EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of January 14, 2003, ("Effective Date") by and between AMERICAN ITALIAN PASTA
COMPANY, a Delaware corporation (the "Company") and XXXXX X. XXXXXXXXX ("Xx.
Xxxxxxxxx").
WITNESSETH:
WHEREAS, the Company and Xx. Xxxxxxxxx are parties to an Employment
Agreement dated as of September 30, 1997 (the "1997 Employment Agreement") and
the parties desire, as of the Effective Date, to terminate and supersede the
1997 Employment Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Term. The Company hereby employs Xx. Xxxxxxxxx for an initial term
commencing on the Effective Date, and terminating three (3) years from the
Effective Date; unless the initial term is extended or renewed by mutual
agreement in writing of the parties hereto or this Agreement is earlier
terminated pursuant to Section 5 hereof (collectively the "Term"). In the event
one of the parties wishes to extend or renew the Term it will so notify the
other party at least ninety (90) days prior to the date on which the Agreement
would otherwise terminate so that the parties may enter into discussions
regarding such renewal or extension.
2. Position and Responsibilities. Xx. Xxxxxxxxx will serve as a Director
and the Chairman of the Board of the Company and render such advice and services
to the Company during the Term as may be reasonably required by the Company in
accordance with this Agreement, including but not limited to the following:
a. Serve on all key committees of the Board of Directors, except as
may be prohibited, deemed inadvisable or as may create adverse consequences
to the Company or its employees under applicable securities laws, tax laws,
stock exchange regulations, or any other applicable law, rule or
regulation, as determined by the Company's legal counsel.
b. Counsel and assist the Company's management in the development,
implementation and control of the Company's business objectives and
strategies to further the profitable growth of the Company.
c. Assist in developing and implementing operational and marketing
strategies which will support the Company's business growth plan.
d. Assist and counsel the Company's management in all matters related
to the implementation of the Company's business plan.
The Company agrees to give reasonable advance notice to Xx. Xxxxxxxxx
regarding the anticipated timing and duration of the services needed and
understands and agrees that in no event shall Xx. Xxxxxxxxx'x physical presence
be required to render services to the Company for more than an aggregate of
fifty (50) days in each calendar year during the Term. It is expressly
understood and agreed by the parties hereto that any request for services in
addition to the foregoing limitations shall be subject to Xx. Xxxxxxxxx'x
availability. In rendering his services to the Company, Xx. Xxxxxxxxx shall
report directly to the Company's Board of Directors.
3. Compensation.
a. Base Compensation. As base compensation ("Base Compensation"), the
Company shall pay Xx. Xxxxxxxxx $4,000.00 per day ("the Daily Rate") for
each day of service rendered to the Company; provided, however, that in the
event Xx. Xxxxxxxxx is willing and able to render services but the Company
does not request services which aggregate thirty (30) days for any given
calendar year, then, the Company shall pay Xx. Xxxxxxxxx for a minimum of
thirty (30) days in said calendar year. Within a reasonable time after the
end of each calendar quarter, Xx. Xxxxxxxxx will provide the Company a
written statement describing the services rendered during the said calendar
quarter and within fifteen (15) days after receipt of said written
statement, the Company shall pay Xx. Xxxxxxxxx for said services. In the
event the Company does not request at least thirty (30) days of service
from Xx. Xxxxxxxxx during a given calendar year, then, on or before the
last business day of said calendar year, the Company shall pay Xx.
Xxxxxxxxx an amount equal to the Daily Rate times the number of days fewer
than thirty for which services were not rendered because they were not
requested by the Company.
b. Bonuses. During the Term of this Agreement, Xx. Xxxxxxxxx will be
entitled to participate in an equitable manner with other senior executive
employees of the Company in discretionary bonuses authorized and declared
from time to time by the Board of Directors or its Compensation Committee.
In addition, Xx. Xxxxxxxxx will be entitled to participate in the Company's
1996 Salaried Employee 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 in an amount equal to 67% of Xx.
Xxxxxxxxx'x Base Compensation and the Bonus Plan will have a "target bonus"
equal to up to 100% of Xx. Xxxxxxxxx'x Base Compensation.
c. Withholdings. All payments due under this Agreement will be subject
to the required and customary employment tax and income tax withholdings.
4. Expense Reimbursement. The Company shall reimburse Xx. Xxxxxxxxx for
necessary and reasonable business expenses incurred in connection with the
performance of duties hereunder. Xx. Xxxxxxxxx shall provide an invoice to the
Company for such expenses at the end of the quarter in which such expenses were
incurred. The Company shall, subject to its normal review and approval policies
and procedures, pay such invoice of Xx. Xxxxxxxxx not later than on the due date
stated therein which date shall not be less than fifteen (15) days after the
date such invoice was provided to the Company.
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5. Termination.
a. Death or Disability. If Xx. Xxxxxxxxx is prevented from providing
the services or performing the assignments herein contemplated due to his
illness, incapacity or injury for a period of sixty (60) consecutive days
or sixty (60) days in the aggregate in any six (6) month period
("Disability") or his death, the Company may terminate this Agreement
immediately by giving written notice to such effect. Upon the death or
Disability of Xx. Xxxxxxxxx, the Company shall pay to him or his designated
beneficiary or estate all amounts due and unpaid for services rendered
prior to his death or Disability.
b. Termination of Employment by Company for Cause. The Company may
also terminate this Agreement for "Cause" (as defined below). Upon
termination for Cause, the Company will pay to Xx. Xxxxxxxxx all amounts
due and unpaid for services rendered prior to termination. The Term shall
be terminated effective the date of such termination for Cause and, except
as provided in the foregoing sentence, no further amounts shall be payable
hereunder. For purposes of this Agreement, "Cause" shall mean termination
of Xx. Xxxxxxxxx'x employment because, in the Company's good faith belief,
(i) Xx. Xxxxxxxxx willfully and continually failed substantially to perform
his duties under the Agreement (other than as a result of Disability), (ii)
Xx. Xxxxxxxxx failed to comply with any of the material terms of this
Agreement, including, but not limited to, Sections 6 and 7 hereof, (iii)
Xx. Xxxxxxxxx committed an act or acts that constituted a misdemeanor
(other than a minor traffic violation) or a felony under the law of the
United States (including any subdivision thereof) or any country to which
he is assigned (including any subdivision thereof), including, but not
limited to, his conviction for or plea of guilty or no contest ("nolo
contendre") to any such misdemeanor or felony, (iv) Xx. Xxxxxxxxx committed
an act or acts in violation of the Company's policies and/or practices
applicable to its senior level executive officers, (v) Xx. Xxxxxxxxx
willfully acted, or willfully failed to act, in a manner that was injurious
to the financial condition or business reputation of the Company or any of
its subsidiaries or affiliates, (vi) Xx. Xxxxxxxxx acted in a manner that
is unbecoming of his position, regardless of whether such action or
inaction occurs in the course of the performance of his duties, or (vii)
Xx. Xxxxxxxxx was subject to any fine, censure, or sanction of any kind,
permanent or temporary, issued by the Securities and Exchange Commission or
the New York Stock Exchange.
c. Termination of Employment by Xx. Xxxxxxxxx for Good Reason. Xx.
Xxxxxxxxx may resign and terminate this Agreement for "Good Reason" by
giving written notice to the Company. For purposes of this Agreement, "Good
Reason" shall mean any of the following reasons: (i) the Company willfully
fails to pay an amount due under this Agreement after Xx. Xxxxxxxxx has
provided written notice to the Company of such failure; (ii) the occurrence
without Xx. Xxxxxxxxx'x written consent of a Change of Control (defined as
any person or group (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, acquiring beneficial ownership of more
than 50% of Company's then outstanding Common Stock or 51% or more of the
combined voting power of the Company's then outstanding securities entitled
to vote for the election of the
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Company's Directors); or (iii) there occurs a significant strategic
disagreement between Xx. Xxxxxxxxx and a majority of the members of the
Board of Directors of the Company involving: (a) the CEO position or (b)
removal by the Company of Xx. Xxxxxxxxx as Chairman of Board of Directors
other than for Cause.
If Xx. Xxxxxxxxx terminates this Agreement for Good Reason, Xx. Xxxxxxxxx
shall no longer be obligated to provide any services to the Company and shall be
entitled to receive a prompt payment of all amounts due for service rendered but
not yet paid, and an amount equal to: (ii) the unpaid balance due for the
remainder of the Term; and (iii) an additional payment equal to $2,000
multiplied by the number of days of service remaining under the Term (but in no
event shall such number of days of service exceed thirty (30) days for any
calendar year during the Term). As an example and solely for purposes of
illustration: If Xx. Xxxxxxxxx terminates employment for Good Reason after
rendering ten (10) days of service in 2003, the Company will pay Xx. Xxxxxxxxx
the additional sum of $120,000 (the sum of $4,000 x 20 days, and $2,000 x 20
days for 2003), plus an additional sum for each additional year remaining under
the Term of this Agreement, calculated based upon the formula set forth in this
paragraph and based upon a minimum of thirty (30) days of service in each year.
Furthermore, upon termination of this Agreement for Good Reason by Xx.
Xxxxxxxxx, the unvested portion of the Options granted pursuant to the Plans
shall accelerate and become immediately vested ("Options" and "Plans" are
defined in Section 12(b)).
6. Non-Competition. During, and for the two year period following
termination of the Term Xx. Xxxxxxxxx will not, without the prior written
consent of the Board, directly or indirectly be or remain employed or retained
by, or consult with or render any services for any person, firm, partnership,
joint venture, limited liability company, association, corporation or other
business organization, entity or enterprise engaged in any business, which is
competitive with the business in which the Company or any of its subsidiaries or
affiliates is engaged at any time during the Term, it being expressly understood
and agreed by the Company that (i) the foregoing limitation shall not prohibit
or otherwise constrain or apply to Xx. Xxxxxxxxx'x provision of consulting and
other business advisory services to any affiliate of Xxxxxx Xxxxxxx, Xxxx
Xxxxxx, Discover & Co., and (ii) to the extent consistent with the foregoing,
Xx. Xxxxxxxxx may provide consulting services to other clients which do not
compete, directly or through one or more subsidiaries or affiliates, in any way
with any business in which the Company or any of its affiliates or subsidiaries
is engaged provided such services do not interfere with the services to be
provided hereunder.
7. Confidentiality. During and after the Term, Xx. Xxxxxxxxx will not
disclose or use for his own benefit or purposes or the benefit or purposes of
any other person, firm, partnership, joint venture, limited liability company,
association, corporation or other business organization, entity or enterprise
other than the Company and any of its subsidiaries or affiliates, any trade
secrets, information, data, or other confidential information relating to
customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of the Company generally,
or of any subsidiary or affiliate of the Company; provided that the foregoing
shall not apply to information which is not unique to the Company or which is
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generally known to the industry or the public other than as a result of Xx.
Xxxxxxxxx'x breach of this Agreement. Xx. Xxxxxxxxx agrees that upon termination
of the Term for any reason, he will return to the Company 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 the Company and its
affiliates, except that Xx. Xxxxxxxxx may retain personal notes, notebook and
diaries. Xx. Xxxxxxxxx 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 the Company or its
affiliates.
8. Specific Performance; Other Actions. 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 6 or Section 7 would be inadequate and, in
recognition of this fact, Xx. Xxxxxxxxx agrees that, in the event of such 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.
9. Employee Benefit. The Company agrees to seek to have Xx. Xxxxxxxxx
included and covered by the Company's medical and other employee benefit plans
to the extent he satisfies the eligibility requirements of the applicable plans
and insurers.
10. Indemnity; Fees and Expenses. The Company agrees to hold harmless Xx.
Xxxxxxxxx for all acts or decisions made by him in good faith related to his
performance of services hereunder. The Company agrees to pay any and all
reasonable legal fees and related expenses incurred by Xx. Xxxxxxxxx in
connection with entering into and performing services under this Agreement. The
Company will use its reasonable best efforts to obtain coverage for Xx.
Xxxxxxxxx under any insurance policy now in force or hereinafter obtained during
the term of this Agreement covering the Company against liability from claims or
causes of action which arise as a result of or with respect to this Agreement ;
provided, however, it is understood by each of the parties hereto that the
Company is not required to maintain insurance coverage for its officers and
Directors. If, however, the Company obtains such insurance coverage and Xx.
Xxxxxxxxx services as a director or officer of the Company, Xx. Xxxxxxxxx will
be included as an insured party in his capacity as such.
11. Equity Compensation.
a. Upon the Effective Date of this Agreement, the Company shall grant
Xx. Xxxxxxxxx additional options to acquire 75,000 additional shares of the
Company's common stock (the "Additional Options"). The exercise price of
the Additional Options shall be the closing price of the Company's common
stock on the Effective Date and one-third of the options will vest on each
anniversary of the grant date. The Additional Options will be exercisable
over a ten-year period following each portion of the Additional Option's
respective vesting dates.
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b. Upon the Effective Date, the Company will grant Xx. Xxxxxxxxx 3,500
shares of restricted stock, to vest one-third on each anniversary of the
grant date, with such other restrictions as the Company shall impose.
12. Miscellaneous.
a. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri.
b. Entire Agreement; Amendments. This Agreement supersedes any and all
prior understandings and agreements between the parties with respect to the
subject matter referred to herein, it being understood that all Option
Agreements granting Options (the "Option Agreements") to Xx. Xxxxxxxxx
pursuant to the Company's option plans (collectively, the "Plans") shall
remain in full force and effect. This Agreement contains the entire
understanding of the parties with respect to the Company's employment of
Xx. Xxxxxxxxx. Except as provided in the Plans and the Option Agreements,
there are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement may not be
altered, modified or amended except by written instrument signed by each of
the parties hereto.
c. 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.
d. Severability. If any one or more of the provisions of this
Agreement are or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of
this Agreement shall not be affected thereby.
e. Assignment. This Agreement may not be assigned by Xx. Xxxxxxxxx
except with respect to his rights to receive payments under Section 3
hereof and may be assigned by the Company only with the consent of Xx.
Xxxxxxxxx; provided that no such assignment by the Company shall relieve
the Company of any liability hereunder, whether accrued before or after
such assignment.
f. Arbitration. Any dispute between the parties to this Agreement
arising from or relating to the terms of this Agreement or any dispute
between the Company and Xx. Xxxxxxxxx shall be submitted to arbitration in
Missouri under the auspices of the American Arbitration Association.
g. Successors; Binding Agreement. The Company shall seek to cause any
successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or the assets
of the Company to expressly assume 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. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, representatives, successors and assigns.
h. Notice. For the purposes of this Agreement, notices and all other
communications (including invoices) 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 the Company shall be
directed to the attention of the Secretary, 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.
i. Headings. The headings used in this Agreement are for convenience
only and shall not affect the meaning of or be used to interpret any
provisions herein.
j. 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
AMERICAN ITALIAN PASTA COMPANY
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
President
0000 Xxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
XXXXX X. XXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
00 Xxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxx Xxxxxxxx 00000
