SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): November 16, 1999
AMERICAN ITALIAN PASTA COMPANY
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
001-13403 84-1032638
(Commission File Number) (IRS Employer
Identification No.)
1000 Italian Way, Excelsior Springs, MO 64024
Registrant's telephone number, including area code: (816) 502-6000
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Attached as an exhibit are the following:
The First Amendment to Employment Agreement between the Registrant and
Horst W. Schroeder, which amends the Employment Agreement, dated September
30, 1997, between the Registrant and Mr. Schroeder (attached as Exhibit 10.6
to Registrant's registration statement on Form S-1, as amended (Commission
File No. 333-32827) (the "IPO Registration Statement");
The First Amendment to Employment Agreement between the Registrant and
David E. Watson, which amends the Employment Agreement, dated September 30,
1997, between the Registrant and Mr. Watson (attached as Exhibit 10.7 to the
IPO Registration Statement);
The First Amendment to Employment Agreement between the Registrant and
Norman F. Abreo, which amends the Employment Agreement, dated September 30,
1997, between the Registrant and Mr. Abreo (attached as Exhibit 10.8 to the
IPO Registration Statement);
The Second Amendment to Employment Agreement between the Registrant and
David B. Potter, which amends the Employment Agreement, dated September 30,
1997, between the Registrant and Mr. Potter (attached as Exhibit 10.9 to the
IPO Registration Statement), as amended by the First Amendment to Employment
Agreement, dated January 21, 1999, between the Registrant and Mr. Potter
(attached as Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended January 1, 1999);
The Employment Agreement between the Registrant and Warren B.
Schmidgall; and
A letter agreement dated October 1, 1999, between the Registrant and HWS
& Associates, Inc. of which Horst W. Schroeder is President, regarding
reimbursement of certain costs and expenses.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
None.
(b) Pro Forma Financial Information
None
(c) Exhibits.
10.1 First Amendment to Employment Agreement Between the
Registrant and Horst W. Schroeder dated October 1, 1999.
10.2 First Amendment to Employment Agreement between the
Registrant and David E. Watson dated September 30, 1999.
10.3 First Amendment to Employment Agreement between the
Registrant and Norman F. Abreo dated September 30, 1999.
10.4 Second Amendment to Employment Agreement between the
Registrant and David B. Potter dated October 27, 1999.
10.5 Employment Agreement between the Registrant and Warren B.
Schmidgall dated September 30, 1999.
10.6 Letter Agreement between the Registrant and HWS &
Associates, Inc. dated October 1, 1999.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN ITALIAN PASTA COMPANY
Date: November 16, 1999 By /s/ Warren B. Schmidgall
-------------------------------------
Warren B. Schmidgall,
Senior Vice President and
Chief Financial Officer
<PAGE>
INDEX OF EXHIBITS
-----------------
Exhibit No. Description
- ----------- -----------
10.1 First Amendment to Employment Agreement between the Registrant and
Horst W. Schroeder dated October 1, 1999.
10.2 First Amendment to Employment Agreement between the Registrant and
David E. Watson dated September 30, 1999.
10.3 First Amendment to Employment Agreement between the Registrant and
Norman F. Abreo dated September 30, 1999.
10.4 Second Amendment to Employment Agreement between the Registrant and
David B. Potter dated October 27, 1999.
10.5 Employment Agreement between the Registrant and Warren B. Schmidgall
dated September 30, 1999.
10.6 Letter Agreement between the Registrant and HWS & Associates, Inc.
dated October 1, 1999.
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS AMENDMENT (this "Amendment"), dated October 1, 1999, is by and
between American Italian Pasta Company, a Delaware corporation (the
"Employer"), and Horst W. Schroeder, an individual (the "Employee").
Capitalized terms not defined herein shall have the meaning given them in the
Agreement (as defined below).
WHEREAS, Employer and Employee are parties to an Employment Agreement,
dated as of September 22, 1997 (the "Agreement"); and
WHEREAS, Employer and Employee desire to amend the Agreement to extend
the Term and to make certain other agreed upon amendments as set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises herein and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Amendment of Section 1 of the Agreement. Section 1 of the Agreement
shall be deleted in its entirety and replaced with the following provision:
"1. Term. The Company hereby employs Mr. Schroeder for an initial
term commencing on the Effective Date, and terminating on September 30,
2003 (the "Initial Term"); 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. Effective Date. The parties hereby agree that the Effective Date,
which was not ascertainable at the time the Agreement was executed, is
October 9, 1997, which is the date Employer's initial public offering of its
common stock was consummated and trading of its common stock commenced on the
New York Stock Exchange.
3. Amendment of Section 9.2(a) of the Agreement. Section 9.2(a) of the
Agreement shall be deleted in its entirety and replaced with the following
provision:
"(a) any person or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
acquiring beneficial ownership of more than 50% of Employer's then
outstanding Common Stock or 51% or more of the combined voting power of
the Employer's then outstanding securities entitled generally to vote
for the election of the Employer's Directors;"
4. Agreement Continued in Effect. Except as amended hereby, the
Agreement shall remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
EMPLOYER:
--------
American Italian Pasta Company
By: /s/ T. S. Webster
--------------------------------------
Timothy S. Webster, President
EMPLOYEE:
--------
/s/ Horst W. Schroeder
-----------------------------------------
Horst W. Schroeder
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS AMENDMENT (this "Amendment"), dated September 30, 1999, is by and
between American Italian Pasta Company, a Delaware corporation (the
"Employer"), and David E. Watson, an individual (the "Employee").
Capitalized terms not defined herein shall have the meaning given them in the
Agreement (as defined below).
WHEREAS, Employer and Employee are parties to an Employment Agreement,
dated as of September 22, 1997 (the "Agreement"); and
WHEREAS, Employer and Employee desire to amend the Agreement to extend
the Employment Term and to make certain other agreed upon amendments as set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Amendment of Section 1 of the Agreement. Section 1 of the Agreement
shall be deleted in its entirety and replaced with the following provision:
"1. Term of Employment. Subject to the provisions of Section 7 hereof,
Employee's term of employment by Employer under this Agreement (the
"Initial Employment Term") shall commence on the date Employer's initial
public offering (the "Offering") of its Class A Convertible Preferred
Common Stock, par value $.001 per share (the "Common Stock), is
consummated (the "Effective Date") and terminate on September 30, 2002,
provided, however, that upon completion of the Initial Term, Employee's
employment shall be extended automatically for a period terminating on
the date which is two years after the completion of the Initial Term and
further shall be automatically extended thereafter for successive one-
year periods unless not later than six months prior to the commencement
of any Additional Term (as defined below) Employer shall have given
written notice to the contrary. Each period of time for which
Employee's employment is extended beyond the end of the Initial Term is
referred to herein as an "Additional Term" and the period of time
between the Effective Date and the end of the last Additional Term is
referred to herein as the "Employment Term"."
2. Effective Date. The parties hereby agree that the Effective Date,
which was not ascertainable at the time the Agreement was executed, is
October 9, 1997, which is the date Employer's initial public offering of its
Common Stock was consummated and trading of the Common Stock commenced on the
New York Stock Exchange.
3. Amendment of Section 2.1 of the Agreement. The second sentence of
Section 2.1 of the Agreement shall be deleted in its entirety and replaced
with the following provision:
"Employee's principal duties on behalf of Employer shall be overall
responsibility for logistics, information technology and operations
support (including procurement); 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 10.6 hereof,
result in any modification in, increase or decrease of, Employee's
compensation referred to in Section 3 hereof."
4. Amendment of Section 4.1 of the Agreement. The first sentence of
Section 4.1 of the Agreement shall be deleted in its entirety and replaced
with the following provision:
"4.1 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 eighteen
(18) months after the date that Employee ceases employment with Employer
(such term period hereinafter referred to as the "Noncompetition
Period"), Employee will not, within the United States of America,
directly or indirectly, own, manage, operate, control, be employed by 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 dry pasta for human consumption."
5. Amendment of Section 7.1.1 of the Agreement. The third sentence of
Section 7.1.1 of the Agreement shall be deleted in its entirety and replaced
with the following provision:
"During the Severance Period and for a period of six 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 pursuant to
Section 3.3 above ("Employee Welfare Plans") at the time of such
termination or resignation and which are 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."
6. Amendment of Section 9.2(a) of the Agreement. Section 9.2(a) of the
Agreement shall be deleted in its entirety and replaced with the following
provision:
"(a) any person or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
acquiring beneficial ownership of more than 50% of Employer's then
outstanding Common Stock or 51% or more of the combined voting power of
the Employer's then outstanding securities entitled generally to vote
for the election of the Employer's Directors;"
7. Agreement Continued in Effect. Except as amended hereby, the
Agreement shall remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
EMPLOYER:
--------
AMERICAN ITALIAN PASTA COMPANY
------------------------------
/s/ T. S. Webster
--------------------------------------
Timothy S. Webster, President
EMPLOYEE:
--------
/s/ David E. Watson
-----------------------------------------
David E. Watson
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------------
THIS AMENDMENT (this "Amendment"), dated September 30, 1999, is by and
between American Italian Pasta Company, a Delaware corporation (the
"Employer"), and Norman F. Abreo, an individual (the "Employee").
Capitalized terms not defined herein shall have the meaning given them in the
Agreement (as defined below).
WHEREAS, Employer and Employee are parties to an Employment Agreement,
dated as of September 22, 1997 (the "Agreement"); and
WHEREAS, Employer and Employee desire to amend the Agreement to extend
the Employment Term and to make certain other agreed upon amendments as set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Amendment of Section 1 of the Agreement. Section 1 of the Agreement
shall be deleted in its entirety and replaced with the following provision:
"1. Term of Employment. Subject to the provisions of Section 7 hereof,
Employee's term of employment by Employer under this Agreement (the
"Initial Employment Term") shall commence on the date Employer's initial
public offering (the "Offering") of its Class A Convertible Preferred
Common Stock, par value $.001 per share (the "Common Stock), is
consummated (the "Effective Date") and terminate on September 30, 2002,
provided, however, that upon completion of the Initial Term, Employee's
employment shall be extended automatically for a period terminating on
the date which is two years after the completion of the Initial Term and
further shall be automatically extended thereafter for successive one-
year periods unless not later than six months prior to the commencement
of any Additional Term (as defined below) Employer shall have given
written notice to the contrary. Each period of time for which
Employee's employment is extended beyond the end of the Initial Term is
referred to herein as an "Additional Term" and the period of time
between the Effective Date and the end of the last Additional Term is
referred to herein as the "Employment Term"."
2. Effective Date. The parties hereby agree that the Effective Date,
which was not ascertainable at the time the Agreement was executed, is
October 9, 1997, which is the date Employer's initial public offering of its
Common Stock was consummated and trading of the Common Stock commenced on the
New York Stock Exchange.
3. Amendment of Section 4.1 of the Agreement. The first sentence of
Section 4.1 of the Agreement shall be deleted in its entirety and replaced
with the following provision:
"4.1 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 eighteen
18) months after the date that Employee ceases employment with Employer
(such term period hereinafter referred to as the "Noncompetition
Period"), Employee will not, within the United States of America,
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 dry pasta for human
consumption."
4. Amendment of Section 7.1.1 of the Agreement. The third sentence of
Section 7.1.1 of the Agreement shall be deleted in its entirety and replaced
with the following provision:
"During the Severance Period and for a period of six 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 pursuant to
Section 3.3 above ("Employee Welfare Plans") at the time of such
termination or resignation and which are 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."
5. Amendment of Section 9.2(a) of the Agreement. Section 9.2(a) of the
Agreement shall be deleted in its entirety and replaced with the following
provision:
"(a) any person or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
acquiring beneficial ownership of more than 50% of Employer's then
outstanding Common Stock or 51% or more of the combined voting power of
the Employer's then outstanding securities entitled generally to vote
for the election of the Employer's Directors;"
6. Agreement Continued in Effect. Except as amended hereby, the
Agreement shall remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
EMPLOYER:
--------
AMERICAN ITALIAN PASTA COMPANY
------------------------------
By: /s/ T. S. Webster
--------------------------------------
Timothy S. Webster, President
EMPLOYEE:
--------
/s/ Norman F. Abreo
------------------------------------------
Norman F. Abreo
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
----------------------------------------
THIS AMENDMENT (this "Amendment"), dated October 27, 1999, is by and
between American Italian Pasta Company, a Delaware corporation (the
"Employer"), and David B. Potter, an individual (the "Employee").
Capitalized terms not defined herein shall have the meaning given them in the
Agreement (as defined below).
WHEREAS, Employer and Employee are parties to an Employment Agreement,
dated as of September 22, 1997 (the "Agreement");
WHEREAS, the parties amended the Agreement on January 21, 1999; and
WHEREAS, Employer and Employee desire to further amend the Agreement to
extend the Employment Term and to make certain other agreed upon amendments
as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Amendment of Section 1 of the Agreement. Section 1 of the Agreement
shall be deleted in its entirety and replaced with the following provision:
"1. Term of Employment. Subject to the provisions of Section 7 hereof,
Employee's term of employment by Employer under this Agreement (the
"Initial Employment Term") shall commence on the date Employer's initial
public offering (the "Offering") of its Class A Convertible Preferred
Common Stock, par value $.001 per share (the "Common Stock), is
consummated (the "Effective Date") and terminate on September 30, 2002,
provided, however, that upon completion of the Initial Term, Employee's
employment shall be extended automatically for a period terminating on
the date which is two years after the completion of the Initial Term and
further shall be automatically extended thereafter for successive one-
year periods unless not later than six months prior to the commencement
of any Additional Term (as defined below) Employer shall have given
written notice to the contrary. Each period of time for which
Employee's employment is extended beyond the end of the Initial Term is
referred to herein as an "Additional Term" and the period of time
between the Effective Date and the end of the last Additional Term is
referred to herein as the "Employment Term"."
2. Effective Date. The parties hereby agree that the Effective Date,
which was not ascertainable at the time the Agreement was executed, is
October 9, 1997, which is the date Employer's initial public offering of its
Common Stock was consummated and trading of the Common Stock commenced on the
New York Stock Exchange.
3. Amendment of Section 4.1 of the Agreement. The first sentence of
Section 4.1 of the Agreement shall be deleted in its entirety and replaced
with the following provision:
"4.1 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 eighteen (18) months after the date that Employee ceases employment
with Employer (such term period hereinafter referred to as the
"Noncompetition Period"), Employee will not, within the United States of
America, 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
dry pasta for human consumption."
4. Amendment of Section 7.1.1 of the Agreement. The third sentence of
Section 7.1.1 of the Agreement shall be deleted in its entirety and replaced
with the following provision:
"During the Severance Period and for a period of six 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 pursuant to
Section 3.3 above ("Employee Welfare Plans") at the time of such
termination or resignation and which are 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."
5. Amendment of Section 9.2(a) of the Agreement. Section 9.2(a) of the
Agreement shall be deleted in its entirety and replaced with the following
provision:
"(a) any person or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
acquiring beneficial ownership of more than 50% of Employer's then
outstanding Common Stock or 51% or more of the combined voting power of
the Employer's then outstanding securities entitled generally to
vote for the election of the Employer's Directors;"
6. Agreement Continued in Effect. Except as amended hereby, the
Agreement shall remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
EMPLOYER:
--------
AMERICAN ITALIAN PASTA COMPANY
------------------------------
By: /s/ T. S. Webster
--------------------------------------
Timothy S. Webster, President
EMPLOYEE:
--------
/s/ David B. Potter
------------------------------------------
David B. Potter
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated September 30, 1999,
is by and between AMERICAN ITALIAN PASTA COMPANY, a Delaware corporation
(hereinafter referred to as "Employer"), and WARREN B. SCHMIDGALL, 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.
WITNESSETH:
----------
WHEREAS, Employer is engaged in the business of durum wheat milling and
pasta production/marketing and maintains its principal place of business at
1000 Italian Way, Excelsior Springs, Missouri 64024; and
WHEREAS, in connection with such business, Employer desires to continue
to employ Employee in the capacity of Senior Vice President and Chief
Financial Officer; and
WHEREAS, Employee desires to continue to be employed by Employer in the
aforesaid capacity.
NOW, THEREFORE, in consideration of the premises 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. Subject to the provisions of Section 7 hereof,
the term of Employee's employment under this Agreement (the "Initial
Employment Term") will commence as of the date hereof (the "Effective Date")
and terminate on September 30, 2002, provided, however, that the term of
Employee's employment shall be extended automatically for successive one-year
periods unless, not later than six months prior to such automatic extension,
Employer shall have given written notice to the contrary (each an "Additional
Term"). The period of time between the Effective Date and the termination of
the Initial Employment Term or the last Additional Term, if any, is referred
to herein as the "Employment Term."
2. Duties of Employee.
------------------
2.1 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 Employer 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 overall
responsibility for Employer's financial and administrative functions,
corporate development, strategic planning and investor relations; 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 10.6 hereof, result in any modification in, increase or decrease of,
Employee's compensation referred to in Section 3 hereof.
2.2 Employee 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, to the reasonable satisfaction of Employer.
2.3 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
three (3) weeks vacation 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 Employee.
3. Compensation. 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") equal to One Hundred Eighty
Thousand Dollars ($180,000). Such Base Salary shall be subject to merit
increase reviews, in the sole discretion of the Board, at least annually by
Employer. Such salary shall be paid in equal bi-weekly installments.
3.1 Bonuses. During the term of this Agreement, Employee will be
eligible to participate in, and bonuses may be awarded to Employee at the
discretion of the Board of Directors in accordance with the terms of
Employer's 1998 Salaried Bonus Plan (the "Bonus Plan") attached hereto as
Exhibit A, as the same may be amended, modified or terminated from time to
time.
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 Automobile Allowance. Employee shall be entitled to an annual
automobile allowance of Five Thousand Dollars ($5,000), payable in bi-weekly
installments, to reimburse him for the expenses incurred by him in
maintaining and operating an automobile used by him in connection with the
performance of his duties hereunder.
3.4 Benefits. 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, adopted and maintained from time to time by Employer, including,
without limitation, the following: 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.
4. Non-Competition.
---------------
4.1 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 eighteen
(18) months after the date that Employee ceases employment with Employer
(such period hereinafter referred to as the "Noncompetition Period"),
Employee will not, within the United States of America, 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 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 4.1 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 4.1, Employer shall cease to have any
obligations to make payments to Employee under this Agreement.
4.2 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 4.1 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
4.1 above, 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 In addition to any payments Employer is required to make
pursuant to Section 7 hereof, Employer and Employee hereby agree that
Employer may, in its sole discretion, continue to pay to Employee his Base
Salary during the Noncompetition Period. During such period of continued
payment, if any, Employee agrees to be available, consistent with other
responsibilities that he may then have, to answer questions and provide
advice to Employer.
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 3.3 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, however, that the foregoing shall not apply to
information which is not 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 and diaries. 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 of Employment
-------------------------
7.1 Termination without Cause; Resignation for Good Reason.
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7.1.1 General. Subject to the provisions of Sections 7.1.2
and 7.1.3, if Employee's employment is terminated by Employer without Cause,
as defined in Section 7.3, or if Employee resigns from his employment for
Good Reason, as defined in Section 7.4, Employer shall pay Employee his
accrued unpaid Base Salary to the date of termination or resignation and any
bonus earned but not paid and shall continue to pay Employee his annual Base
Salary as of the date of termination or resignation plus his bonus, if any,
for the year in which such termination or resignation occurs (calculated as
if the Norm Bonus for that year is earned) for a period of one (1) year
following the date of termination or resignation (such period, as applicable,
being referred to hereinafter as the "Severance Period"). The Base Salary
shall be payable in bi-weekly payments during the Severance Period and the
bonus shall be payable at the conclusion of the Severance Period. 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 pursuant to Section 3.4 above ("Employee Welfare
Plans") at the time of such termination or resignation and which are 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 Plan by its
terms or applicable law, Employer will provide Employee with benefits that
are reasonably equivalent to those which Employee would have received under
such plan had Employee been eligible to participate therein. 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 terminate its dental insurance plan
prior to or during the Severance Period, then Employer would have no
obligation to maintain such plan or provide to Employee individual dental
insurance in order to satisfy its obligations under this Section 7.1.1.
7.1.2 Mitigation. Employee will not be required to mitigate
the amount of any payment provided for in Section 7.1.1 by seeking other
employment, and the amount of any such payment will not be reduced by any
compensation earned by Employee as the result of his employment by another
employer subsequent to termination of Employee's employment with Employer.
7.1.3 Death During Severance Period. In the event of
Employee's death during the Severance Period, the Severance Period shall
immediately cease, Employer shall not be obligated to make any further
payments pursuant to this Section 7, and the provisions of Section 8.1 shall
apply as though Employee's death had occurred immediately prior to
termination of Employee's employment hereunder.
7.1.4 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.
7.2 Termination for Cause; Resignation Without Good Reason.
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7.2.1 General. If Employee's employment hereunder is
terminated by Employer for Cause, or if Employee resigns from his employment
hereunder other than for Good Reason (a "Voluntary Termination"), Employee
shall be entitled only to payment of his 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
resignation of employment other than for Good Reason.
7.2.2 Date of Termination. Subject to Section 7.3, the date
of termination for Cause shall be the date of receipt by Employee of a
written Notice of Termination provided for in Section 7.2.3. The date of
resignation without Good Reason shall be the date specified in the written
notice of resignation from Employee to Employer, or if no date is specified
therein, 10 business days after receipt by Employer of written notice or
resignation from Employee.
7.3 Cause. Termination for "Cause" means termination of
Employee's employment because of (i) any willful and continued failure
substantially to perform his duties hereunder (other than as a result of
Permanent Disability, as defined below), (ii) Employee's failure to comply
with any of the material terms of this Agreement, (iii) an act or acts on
Employee's part constituting a felony under the laws of the United States or
any state thereof, (iv) breach by Employee of any of the covenants contained
in Sections 4 or 5 of this Agreement, or (v) 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 of
affiliates; provided, however, that if any such Cause relates to Employee's
obligations under this Agreement and (x) is susceptible to cure, and (y) does
not constitute a repetition of such Cause, Employer shall not terminate
Employee's employment hereunder unless Employer first gives Employee a Notice
of Termination, and Employee has not, within 15 business days following
receipt of the notice, cured such Cause, or in the event such Cause is not
susceptible to cure within such 15 business day period, Employee has not
taken all reasonable steps within such 15 business day period to cure such
Cause as promptly as practicable thereafter. For purposes of this Section
7.3, 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.
7.4 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 under this Agreement, which failure is uncorrected for a
period of 15 days following receipt by Employer of written notice thereof
from Employee; (ii) a material diminution in Employee's position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by Employer promptly after receipt of written notice thereof given
by Employee; provided, however, that a mere change of Employee's title shall
not constitute Good Reason so long as Employee continues to perform duties,
functions and responsibilities substantially equivalent to those performed by
him prior to such change of title; (iii) relocation of Employee's primary
workplace to a location outside of the United States of America; and (iv)
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. It is expressly understood and agreed by the parties hereto that
Employer's failure to deliver a notification extending the Initial Employment
Term as referred to in Section 1 of this Agreement shall constitute a
termination without Cause.
7.5 Stock Options. Employer has awarded to Employee options to
acquire shares of Employer's Class A Convertible Common Stock, par value
$.001 per share (the "Common Stock"), under a stock option agreement by and
between Employer and Employee dated October 26, 1998 (the "Option Agreement")
under the American Italian Pasta Company 1997 Equity Incentive Plan (the
"1997 Plan"). Notwithstanding anything to the contrary herein or in the
Plan, all of the stock options awarded to Employee under the Option Agreement
and subsequent stock option grants immediately vest (i) upon a termination by
Employee for Good Reason, or (ii) upon a Change of Control (as defined
below), at and to the extent of Employee's choice.
8. Death or Permanent Disability.
8.1 Death. If Employee's employment hereunder is terminated by
death, Employer shall, within 90 days of the date of death, make (i) a lump
sum payment to Employee's estate (or other beneficiary designated by him in
writing) equal to all Base Salary and bonuses, if any, earned and accrued
through the date of death, and (ii) any other benefits payable under any
then-current life insurance policy provided to Employee pursuant to Section
3.3 hereof payable in accordance with the terms of such policy. Thereafter,
Employer shall have no further obligation to Employee under the Agreement.
8.2 Permanent Disability. In the event Employee shall become
physically or mentally disabled while employed by Employer under this
Agreement so that Employee is 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),
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 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 received 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.
9. Change of Control.
-----------------
9.1 Notwithstanding anything to the contrary contained herein, if
Employer terminates Employee without Cause upon or within six months
following a Change of Control (as defined below), Employer shall pay Employee
his accrued unpaid Base Salary to the date of termination and any bonus
earned but not paid and shall continue to pay Employee of (i): his annual
Base Salary as of the date such termination occurs (calculated as if the Norm
Bonus for that year is earned) for a period of one (1) year following the
date of termination as severance pay (such period, as applicable, being
referred to hereinafter as the "Change of Control Severance Period"). Any
severance payable pursuant to this Section 9.1 will be in substitution for
and not in addition to any severance that might be payable pursuant to
Article 7 hereof. To the extent Employer makes payments pursuant to this
Section 9.1, it will have no additional obligations under Article 7. The
Base Salary shall be payable in bi-weekly payments during the Change of
Control Severance Period and the bonus shall be paid at the conclusion of the
Change of Control Severance Period.
9.2 For purposes of this Agreement, "Change of Control" means any
one of the following:
(a) any person or group (as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
acquiring beneficial ownership of more than 50% of Employer's then
outstanding Common Stock or 51% or more of the combined voting power of the
Employer's then outstanding securities entitled generally to vote for the
election of the Employer's Directors;
(b) 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 Employer, unless, in the case of a
merger or consolidation, (x) the Directors in office immediately prior to
such merger or consolidation 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
66 2/3% 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
(c) Continuing Directors (as defined below) no longer
constitute at least a majority of the Board or a similar body of any
successor to the Employer. For purposes of this Agreement, "Continuing
Directors" means any individual who either (i) is a member of the Employer's
Board of Directors on the Effective Date, (ii) who becomes a director after
the Effective Date whose election or nomination for election by Employer'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
Employer 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 Employer's Amended and Restated
Shareholders' Agreement dated as of October 4, 1997, as amended.
9.3 Excess Parachute Payments. 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 Internal
Revenue Code of 1986, as amended (the "Code"), so as to result in the loss of
a deduction to the Employer under Code Section 280G or in the imposition of
an excise tax on the 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 the Employer and no such excise tax will be
imposed on the Employee. The 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 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.
10.2 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.
10.3 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.
10.4 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 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.
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 the Employer's
Stock Option Plans, 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
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 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 Employee shall not operate or be construed as
a waiver of any subsequent breach by Employee.
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 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 above written.
EMPLOYER:
--------
AMERICAN ITALIAN PASTA COMPANY
------------------------------
a Delaware Corporation
1000 Italian Way
Excelsior Springs, Missouri 64024
By: /s/ T. S. Webster
--------------------------------------
Timothy S. Webster, President and
Chief Executive Officer
EMPLOYEE:
--------
/s/ Warren B. Schmidgall
------------------------------------------
Warren B. Schmidgall
Address:
------------------------------------------
------------------------------------------
------------------------------------------
October 1, 1999
Mr. Horst W. Schroeder
HWS & Associates, Inc.
1040 William Hilton Parkway
Post Office Drawer 8027
Hilton Head, South Carolina 29938
Dear Horst:
This letter will confirm the agreement between AIPC and HWS &
Associates, Inc. ("HWS") for AIPC to reimburse HWS for certain costs and
expenses incurred by HWS in connection with supporting your activities as an
employee and chairman of the board of AIPC, as well as, from time to time,
supporting the activities of me and other AIPC employees. Specifically, we
have agreed that on a quarterly basis, commencing October 1, 1999 and
continuing during the term of your employment with AIPC, you will invoice
AIPC in advance for reimbursement of certain expenses including office rent
and office equipment, telephone, facsimile, Federal Express, the salary and
other employee benefits of a person to serve as your administrative assistant
in assisting you on AIPC matters, and other office costs. We have agreed
that HWS will be reimbursed for the expenses in the amount of $18,750 per
quarter.
I think this sets forth our agreement, Horst. If you agree, please sign
the enclosed copy of this letter at the space provided below and return it to
me at your convenience.
Sincerely,
/s/ T.S. Webster
Timothy S. Webster
President and Chief Executive Officer
Agreed:
- ------
HWS & Associates, Inc.
/s/ Horst W. Schroeder
- ------------------------------------
Horst W. Schroeder, President
