AMERICAN ITALIAN PASTA COMPANY
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), effective October 1, 2005 is
by and between American Italian Pasta Company ("Employer"), and Xxxxxx X.
Xxxxxx, an individual ("Employee") (collectively "the parties).
WITNESSETH:
In consideration of the promises and mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. Non-Competition, Nonsolicitation and Nondisparagement.
1.1 Employee acknowledges and recognizes the highly competitive
nature of the business of Employer and its affiliates and accordingly agrees as
follows: while he is employed by Employer and until the date that is eighteen
(18) months after any termination of such employment with Employer for any
reason (the period of employment and such 18 month post-employment period being
the "Noncompetition Period"), Employee will not, in any area in the world where
Employer conducts business, directly or indirectly own, manage, operate,
control, be employed by, consult with, or be connected in any manner with the
ownership (other than passive investments of not more than one percent of the
outstanding shares of, or any other equity interest in, any company or entity
listed or traded on a national securities exchange or in an over-the-counter
securities market), management, operation, or control of any business engaged in
the production and/or marketing of pasta products for human consumption.
Notwithstanding any provision of this Agreement to the contrary, if Employee is
employed by Employer, then any breach of the provisions of this Section 1.1
shall permit Employer to terminate the employment of Employee for Cause (as
defined below), and, whether or not Employee is employed by Employer, from and
after any breach by Employee of the provisions of this Section 1.1, then
Employer shall cease to have any obligations to make payments to Employee under
this Agreement.
1.2 During the Noncompetition Period, Employee will not directly or
indirectly induce or attempt to induce any employee of Employer or any of its
affiliates to engage in any activity in which Employee is prohibited from
engaging by Section 1.1 hereof or to terminate his or her employment with
Employer or any of its affiliates, will not directly or indirectly assist or
attempt to assist others in engaging in any of the activities in which Employee
is prohibited from engaging by Section 1.1 hereof, and will not directly or
indirectly employ or offer employment to any person who 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.
1.3 During the Noncompetition Period, Employee will not directly or
indirectly induce or attempt to induce any customer or supplier of Employer or
any of its
affiliates to move, reduce or not increase its trade or business with Employer
or any of its affiliates.
1.4 Employee acknowledges and agrees that disparaging or critical
statements made by Employee about Employer or its board members, officers or
employees would be uniquely detrimental to the interests of both parties.
Therefore, during the Noncompetition Period, Employee agrees to refrain from
making any disparaging or critical statements about Employer or its board
members, officers or employees.
1.5 Employee acknowledges that the restrictions contained in Sections
1.1, 1.2, 1.3 and 1.4 are reasonable and appropriate. However, in the event that
a court of competent jurisdiction determines that such restrictions are not
reasonable and therefore unenforceable, the parties agree that such court may
modify the restrictions in order for, but only to the least extent necessary
for, the restrictions to be enforced by such court. In the event such court
finds that any such restriction cannot be modified so as to make it enforceable,
such restriction may be deleted by such court and the enforceability of all
other restrictions will be unaffected by such deletion.
2. Confidentiality. Employee acknowledges that, in and as a result of
Employee's employment by Employer, Employee 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, Employee covenants and
agrees that Employee shall not, at any time during or after the Employee's
employment by Employer, directly or indirectly disclose, divulge, or use for
Employee's 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, however, that the foregoing shall not apply to information
that is not unique to Employer or that 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 Employee's employment with Employer for any reason, Employee
will return to Employer immediately all memoranda, books, manuals, training
materials, records, computer software, papers, plans, contracts, agreements,
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
Employee may retain personal notes, notebooks, and diaries. Employee further
agrees that Employee will not retain or use for Employee's 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.
3. Specific Performance and Survival.
3.1 Employee acknowledges and agrees that Employer's remedies at law
for a breach or threatened breach of any of the provisions of Section 1 hereof
or Section 2 hereof
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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 that may then
be available.
3.2 The parties agree that the terms of Sections 1, 2 and 3 are
independent of and separable from the other provisions of this Agreement and
that the termination of this Agreement for any reason will not affect the
continued existence and enforceability of Sections 1, 2 and 3. Those Sections
will survive and continue to be fully binding on and enforceable against
Employee and Employer after any termination of this Agreement.
4. Termination of Employment
4.1 Termination without Cause; Resignation for Good Reason.
4.1.1 General. (a) Subject to the provisions of Sections 4.1.2
and 4.1.3 hereof, if Employee's employment is terminated by Employer without
Cause, as defined in Section 4.3, or if Employee resigns from Employee's
employment for Good Reason, as defined in Section 4.4, then Employer shall pay
Employee severance in the amount of (i) Employee's accrued unpaid base salary to
the date of termination or resignation and any bonus earned but not paid as of
that date, and (ii) continuation of Employee's base salary as of the date of
termination or resignation for a period of twelve (12) months following the date
of termination or resignation (such period being referred to hereinafter as the
"Severance Period"). In addition, if at the time of such termination or
resignation Employee has completed ten (10) years of uninterrupted service with
Employer, the severance will include a payment in the amount of 50% of the
prorated Normal Bonus level to which Employee would have been entitled had
Employee remained employed through the then applicable bonus period. The Normal
Bonus level will be calculated at the end of the bonus period and is subject to
all adjustments and reductions determined by the Board of Directors and made
applicable to all bonus plan participants. To the extent such calculation
results in a bonus to be paid, that amount will be prorated for the number of
weeks of the bonus period occurring prior to the week in which the termination
or resignation occurred. The base salary shall be payable in equal bi-weekly
installments during the Severance Period, and any bonus shall be payable at the
conclusion of the Severance Period.
(b) During the Severance Period and for a period of six (6)
months thereafter, Employee shall also be eligible to participate on the same
terms and conditions as in effect immediately prior to such termination or
resignation in all health, medical, supplemental medical, and life insurance
plans or programs provided to Employee by Employer ("Employee Welfare Plans") at
the time of such termination or resignation and which continue to be provided by
Employer to its employees following the date of such termination or resignation;
provided, however, that Employee's eligibility to participate in these Employee
Welfare Plans shall end at such time as Employee becomes eligible to receive
coverage under comparable programs of a subsequent employer and further provided
that if Employee participates in the Employee Welfare Plans for a period of
eighteen (18) months from the date of termination or resignation, then
Employee's COBRA rights shall commence at the end of such eighteen (18) month
period. If, during the Severance Period, Employee is precluded from
participating in any Employee Welfare
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Plan by its terms or applicable law, then Employer will provide Employee with
benefits that are reasonably equivalent to those Employee would have received
under such plan had Employee been eligible to participate therein, assuming with
respect to any health or medical benefits that Employer is insurable Anything to
the contrary herein notwithstanding, Employer shall have no obligation to
continue to maintain any Employee Welfare Plan during the Severance Period
solely as a result of this Agreement. As an example and solely for purposes of
illustration: If Employer were to cease providing dental insurance to its senior
executives prior to or during the Severance Period, then Employer would have no
obligation to maintain such plan or provide to Employee individual dental
insurance to satisfy its obligations under this Section 4.1.1.
4.1.2 Mitigation. Employee will be required to mitigate the
amount of any payment provided for in Section 4.1.1 hereof by seeking other
employment, and the amount of any such payment will be reduced by any
compensation earned by Employee as the result of Employee's employment by
another employer or acting as a consultant or in any other self-employed
capacity subsequent to termination of Employee's employment with Employer.
4.1.3 Death During Severance Period. If Employee dies during the
Severance Period, then the Severance Period shall immediately cease, Employer
shall not be obligated to make any further payments pursuant to this Section 4,
and the provisions of Section 5.1 hereof shall apply as though Employee's death
had occurred immediately prior to termination of Employee's employment
hereunder.
4.1.4 Date of Termination. The date of termination of employment
without Cause shall be the date specified in a written notice of termination to
Employee which in no case shall be more than 30 days following the date of
notice. The date of resignation for Good Reason shall be the date specified in
the written notice of resignation from Employee to Employer which in no case
shall be more than 30 days following the date of notice.
4.2 Termination for Cause; Resignation Without Good Reason.
4.2.1 General. If Employee's employment is terminated by Employer
for Cause, or if Employee resigns from Employee's employment hereunder other
than for Good Reason (a "Voluntary Termination"), then Employee shall be
entitled only to payment of Employee's base salary earned through and including
the date of termination or resignation. Employee shall have no further right to
receive any other compensation or to participate in any other plan, arrangement,
or benefit, after such termination for Cause or Voluntary Termination.
4.2.2 Date of Termination. Subject to Section 4.3 hereof, the
date of termination for Cause shall be the date of receipt by Employee of notice
such termination. The date of Voluntary Termination shall be the date of receipt
by Employer of the notice of resignation.
4.3 Cause. Terminate for "Cause" means termination of Employee's
employment because, in Employer's good faith belief, if at any time prior to or
after the date of this Agreement, (i) Employee willfully and continually failed
substantially to perform Employee's duties under the Agreement (other than as a
result of Permanent Disability, as defined below), (ii) Employee failed to
comply with any of the material term(s) of this
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Agreement, including, but not limited to, Sections 1 and 2 hereof, (iii)
Employee 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 Employee is assigned
(including any subdivision thereof), including, but not limited to, Employee's
conviction for or plea of guilty or no contest ("nolo contrendre") to any such
misdemeanor or felony, (iv) Employee committed an act or acts in violation of
Employer's policies and/or practices applicable to employees at the level of
Employee within Employer's organization, (v) Employee willfully acted, or
willfully failed to act, in a manner that was injurious to the financial
condition or business reputation of Employer or any of its subsidiaries or
affiliates, (iv) Employee acted in a manner that is unbecoming of Employee's
position with Employer, regardless of whether such action or inaction occurs in
the course of the performance of Employee's duties with Employer, or (v)
Employee was subject to any fine, censure, or sanction of any kind, permanent or
temporary, issued by the Securities and Exchange Commission, the New York Stock
Exchange, or any other regulatory or government authority.
4.4 Good Reason. For purposes of this Agreement, "Good Reason" means
any of the following actions taken by Employer without Employee's prior written
consent: (i) the continued failure of Employer to pay compensation due to
Employee, which failure is uncorrected for a period of 15 days following receipt
by Employer of written notice thereof from Employee; (ii) demotion to a position
below that of Executive Vice President or a reduction in Employee's base salary
below Two Hundred Thirty-three Thousand Dollars ($233,000); (iii) Employer's
material failure or refusal to comply with the provisions of this Agreement,
which failure or refusal to comply is uncorrected for a period of 15 days
following receipt by Employer of written notice thereof from Employee.
4.5 Conditions to Severance Payments. Employer's obligation to make
any severance payments due hereunder or to provide any benefits to Employee
after any termination or resignation hereunder (other than COBRA benefits) is
expressly conditioned on Employee complying in full with the obligations under
Sections 1, 2 and 3. In the event Employee does not fully comply with such
obligations or in the event any such obligations are determined by any court to
be unenforceable to any extent, Employer shall be relieved of all obligations to
provide any severance or post-termination benefits.
5. Death or Permanent Disability.
5.1 Death. If Employee's employment hereunder is terminated by death,
then Employer shall, within 90 days of the date of death, make a lump sum
payment to Employee's estate (or other beneficiary designated by Employee in
writing) equal to all base salary and bonuses, if any, earned and accrued
through the date of death. Thereafter, Employer shall have no further obligation
to Employee.
5.2 Permanent Disability. If Employee becomes physically or mentally
disabled while employed by Employer so that Employee is--with or without
reasonable accommodation--unable to render the services provided for by this
Agreement for a period of six consecutive months or for shorter periods
aggregating six months during any 24-month period, or so that Employee has a
Disability (as defined under Employer's then-current disability policy), then
Employer may, at any time after the last day of the six consecutive months of
disability, the
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day on which the shorter periods of disability equal an aggregate of six months,
or the day on which Employee is determined to have a Disability, terminate
Employee's employment hereunder for "Permanent Disability" by written notice to
Employee. Following such termination, Employee shall be entitled to receive from
Employer (i) all base salary and bonuses, if any, accrued through the date of
termination and (ii) any other benefits payable under Employer's then-current
disability policy, but all other rights of Employee hereunder shall terminate as
of the date of Employee's termination.
6. Employment At Will. Notwithstanding anything herein to the contrary,
Employee understands and agrees that he is an at-will employee and may terminate
his employment at any time and for any or no reason, and that Employer may
terminate his employment at any time and for any or no reason.
7. Miscellaneous.
7.1 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.
7.2 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.
7.3 Governing Law. In view of the fact that the principal office of
Employer is located in the State of Missouri, the parties understand and agree
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, that the
state and federal courts situated in the State of Missouri shall have exclusive
jurisdiction over any claims arising under or in relation to this Agreement, and
that the parties consent to personal jurisdiction in such state and federal
courts.
7.4 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.
7.5 Entire Agreement; Modification. Except as to Employer's Stock
Option Plans, any instrument relating to an Option granted thereunder,
provisions of Employee's terminated employment agreement with Employer that by
their terms survive such termination, 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 subject matter hereof, and any representations,
promises, agreements, or understandings, written or oral, not herein contained
shall be of 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
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writing, duly executed as aforesaid, and the parties further agree that the
provisions of this Section 7.5 may not be waived except as set forth herein.
7.6 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.
7.7 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, however, that all notices to Employer shall be directed to the
attention of the Board of Directors of Employer 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.
7.8 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.
7.9 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, Employer and Employee have duly executed this Agreement
as of the day and year first hereof written.
EMPLOYEE:
Signature: /s/ Xxxxxx X. Xxxxxx
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Printed Name: Xxxxxx X. Xxxxxx
Address:
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AMERICAN ITALIAN PASTA COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Printed Name: Xxxxxx X. Xxxxxx
Address: 0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxx XX 00000-0000
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