benefits
agreement in effect between the Companies and Employee immediately prior to the
Severance Period. All
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such payments shall be made without reference to or deduction for any subsequent
employment obtained or obtainable by Employee. In the event that Employee would
be ineligible to participate in or be covered by any noncash benefit plan or
program by reason of such termination of his employment, one or more of the
Companies shall provide substantially similar benefits or coverage through other
sources.
(d) During the Severance Period the Companies shall continue to make
all payments of their portion of the premiums for the life insurance in effect
with respect to Employee's life. Employee shall also be entitled to receive or
exercise during the Severance Period all other benefits and rights available
under any benefit plans or programs to terminated or discharged employees.
5. Travel Expense. Employee's duties under this Agreement may require
a reasonable amount of travel and the incurrence of travel and other business
expenses. The Companies shall pay or reimburse Employee for all such reasonable
expenses incurred or paid by him upon presentation of expense statements or
vouchers and such other information as West may reasonably require.
6. Confidentiality. Employee shall not at any time during or after
the term of this Agreement (and without regard to the circumstances under which
this Agreement or Employee's employment hereunder may have terminated), directly
or indirectly, disclose or permit those under his control to disclose, or use,
or permit those under his control to use, except as shall be necessary in the
performance of his duties hereunder, any trade secrets or other proprietary
information owned by or confidential to any of the Companies or any of their
subsidiaries without the prior written consent of the Companies including but
not limited to (i) any confidential information concerning the business,
affairs, properties, management or prospects (financial or otherwise) of the
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Companies or any of their subsidiaries that he may have acquired in the course
of, or as an incident to, his employment by the Companies or any of their
subsidiaries or predecessors or (ii) any confidential information entrusted to
the Companies or any of their subsidiaries or predecessors which any such
company is obligated to keep confidential.
7. Board Seat. Employee will continue to be a member of Bakeries'
Board of Directors throughout the term of his employment hereunder and Bakeries
shall include him in the management slate for election as a director at every
stockholders' meeting at which his term as a director would otherwise expire.
8. Kansas City Residence. Employee understands, and by accepting
employment hereunder agrees, that it is currently impracticable to move the
principal office of the Companies and that he will be required to spend
substantially all of his business time and, on average, approximately two
weekends per month in Kansas City. In light of the foregoing, promptly after the
Effective Time, Employee shall locate acceptable living quarters for Employee
and his wife in the Kansas City area. Bakeries shall pay or cause to be paid the
reasonable and necessary moving costs associated with obtaining Kansas City
living quarters.
9. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach or asserted breach of its terms, will be
settled by arbitration before a single arbitrator in Kansas City, Missouri, in
accordance with the rules then obtaining of the Federal Arbitration Act, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof. No claim may be arbitrated unless written notice of the basis of the
claim is received within 180 days after the party first knew of the existence of
the general facts upon which the claim is based. All arbitration
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hearings must commence within 90 days after the written notice of the claim.
Employee and Bakeries shall share equally any fees and expenses of any
arbitrator. The arbitrator will decide what amount, if any, of the prevailing
party's legal fees and expenses will be paid by the non-prevailing party. For
all purposes, this Agreement will be interpreted and enforced under Missouri and
United States law, as respectively applicable.
10. Entire Agreement. This Agreement is the entire agreement between
the parties hereto with respect to Employee's employment and shall not be
amended, altered or modified in any manner whatsoever, except by a written
instrument executed by the parties hereto. This Agreement supersedes all prior
agreements between any of the Companies and Employee and all such prior
agreements shall be void and of no further force or effect as of the Effective
Time.
11. No Continuous Waiver. The waiver by any party hereto of a
breach of any provision of this Agreement by the other party hereto shall not
operate or be construed as a waiver of any subsequent breach by such party.
12. Governing Law. This Agreement shall be subject to, and be
governed by, the laws of the State of Missouri.
13. Transfer, Assignment, Modification, etc. This Agreement may not
be transferred, assigned, modified, amended or waived without the prior written
consent of all parties. Further, this Agreement and all rights and obligations
of the Companies hereunder shall not inure to the benefit of their respective
successors and assigns without the written consent of Employee. The term
"successor" shall mean only any person, corporation or other entity that, by
merger, consolidation, purchase of assets, liquidation, voluntary or involuntary
assignment or otherwise, acquires all or a substantial part of the assets of one
or more of the Companies or succeeds to one or more lines of
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business of one or more of the Companies. For purposes of this Agreement, any
such acquisition or succession by merger, consolidation, purchase of assets,
liquidation, voluntary or involuntary assignment, shall be deemed a termination
of Employee's employment by the Companies for purposes of Sections 4(b), unless
Employee consents otherwise in writing to Bakeries.
14. Severability. If any one or more of the provisions of this
Agreement, as applied to any party or any circumstance, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained in the Agreement. If any one or
more of the provisions of this Agreement shall, for any reason, be held to be
unenforceable as to duration, scope, activity or subject, such provision shall
be construed by limiting and reducing it so as to make such provision
enforceable to the extent compatible with the then existing applicable law.
15. Notices. All notices hereunder shall be in writing, shall
be delivered personally or sent by certified or registered mail, postage
prepaid, return receipt requested, or by overnight delivery utilizing a
recognized national express delivery carrier such as FedEx, if to Employee, to
his attention at the principal office of Bakeries, and if to the Companies, to
Bakeries at its principal office, Attention: General Counsel. No notice shall be
effective if given otherwise than as provided herein.
16. Effective Time. This Agreement may be signed in any number of
counterparts each of which shall be an original and all of which, when taken
together,
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shall constitute one and the same instrument and shall become effective as of
October 1, 2002 (the "Effective Time") upon the execution and delivery hereof by
the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
INTERSTATE BAKERIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
INTERSTATE BRANDS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
INTERSTATE BRANDS WEST CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Title: Chairman and Chief Executive Officer
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
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