Exhibit 10.1
AMERICAN ITALIAN PASTA COMPANY
EMPLOYMENT AGREEMENT
XXXX X. XXXXX
This EMPLOYMENT AGREEMENT (this "Agreement"), effective November 6, 2007
(the "Effective Date") is by and between American Italian Pasta Company
("Employer"), and Xxxx X. Xxxxx ("Executive") (collectively "the parties") and
supersedes any and all prior oral or written agreements between the parties with
respect to the subject matter hereof.
WITNESSETH:
WHEREAS, in connection with such business, Employer desires to employ
Executive in the capacity of Chief Operating Officer until the current Chief
Executive Officer steps down, and thereafter it is intended that he be employed
in the capacity of Chief Executive Officer; and
WHEREAS, Executive desires to be employed by Employer in such capacity.
NOW, THEREFORE, 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. Term of Employment. The term of Executive's employment under this Agreement
(the "Employment Term") will commence as of the Effective Date and continue
until terminated pursuant to Section 7, below. The provisions of Sections 4, 5
and 6, below, survive any termination of Executive's employment and/or any
termination or expiration of this Agreement.
2. Duties of Executive.
2.1 In accepting such employment, Executive shall undertake and assume the
responsibility of performing for and on behalf of Employer such duties as shall
reasonably be assigned to Executive by the board of directors of Employer (the
"Board") at any time and from time to time and in accordance with all of
Employer's policies, practices and procedures. It is understood and agreed that
Executive's principal duties on behalf of Employer are and shall be to serve as
Chief Operating Officer until the current Chief Executive Officer is no longer
employed as such, and thereafter it is intended that he serve as Chief Executive
Officer.
2.2 Executive will, to the reasonable satisfaction of the Board, at all
times faithfully, industriously, and to the best of Executive's ability,
experience, and talents perform all of the duties that may be required of and
from Executive pursuant to the express and implicit terms hereof.
2.3 Executive shall devote substantially all of Executive's professional
time, attention, knowledge, and skills solely to the business and interests of
Employer, and Employer
shall be entitled to all of the benefits, profits, and other issues arising from
or incident to all professional work, services, and advice of Executive.
Executive may, with the prior written approval of the Board's
Nominating/Governance Committee, participate in civic or charitable
organizations and serve as a member of the board of directors of noncompetitive
public or private businesses, which approval must be reviewed annually.
3. Compensation. Employer shall pay Executive, and Executive shall accept from
Employer, in payment for Executive's services rendered to Employer hereunder an
annual base salary ("Base Salary") equal to Four Hundred Fifty Thousand Dollars
($450,000). Executive shall pay such Base Salary in equal bi-weekly
installments. Base Salary shall be reviewed annually by the Board's Compensation
Committee for possible adjustment.
3.1 Position Acceptance Payment. On the Effective Date, Employer shall
award Executive 49,000 shares of restricted stock of Employer and 145,000 stock
appreciation rights pursuant to the attached forms of award agreement. Such
awards shall have been approved by the Board of Directors or Compensation
Committee of the Board in accordance with the provisions of the Employer's 2000
Equity Incentive Plan, as amended (the "Plan"). Notwithstanding any vesting
requirements provided in such award agreements, the Plan or the Severance Plan,
these awards will accelerate and become fully vested upon any termination of
Executive by the Employer other than for Cause as defined in Section 7, below
(provided, however, the award agreements shall control in the event of
Executive's disability, death or retirement).
3.2 Annual Incentive Program. Executive will be eligible for an annual cash
incentive payment based on Employer's measures of EBITDA and cash flow as set
forth on Exhibit A, hereto, at threshold, target and maximum levels. At
threshold level of Employer performance for the fiscal year ending September 26,
2008 ("FY2008"), Executive will be eligible for a payment for FY2008 equivalent
to 49% of Base Salary; at target level of Employer performance for the fiscal
year ending September 26, 2008 ("FY2008"), Executive will be eligible for a
payment for FY2008 equivalent to 70% of Base Salary; and at maximum level of
Employer performance for FY2008, Executive will be eligible for a payout for
FY2008 of 91% of Base Salary. Payout for FY2008 will be guaranteed at $157,500.
Annual cash incentives post-FY2008 will be established in the discretion of the
Compensation Committee.
3.3 Long Term Incentive Program. Executive will be eligible for equity
grants under the Employer's Long Term Incentive Program in the discretion of the
Compensation Committee. In the event any such awards are made, they will be
divided equally between stock appreciation rights and shares of restricted stock
and will vest ratably over a three (3) year period.
3.4 Reimbursement of Business Expenses. Employer agrees to reimburse
Executive for reasonable travel, entertainment, and other business expenses
incurred in the performance of Executive's duties hereunder in accordance with
Employer's policies on terms no less favorable than those policies in effect
immediately prior to the date hereof.
3.5 Benefits. Executive shall be entitled to relocation and living expenses
of $130,000 during his family's transition to the Kansas City metropolitan area
during the period ending no later than 120 days after the Effective Date, and
reimbursement of up to $7,500 for
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legal services related to review of this Agreement. These payments will be made
on or before December 1, 2007. Executive shall participate in an equitable
manner with other senior executive employees of Employer in all welfare benefit,
incentive compensation, or other plans or arrangements authorized, adopted, and
maintained from time to time by Employer, including, without limitation, the
following: automobile allowance, profit sharing plan, medical reimbursement
plan, group life insurance plan, medical and dental insurance plan, and
long-term disability income plan, if in effect with Employer. Executive shall be
entitled to four (4) weeks vacation annually.
4. Non-Competition, Nonsolicitation and Nondisparagement.
4.1 Executive 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 eighteen (18) months after
the date that Executive ceases employment with Employer for any reason (the
Employment Term and such period hereinafter referred to as the "Noncompetition
Period"), Executive 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 any class of the outstanding
equity of 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 activity in which the Company is actively engaged at the
time Executive's employment with the Company ceases.
4.2 During the Noncompetition Period, Executive 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 Executive is prohibited from
engaging by Section 4.1 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 Executive
is prohibited from engaging by Section 4.1 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.
4.3 During the Noncompetition Period, Executive 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 (whether or not the communication relates to
doing business during a period that is during or after the Noncompetition
Period).
4.4
(a) Executive acknowledges and agrees that disparaging statements made
by Executive about Employer or its board members, officers or employees
would be uniquely detrimental to the interests of both parties. Therefore,
Executive agrees to refrain from making any disparaging statements about
Employer or its board members, officers or employees, except as may be
compelled by law.
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(b) Employer acknowledges and agrees that disparaging statements made
about Executive would be detrimental to Executive and, therefore, during
the Noncompetition Period, Employer agrees, for itself and its officers and
Board members, to refrain from making any disparaging statements about
Executive, except as may be compelled by law.
4.5 Any and all inventions, designs, discoveries, writings, analyses,
improvements, processes, procedures and/or techniques (hereafter "Intellectual
Property") that Executive has made, conceived, discovered or developed, or may
hereafter make, conceive, discover or develop, either solely or jointly with any
other person or persons, at any time during the term of Executive's employment
with Employer, whether during working hours or at any other time, whether
conceived by Executive alone or with others, whether conceived in conjunction
with the use of any assets of Employer, and whether at the request or upon the
suggestion of the Board or otherwise, that relate to or are useful in connection
with any business carried on or contemplated by the Employer shall be the sole
and exclusive property of Employer. Executive shall make full disclosure to the
Board of all Intellectual Property as and when requested by the Board. Executive
shall do everything necessary to vest the absolute title thereto in Employer.
Executive agrees that he shall not be entitled to any additional or special
compensation or reimbursement in connection with any and all Intellectual
Property. All Intellectual Property shall be the exclusive property of Employer
whether or not patent or trademark applications are filed thereon. Executive
agrees that Executive shall never at any time during or after termination of
Executive's employment with Employer have or claim any right, title or interest
in any Intellectual Property belonging to or used by Employer. Executive shall
execute all necessary papers, maintain adequate and current records and
otherwise provide assistance, at the expense of Employer, during and after
termination of Executive's employment with Employer to enable Employer to obtain
for themselves or their nominee patents, copyrights, trademarks, registrations
or other legal protection for such Intellectual Property and protect the same
against infringement by others.
4.6 Executive acknowledges that the restrictions contained in Section 4 are
reasonable and appropriate and that, in the event of any termination of
Executive's employment, Executive shall not challenge such restrictions as
overbroad or otherwise unenforceable. Executive further acknowledges and agrees
that, if a court of competent jurisdiction determines such restrictions are
unenforceable for any reason, such court shall modify the restrictions in order
for, but only to the least extent necessary for, the restrictions to be enforced
by such court. If 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.
5. Confidentiality. Executive acknowledges that, in and as a result of
Executive's employment by Employer, Executive 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 Executive the
compensation referred to in Section 3.1 hereof, Executive covenants and agrees
Executive shall not, at any time
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during or after the Employment Term, directly or indirectly disclose, divulge,
or use for Executive'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. Executive agrees that,
upon termination of Executive's employment with Employer for any reason,
Executive will return to Employer immediately all Employer property, including,
without limitation, 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 Executive may retain
personal notes, notebooks, and diaries. Executive further agrees that Executive
will not retain or use for Executive'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.
6. Specific Performance and Survival.
6.1 Executive acknowledges and agrees that Employer's remedies at law for a
breach or threatened breach of any of the provisions of Section 4 hereof or
Section 5 hereof would be inadequate and, in recognition of this fact, Executive
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.
6.2 The parties agree that the terms of Sections 4, 5, and 6 are
independent of and separable from the other provisions of this Agreement and
that the termination of this Agreement (or of Executive's employment) for any
reason will not affect Executive's obligations under Sections 4, 5, and 6 and
further shall not affect the enforceability of Sections 4, 5, and 6. Those
Sections will survive and continue to be fully binding on and enforceable
against Executive and Employer after any termination of this Agreement.
7. Termination of Employment.
7.1 Termination of Employment. Either party may terminate this Agreement
and Executive's employment hereunder at any time, with or without cause or
reason. Executive shall be a participant in Employer's Severance Plan for Senior
Vice Presidents and Above effective May 2, 2006 (the "Severance Plan") and the
terms of the Severance Plan shall apply to Executive.
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7.2 Termination for Cause; Resignation.
7.2.1 General. If Executive's employment hereunder is terminated by
Employer for Cause (as defined in the Severance Plan), or if Executive
resigns from Executive's employment hereunder, then Executive shall be
entitled only to payment of Executive's Base Salary, as adjusted under
Section 3, earned through and including the date of termination or
resignation, plus any bonus that had been approved by the Compensation
Committee prior to the date of such termination for which Executive has met
all eligibility criteria. Executive 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.
7.2.2 Involuntary Termination. In the event Employer materially
reduces the duties and responsibilities of the Executive below the level of
Chief Operating Officer (or as he becomes Chief Executive Officer then
below the level of Chief Executive Officer) or materially reduces the
compensation and benefits of the Executive, other than as part of
compensation and benefit reduction implemented with respect to the
Employer's executive officers generally, Executive may resign within ten
business days thereafter and treat such resignation as an involuntary
termination under the Severance Plan.
7.2.3 Date of Termination. The date of termination for Cause shall be
the date of receipt by Executive of notice of such termination. The date of
resignation shall be the date of receipt by Employer of the notice of
resignation.
7.2.4 Certain Breaches. Notwithstanding any provision of this
Agreement to the contrary, if Executive is employed by Employer, then any
breach of Sections 4 or 5 shall permit Employer to terminate the employment
of Executive for Cause (regardless of the definition of Cause in the
Severance Plan), and, whether or not Executive is employed by Employer,
from and after any breach by Executive of Sections 4 or 5, then Employer
shall cease to have any obligation to make payments to Executive under this
Agreement.
7.3 Conditions to Severance Payments. Employer's obligation to make any
severance payments due pursuant to the Severance Plan or to make available any
benefits to Executive pursuant to the Severance Plan (other than COBRA benefits)
is expressly conditioned on Executive complying in full with the obligations of
the Severance Plan and the obligations under Sections 4, 5, and 6 of this
Agreement. In the event Executive 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. Any dispute between the
parties as to whether the Executive fully complied with such obligations shall
be subject to arbitration under the provisions of Section 10.13, hereof, and
during the pendency of any such arbitration Employer shall make any severance
payments otherwise due into an "rabbi trust account" to be held pending finality
of the arbitration. Notwithstanding anything in the Severance Plan or this
Agreement to the contrary, in order to avoid a violation of Section 409A of the
Internal Revenue Code of 1986 (the "Code") any severance payments due Executive
shall be deferred for a period of six (6) months following his termination,
after which time any severance payments due Executive shall begin, with the
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first such payment including an amount equal to the aggregate amount deferred
for such six (6) month period.
8. Death or Permanent Disability.
8.1 Death. If Executive's employment hereunder is terminated by death, then
Employer shall, within 90 days of the date of death, make a lump sum payment to
Executive's estate (or other beneficiary designated by Executive 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
Executive under the Agreement.
8.2 Permanent Disability. If Executive becomes physically or mentally
disabled while employed by Employer under this Agreement so that Executive
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
Executive 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 day on which the shorter periods of
disability equal an aggregate of six months, or the day on which Executive is
determined to have a Disability, terminate Executive's employment hereunder for
"Permanent Disability" by written notice to Executive. Following such
termination, Executive 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 Executive hereunder shall terminate as of the date of
Executive's termination.
9. Excess Parachute Payments.
9.1 If any payment by Employer or the receipt of any benefit from Employer
(whether or not pursuant to 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 in the imposition of an excise tax on the Executive under Code Section 4999,
or any successor sections thereto (an "Excess Parachute Payment"), then the
Executive shall be paid either (i) the amounts and benefits due, or (ii) the
amounts and benefits due shall be reduced to an amount equal to one-dollar ($1)
less than the maximum amount allowed under the Code that would avoid the
existence of an "Excess Parachute Payment," whichever amount results in the
greater after-tax payment to the Executive. Employer, in its sole discretion,
shall determine whether or not an "excess parachute payment" would otherwise
occur and shall determine the amount and method of the foregoing reduction.
9.2 Notwithstanding the provisions of Section 9.1 above, if any payment by
Employer or the receipt of any benefit from Employer (whether or not pursuant to
this Agreement) in calendar year 2008 or 2009 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 in the imposition of an excise tax on the Executive under Code Section 4999,
or any successor sections thereto, then in addition to the amounts payable or
benefits provided under this Agreement, Executive shall receive an additional
amount equal to the amount of any excise tax imposed on Executive under Code
Section 4999. Such additional
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amount shall be paid to Executive on or before December 31 of the calendar year
following the calendar year in which the Executive remits such excise tax.
Employer, in its sole discretion, shall determine whether or not an "excess
parachute payment" would otherwise occur and shall determine the amount and
method of the foregoing reduction.
10. Miscellaneous.
10.1 Assignment of Executive Benefits. This Agreement shall inure to the
benefit of and be enforceable by each of the parties hereto, and Employer's
successors and assigns and, in the case of the Executive, his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees. Executive's obligations under this Agreement are personal and not
assignable by Executive.
10.2 No Right to Employment. Nothing contained in this Agreement or any act
done pursuant hereto shall be construed as giving any person any legal or
equitable right against Employer, except to enforce the provisions of this
Agreement, or as giving any person a right to be retained in the employ of
Employer. Subject to the provisions set forth herein, Executive shall remain
subject to assignment, reassignment, promotion, transfer, layoff, reduction,
change in employment terms, suspension, and discharge to the same extent as if
this Agreement had never been executed.
10.3 No Conflicting Agreements. Executive represents to Employer (i) that
there are no restrictions, agreements or understandings whatsoever to which
Executive is a party that would prevent or make unlawful Executive's execution
or performance of this Agreement or employment hereunder; and (ii) that the
execution of this Agreement and Executive's employment does not constitute a
breach of any contract, agreement or understanding, oral or written, to which
Executive is a party or by which Executive is bound.
10.4 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
(subject to the arbitration provision in Section 10.13, below), and that the
parties consent to personal jurisdiction in such state and federal courts.
10.5 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.
10.6 Entire Agreement; Modification. Except as to Employer's Severance
Plan, equity benefit plan, any instrument relating to an option or restricted
share 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 Executive with
respect to the subject matter hereof, and any representations, promises,
agreements, or understandings, written or oral, not herein contained, whether
related to Employer's operations or financial condition, the terms and
conditions of Executive's employment, or any other matter, shall be of no force
or effect. Except as provided in Section
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4.6, 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 10.6 may not be waived except as set forth herein.
10.7 Waiver of Breach. The waiver by Employer of a breach of any provision
of this Agreement by Executive shall not operate or be construed as a waiver of
any subsequent breach by Executive.
10.8 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, 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.
10.9 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.
10.10 Consultation with Attorney. Executive represents that he has
consulted with an attorney concerning the terms of this Agreement and
understands the Agreement, including but not limited to the provisions of
Sections 4, 5 and 6.
10.11 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.
10.12 Interpretation of Agreement. In any action to enforce or interpret
this Agreement, the parties shall be considered joint authors; this Agreement
shall not be strictly construed for any purpose against either party.
10.13 Arbitration of Disputes.
10.13.1 Any dispute or claim arising out of or relating to this
Agreement or any termination of Executive's employment, other than a
dispute or claim arising under Sections 4 through 6, shall be settled by
final and binding arbitration in the greater Kansas City metropolitan area
in accordance with the Employment Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
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10.13.2 The fees and expenses of the arbitration panel shall be borne
equally by Executive and Employer, unless the arbitrator orders otherwise.
10.13.3 Either party may elect to have any dispute governed by this
Section 10.13 to be resolved by a panel of three arbitrators, and the party
electing same shall bear any additional costs resulting from such
selection, the provision of Section 10.13.2 notwithstanding.
IN WITNESS WHEREOF, Employer and Executive have duly executed this
Agreement as of the day and year first hereof written.
I ACKNOWLEDGE AND UNDERSTAND THIS AGREEMENT CONTAINS AN ARBITRATION CLAUSE.
EXECUTIVE:
Signature: /s/ Xxxx X. Xxxxx
-------------------------------
Printed Name: Xxxx X. Xxxxx
Address: 000 Xxx Xxxxxxxxxx
Xxxxxx, XX 00000
AMERICAN ITALIAN PASTA COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Printed Name: Xxxxxxx X. Xxxxxxxxx,
Chairman
Address: 0000 X. Xxxxxxxx Xx.
Xxxxx 000
Xxxxxx Xxxx, XX 00000
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