EXHIBIT 10.1

 
AMERICAN ITALIAN PASTA COMPANY, INC.
AMENDED AND RESTATED SEVERANCE PLAN
FOR SENIOR VICE PRESIDENTS AND ABOVE
Effective October 30, 2009
 

 
I.
TERMINATION OTHER THAN IN THE CONTEXT OF A CHANGE IN CONTROL

 
Except as provided in Section II, below, if the employment of a Senior Vice
President or above (“Executive”) is terminated by American Italian Pasta
Company, Inc., its subsidiaries, affiliates, successors or assigns (“the
Company”) other than for Cause, or if the Executive terminates employment for
Good Reason, and in either case, if the Executive executes, within 30 days
following the termination (or, in the case of a termination for Good Reason,
within 30 days after expiration of the Company’s right to cure by reversing the
act that resulted in Good Reason, as described in the definition of “Good
Reason” in Section III below), a Separation Agreement in the form required by
the Company (which shall be in a form substantially identical to that attached
hereto as Appendix A) that includes, among other things, a full and general
release of claims in favor of the Company, a confidentiality agreement, a
non-solicitation and non-competition agreement, a non-disparagement agreement
and a cooperation agreement (the “Separation Agreement”), then the Executive
will receive the following:
 
 
1.
Severance Pay.  A continuation of his or her base salary at the rate in effect
on the date of termination (“Base Salary”), paid in equal bi-weekly
installments, for the number of weeks applicable to him or her as set forth in
Exhibit A, except that any amount not paid by the Short-Term Deferral Deadline
shall be paid on or before the Short-Term Deferral Deadline.  The applicable
number of weeks under Exhibit A is the “Severance Period.”

 
 
2.
Welfare Benefits.

 
 
a.
Eligibility during the Severance Period for participation in the Company’s
medical, dental, and vision group health plans that are provided to active
employees from time to time following the termination date.  For the portion of
the Severance Period that does not exceed one week for every year of Executive’s
service with the Company (the “Health Plan Subsidy Period”), Executive must pay
the same amount that is paid by active Executives from time to time for the same
type and level of coverage,

 

 

 
 

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subject to certain other limits as set forth herein1.  The Health Plan Subsidy
Period may not exceed 26 weeks.  The Company will increase or decrease the
Executive’s portion of the Plan cost during the Severance Period at the same
times and on the same terms that such changes apply to then current employees,
and the Company need not continue to provide a benefit to Executive if it has
terminated that benefit with respect to active employees.  For the portion of
the Severance Period in excess of the Health Plan Subsidy Period, the Executive
will be responsible for payment of one hundred percent of the cost of coverage
to the Company on an after-tax basis.  If Executive participates in any such
plans during the Severance Period, his/her rights under COBRA will commence at
the end of the Severance Period.
 
 
b.
An amount equal to the bi-weekly Company subsidy for active employees for the
level of medical, dental and vision coverage, if any, that was in effect for the
Executive at the time of termination of employment shall be paid to Executive
during the portion of the Severance Period in Paragraph 1 that exceeds the
Health Plan Subsidy Period.  A “Tax Gross Up” will be added to this
payment.  The Tax Gross Up will be based on assumed federal, state and local
taxes of 32% and will not be based on actual tax rates.  This payment will
change as the subsidy for such coverage level changes for active employees
before the Short-Term Deferral Deadline, but will not change if the Executive’s
level of coverage changes or is terminated.

 
 
c.
Any cash payment to be made to the Executive under this Paragraph 2 shall be
made in equal bi-weekly installments, except that any amount not paid by the
Short-Term Deferral Deadline shall be paid on or before the Short-Term Deferral
Deadline.

 
II.           TERMINATION IN THE CONTEXT OF A CHANGE IN CONTROL
 
If an Executive is involuntarily terminated by the Company other than for Cause
or if the Executive terminates employment for Good Reason either (1) within 18
months following a Change in Control or (2) prior to a Change in Control, if (i)
the termination occurs after a public announcement by the Company of a potential
Change in Control; (ii) the termination occurs no more than 60 days prior to
consummation of the Change in Control; (iii) the Executive executes, within 30
days following the termination (or, in the case of a termination for Good
Reason,
 

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1 Notwithstanding anything herein to the contrary, in the event an Executive
becomes eligible during the Severance Period defined in Paragraph 1 for
participation in the Company’s medical, dental and vision group health plans in
accordance with Paragraph 2(a) due to an involuntary termination that is not
part of a reduction in force, Company reorganization or restructuring or change
in the Company’s operating requirements, then the Executive, to the extent he or
she is a “highly compensated individual” as defined for purposes Internal
Revenue Code Section 105(h), will be responsible for payment of one hundred
percent of the cost of coverage on an after-tax basis during the entire
Severance Period (not just during the portion of the Severance Period that
exceeds the Health Plan Subsidy Period) and the amount equal to the bi-weekly
Company subsidy for active employees for the level of medical, dental and vision
coverage, if any, that was in effect for the Executive at the time of
termination of employment plus the Tax Gross Up shall be paid for the entire
Severance Period (not just during the portion of the Severance Period in excess
of the Health Plan Subsidy Period), subject to Paragraph 2(c).
 

 
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within 30 days after expiration of the Company’s right to cure by reversing the
act that resulted in Good Reason, as described in the definition of “Good
Reason” in Section III below), a Separation Agreement; and (iv) the Change in
Control is consummated, then the Executive will receive the following (in each
case reduced or offset by any amounts or benefits previously received under
Section I):
 
 
1.
Severance Pay.  A lump sum payment of an amount equal to the sum of the
Executive’s Base Salary at the time of termination plus the average of the
Executive’s annual incentive payout, excluding supplemental one-time bonuses and
awards, for the three complete fiscal years prior to the Change in Control (the
“Change in Control Severance Amount”) multiplied by the following applicable
amount:

 
Chief Executive Officer (“CEO”) - Three times Change in Control Severance Amount
 
Executive Vice President (“EVP”) - Two times Change in Control Severance Amount
 
Senior Vice President (“SVP”) - One and one-half times Change in Control
Severance Amount
 
 
The multiplier above expressed in years is referred to as the “Change in Control
Severance Period.”  Such lump sum shall be paid within 14 days following the
date the Executive becomes entitled thereto, but in no event later than the
Short-Term Deferral Deadline.

 
 
2.
Equity Acceleration.  Any unvested restricted stock, stock appreciation rights,
stock options or other grants of equity-related awards will be accelerated and
fully vested.  The terms of this paragraph have been approved by the
Compensation Committee of the Company’s Board of Directors and constitute an
amendment of the award agreement related to any grant to which this provision
may apply.  In addition, this paragraph shall be deemed to delete the following
language in Section 13(a) “and Section 12.2 of the Plan shall not apply to this
SAR or this Award Agreement,” and all of Section 13(c) of any Stock Appreciation
Right Award Agreement with respect to the impact of a Section 12.2 Event (as
defined in the Company’s 2000 Equity Incentive Plan (the “Equity Plan”)) and the
provisions of the Equity Plan shall apply to any Section 12.2 Event.

 
 
3.
Welfare Benefits.

 
 
a.
Eligibility during the Change in Control Severance Period for participation in
the Company’s medical, dental, and vision group health plans that are provided
to active employees from time to time following the termination date.  For the
portion of the Change in Control Severance Period that does not exceed one week
for every year of Executive’s service with the Company (the “Health Plan Subsidy
Period”), Executive must pay the same amount that is paid by active Executives
from time to time for the

 

 

 
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same type and level of coverage, subject to certain other limits, as set forth
herein2.  The Health Plan Subsidy Period may not exceed 26 weeks.  The Company
will increase or decrease the Executive’s portion of the Plan cost during the
Change in Control Severance Period at the same times and on the same terms that
such changes apply to then current employees, and the Company need not continue
to provide a benefit to Executive if it has terminated that benefit with respect
to active employees; provided, however, that if the Company ceases providing a
benefit with respect to active employees, or continues to provide that benefit
to a number of employees that is less than 50 percent of the number of employees
offered that benefit on the date that is 30 days prior to the date of the Change
in Control, Executive shall be permitted to choose to continue coverage for that
benefit under any plan the Executive chooses from among all plans covering any
employees of any organization that would be aggregated with the Company (or any
successor organization) under Sections 414(b) or (c) of the Internal Revenue
Code, and to pay the same amount for such coverage as is paid under that plan by
active employees.  For the portion of the Change in Control Severance Period in
excess of the Health Plan Subsidy Period, the Executive will be responsible for
payment of one hundred percent of the cost of coverage to the Company on an
after-tax basis.  If Executive participates in any such plans during the Change
in Control Severance Period, his/her rights under COBRA will commence at the end
of the Change in Control Severance Period.
 
 
b.
An amount equal to the bi-weekly Company subsidy for active employees for the
level of medical, dental and vision coverage, if any, that was in effect for the
Executive at the time of termination of employment shall be paid to Executive
during the portion of the Change in Control Severance Period that exceeds the
Health Plan Subsidy Period.  A “Tax Gross Up” will be added to this
payment.  The Tax Gross Up will be based on assumed federal, state and local
taxes of 32% and will not be based on actual tax rates.  This payment will
change as the subsidy for such coverage level changes for active employees
before the Short-Term Deferral Deadline, but will not change if the Executive’s
level of coverage changes or is terminated.

 

 

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2 Notwithstanding anything herein to the contrary, in the event an Executive
becomes eligible during the Change in Control Severance Period defined in
Paragraph 1 for participation in the Company’s medical, dental and vision group
health plans in accordance with Paragraph 3(a) due to an involuntary termination
that is not part of a reduction in force, Company reorganization or
restructuring or change in the Company’s operating requirements, then the
Executive, to the extent he or she is a “highly compensated individual” as
defined for purposes Internal Revenue Code Section 105(h), will be responsible
for payment of one hundred percent of the cost of coverage on an after-tax basis
during the entire Change in Control Severance Period (not just during the
portion of the Change in Control Severance Period that exceeds the Health Plan
Subsidy Period) and the amount equal to the bi-weekly Company subsidy for active
employees for the level of medical, dental and vision coverage, if any, that was
in effect for the Executive at the time of termination of employment plus the
Tax Gross Up shall be paid for the entire Change in Control Severance Period
(not just during the portion of the Change in Control Severance Period in excess
of the Health Plan Subsidy Period), subject to Paragraph 3(c).
 

 
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c.
Any cash payment to be made to the Executive under this Paragraph 3 shall be
made in equal bi-weekly installments, except that any amount not paid by the
Short-Term Deferral Deadline shall be paid on or before the Short-Term Deferral
Deadline.

 
 
4.
Equity Value Payment.

 
 
a.
In the event that on the date of an Executive’s termination that causes the
Executive to be eligible for benefits under this Plan, the Unvested Value of all
of such Executive’s restricted stock, stock appreciation rights, stock options
or other equity-based awards that had been granted to the Executive prior to the
date of the Change in Control and was not vested as of the Change in Control,
including Disposed Shares (as defined below), (collectively the “Existing
Equity”) is less than the Unvested Value of such Existing Equity on the date of
the Change in Control, the Executive shall receive a cash payment equal to the
difference.  Such payment shall be made within 14 days following the date the
Employee executes a Separation Agreement as provided herein.

 
 
b.
“Unvested Value” shall mean (i) for Existing Equity which is unvested restricted
stock or similar awards, (A) if being measured at the time of the Change in
Control, the Fair Market Value (as defined below) on the date of the Change in
Control (determined as if the shares were fully vested and not subject to
forfeiture), adjusted for the consideration to be received in the Change in
Control in the same manner that the stock of AIPC stockholders generally is
adjusted, if applicable (the “Adjusted Fair Market Value”), or, (B) if being
measured on the date of the Executive’s termination, the Fair Market Value of
the Existing Equity which is unvested restricted stock of the successor company
in the Change in Control on the date of termination (determined as if the shares
were fully vested and not subject to forfeiture); and (ii) for Existing Equity
which is stock options, stock appreciation rights or similar awards, (A) if
being measured at the time of the Change in Control, the difference between the
exercise price of such award immediately following the Change in Control and the
Adjusted Fair Market Value on the date of the Change in Control multiplied by
the number of shares of stock for which such award could have been exercised
immediately following the Change in Control if such Existing Equity had been
fully vested and exercisable, or, (B) if being measured on the date of the
Executive’s termination, the difference between the exercise price of such award
upon termination and the Fair Market Value of the stock of the successor company
in the Change in Control for which such award may be exercised on the
termination date multiplied by the number of shares of the stock for which such
award may be exercised.

 
Examples:  If (1) the Executive had 100 shares of unvested Company restricted
stock on the date of the Change of Control, (2) the stockholders
 

 
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of the Company received 0.5 shares of the successor in the Change of Control for
each share of Company common stock, and (3) the Fair Market Value of the Company
stock as of the Change in Control was $20 and the Fair Market Value of the
successor stock as of the Change in Control was $40, then the Unvested Value at
the Change in Control would be $2,000 (100 shares x 0.5 x $40).  If the Fair
Market Value of the successor stock on the termination date was $25, then the
Unvested Value on the date of termination would be $1,250 (50 adjusted shares
received x $25) and the Executive would receive a cash payment of $750 ($2,000 -
1,250 = $750).
 
If, (1) at the time of the Change in Control, the Executive had an unvested
stock appreciation right with respect to 100 shares of Company stock and the
exercise price was $10, (2) the stockholders of the Company received 0.5 shares
of the successor in the Change in Control for each share of Company common
stock, and (3) the Fair Market Value of the Company Stock at the time of the
Change in Control was $20 and the Fair Market Value of the successor stock at
the time of the Change in Control was $40, then the Unvested Value at the time
of the Change in Control would be $1000 ($20 (FMV of Company stock) - $10
(exercise price) x 100 shares = $1,000 ÷ $20 (FMV of Company stock) = 50 (number
of shares of Company stock that would have been received if the SAR was
exercised) x 0.5 (Change in Control exchange ratio) = 25 adjusted shares x $40
(FMV of the successor equity) = $1,000).  If the Fair Market Value of the
successor stock on the termination date was $25, then the Unvested Value on the
termination date would be $250 ($25 (FMV of successor stock) - $20 (adjusted
exercise price) x 50 (adjusted number of SARs) ÷ $25 (FMV of successor stock) =
10 shares of successor company (received when SAR is exercised) x $25 (FMV of
successor stock) = $250 (value at time of termination)) and the Executive would
receive a cash payment of $750 ($1,000 - 250 = $750).

 
c.
Fair Market Value shall mean (1) the closing sales price of the equity on any
national securities exchange on which the equity is listed or on any over the
counter market, or if no such price is reported on that date, the immediately
preceding trading date, or (2) if there is no regular public trading market for
the equity, the fair market value as determined by the Board of Directors of the
relevant company, in good faith using standard methods of valuation.

 
 
d.
If, prior to receiving any payment pursuant to this paragraph, the Executive has
sold any Existing Equity which is restricted stock which vested prior to a
termination (and after the date of the Change in Control), or exercised Existing
Equity which is a stock option or stock appreciation right which vested prior to
a termination (and after the date of the Change in Control) and sold the shares
received upon exercise or used shares as payment for taxes upon any such event
(such shares sold or used to pay

 

 

 
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taxes shall be the “Disposed Shares”), the difference between the Fair Market
Value of the Disposed Shares on the date of sale or payment of taxes and the
Fair Market Value of the Disposed Shares on the date of the Change in Control,
if that number is positive, times the number of Disposed Shares, shall be
deducted from any payment owed pursuant to this paragraph 4.
 
For example, if the Executive sold 10 shares at $11 prior to termination, and
the Fair Market Value on the date of the Change in Control was $8, $30 (11 - 8 x
10) would be deducted from any payment made pursuant to this paragraph 4. If the
shares were sold at $7, there would be no deduction.
 
 
e.
If the Unvested Value on the termination date is greater than the Unvested Value
on the date of the Change in Control, no payment under this paragraph will be
made, and all Existing Equity will be reduced proportionately so that the
Executive will be entitled to receive only that number of aggregate shares of
restricted stock or stock upon an exercise of an option or stock appreciation
right so that the Unvested Value as of the termination date, after such
adjustment, is equal to the Unvested Value on the date of the Change in
Control.  If this would result in a fractional share, such fractional share will
be paid in cash. The Executive will be reimbursed for any taxes that have been
paid on restricted stock vested since the date of the Change in Control which
are forfeited pursuant to the above.  In no event shall any reduction be for
more than the Existing Equity still owned or held by the Executive on the date
of termination.

 
 
5.
Excise Tax  If any payment by the Company or the receipt of any benefit from the
Company (whether or not pursuant to this Plan) is an "excess parachute payment"
as such term is described in Section 280G of the Internal Revenue Code so as to
result in the loss of a deduction to the Company under Internal Revenue Code
Section 280G or in the imposition of an excise tax on the Executive under
Internal Revenue 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 under this Plan
shall be reduced so that the amount of all payments and benefits due that are
"parachute payments" within the meaning of Internal Revenue Code Section 280G
(whether or not pursuant to this Plan) are equal to one-dollar ($1) less than
the maximum amount allowed under the Internal Revenue Code that would avoid the
existence of an "Excess Parachute Payment," whichever of the (i) or (ii) amount
results in the greater after-tax payment to the Executive.

 
III.           DEFINITIONS.
 
Terminate for “Cause” means termination of Executive’s employment because, in
the Company’s good faith belief, (i) Executive willfully and continually failed
substantially to perform Executive’s duties (i.e. due to the Executive's failure
to perform job functions at an
 

 
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appropriate level), (ii) Executive 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
Executive is assigned (including any subdivision thereof), including, but not
limited to, Executive’s conviction for or plea of guilty or no contest (“nolo
contendere”) to any such misdemeanor or felony, (iii) Executive committed an act
or acts in material violation of the Company’s significant policies and/or
practices applicable to employees at the level of Executive within the Company’s
organization, (iv) Executive willfully acted, or willfully failed to act, in a
manner that was injurious to the financial condition or business reputation of
the Company or any of its subsidiaries or affiliates, (v) Executive acted in a
manner that is unbecoming of Executive’s position with the Company, regardless
of whether such action or inaction occurs in the course of the performance of
Executive’s duties with the Company, or (vi) Executive was subject to any fine,
censure, or sanction of any kind, permanent or temporary, issued by the
Securities and Exchange Commission or the New York Stock Exchange or any other
stock exchange.
 
A “Change in Control” shall be deemed to have occurred upon any of the following
events; provided, however, that the Board of Directors shall at all times prior
to the occurrence of any particular event described below have the authority to
decide, in its sole discretion, that such event shall be deemed not to
constitute a Change in Control for purposes hereof:
 
(i) individuals who, on the Effective Date, constitute the Board of Directors of
the Company (the “Incumbent Directors”) cease for any reason to constitute at
least a majority of such Board; provided, however, that any person becoming a
director after the Effective Date and whose appointment, election or nomination
for election was approved by a vote of at least a majority of the Incumbent
Directors then on the Board shall be an Incumbent Director; provided, further,
that in no event shall an individual initially appointed, elected or nominated
as a director of the Company as a result of an actual or threatened election
contest with respect to the election or removal of directors (“Election
Contest”) or other actual or threatened solicitation of proxies or consents by
or on behalf of any person other than the Board (“Proxy Contest”), including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest, be deemed an Incumbent Director; or
 
(ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) becomes a “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of either (A) 50% or more of the then-outstanding shares of common stock of the
Company (“Company Common Stock”) or (B) securities of the Company representing
50% or more of the combined voting power of the Company’s then outstanding
securities eligible to vote for the election of directors (the “Company Voting
Securities”); provided, however, that for purposes of this subsection (ii), the
following acquisitions of Company Common Stock or Company Voting Securities
shall not constitute a Change in Control: (w) an acquisition directly from the
Company, (x) an acquisition by the Company or a Subsidiary of the Company, (y)
an acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary of the Company, or (z) an
acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection
(iii) below); or
 

 
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(iii) the consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company or
a Subsidiary (a “Reorganization”), or the sale or other disposition of all or
substantially all of the Company’s assets (a “Sale”) or the acquisition of
assets or stock of another corporation or other entity (an “Acquisition”),
unless immediately following such Reorganization, Sale or Acquisition, all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such Reorganization, Sale or
Acquisition beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Reorganization, Sale or Acquisition (including, without
limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets or stock either directly or
through one or more subsidiaries, (the “Surviving Entity”) in substantially the
same proportions as their ownerships, immediately prior to such Reorganization,
Sale or Acquisition, of the outstanding Company Common Stock and the outstanding
Company Voting Securities, as the case may be (any Reorganization, Sale or
Acquisition which satisfies such criterion shall be deemed to be a
“Non-Qualifying Transaction”); or
 
(iv) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
 
"Effective Date” shall mean October 30, 2009.
 
“Good Reason” shall mean any of the following acts by the Company, without the
prior written consent of the Executive:  (i) a material reduction by the Company
in the Executive’s base salary, annual cash incentive opportunity and annual
long-term equity-based incentive opportunity, taken as a whole, provided that
for purposes of determining whether there has been a material reduction: (a) a
reduction applied generally to all exempt employees of the Company that occurs
prior to a Change in Control shall not constitute "Good Reason", and (b) “annual
cash incentive opportunity” and “annual long-term equity-based incentive
opportunity” shall not include supplemental one-time bonuses and awards;
(ii) (a) a material reduction in the Executive’s position, duties or
responsibilities, (b) assignments to duties materially inconsistent with
Executive’s position, or (c) a material adverse change in the Executive’s
reporting relationships; (iii) the Company requiring the Executive, without his
or her consent, to be based at any office or location more than 50 miles from
the office at which the Executive was principally located immediately prior to a
Change in Control; or (iv) the material breach by the Company of any employment
agreement between the Executive and the Company.  Notwithstanding anything in
this definition to the contrary, an act by the Company shall not constitute
“Good Reason” unless the Executive gives written notice of the same to the
Company within 30 days of such act, and the Company fails, within 30 days of
such notice, to reverse such act.
 
“Short-Term Deferral Deadline” shall mean the fifteenth day of the third month
following the later of (i) the last day of the Executive’s taxable year during
which the termination occurred, or (ii) the last day of the Company’s fiscal
year during which the termination occurred.
 

 
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IV.           MITIGATION.
 
Benefits based on medical, dental or vision group health coverage as described
in Section I, paragraph 2 and Section II, paragraph 3 shall cease with respect
to the same type of coverage on the date the Executive is hired by another
employer that offers the Executive such coverage (i.e., medical, dental or
vision) and the Executive has reached the date he or she is entitled to have
that coverage or a government sponsored plan of the same type become
effective.  All payments and benefits under this Plan shall cease on the date
Executive is rehired by the Company.
 
V.           CHANGE IN STATUS OF CEO, EVP, OR SVP.
 
Any reduction in, or loss of, title following the Effective Date shall be
ignored for purposes of determining an Executive’s right to, and level of,
benefits under this Plan.  For example, an individual who is an Executive Vice
President on the Effective Date, and who later loses that title or has a
reduction in title, shall continue to treated as an Executive Vice President for
purposes of determining the Executive’s right to, and level of, benefits under
the Plan, whether or not that loss or reduction in title constitutes Good
Reason.
 
VI.           SUCCESSORS AND ASSIGNS.
 
This Plan shall be binding upon the Company and any successor to the Company,
including any persons acquiring directly or indirectly all or substantially all
of the business or assets of the Company by purchase, merger, consolidation,
reorganization, or otherwise.  Any such successor shall thereafter be deemed to
be the “Company” for purposes of this Plan, and the term “Company” shall also
include American Italian Pasta Company to the extent advantageous to the
Executives by providing them with the benefits intended under this
Plan.  However, this Plan and the Company’s obligations under this Plan are not
otherwise assignable, transferable, or delegable by the Company.  By written
agreement, the Company shall require any successor to all or substantially all
of the business or assets of the Company expressly to assume and agree to honor
this Plan in the same manner and to the same extent the Company would be
required to honor this Plan if no such succession had occurred.
 
VII.           MISCELLANEOUS.
 
Any Executive who becomes entitled to receive benefits under this Plan must
provide to the Plan Administrator, upon the Plan Administrator’s written
request, such information as the Plan Administrator may reasonably require to
facilitate the payment of benefits to the Executive.
 
The terms of this Plan do not change the at-will nature of any Executive’s
employment with the Company.
 
This Plan shall take effect upon the Effective Date and apply only to
terminations effected after that date.  It is not intended that the application
of this Plan shall modify or alter the tax deductibility of any payment or
benefit paid or excluded hereunder.  Consistent with the Company’s compensation
philosophy and practice, the Compensation Committee of the Board of Directors
retains the right to amend or modify this Plan as needed. However, no amendment
or modification hereof will reduce the benefits hereunder for persons who are
Executives or are
 

 
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receiving benefits under this Plan on the date immediately prior to the date
that any such amendment or modification of this Plan becomes effective, except
that any amendment to this Plan may be adopted to the extent necessary to comply
with applicable law or to avoid the application of Internal Revenue Code Section
409A(a)(1) to amounts or benefits provided hereunder.
 
This Plan shall apply only to persons (i) who are Senior Vice Presidents or
above on the Effective Date, and (ii) who become Senior Vice Presidents or above
after the Effective Date if the Committee determines that this Plan should apply
to such person.
 
If a dispute arises concerning whether Executive is entitled to benefits under
this Plan or as to the amount of Executive’s benefits, Executive must first file
a claim for benefits in accordance with the following procedure.  A claim for
Plan benefits must be in writing and addressed to the Plan Administrator,
Severance Plan for Senior Vice Presidents of American Italian Pasta Company, at
Briarcliff One, 400 North Mulberry Drive, Kansas City, Missouri 64116-1696, or
any other address that may be designated from time to time.  Executive will
receive a written notice from the Plan Administrator with respect to Executive’s
claim within 90 days of the date the Plan Administrator received Executive’s
initial claim.  If special circumstances require an extension of time, written
notice will be given to Executive before the end of this 90-day period and will
explain the reasons for the delay.  If Executive is not furnished notice
regarding Executive’s claim within these time periods, Executive’s claim will be
considered denied.
 
If the Plan Administrator denies Executive’s claim, in whole or in part, it will
tell Executive why, refer Executive to the applicable provisions of the plan
document or other relevant records or papers, and inform Executive when and
where Executive may see them.  Executive will also be told if any additional
material or information is needed to perfect Executive’s claim, what material or
information is needed and why such material is needed.  In addition, Executive
will be told how Executive can appeal for reconsideration of its
decision.  Should Executive disagree with the determination, Executive will have
60 days to request a review in writing.  The Plan Administrator will reconsider
the Executive’s claim and its resulting decision will be issued within 60 days
after Executive’s request.  If more time is needed because of unusual
circumstances, Executive will be notified.
 
In connection with or after a Change in Control, the Company shall pay to the
Executive as incurred all legal and accounting fees and expenses incurred by the
Executive in seeking to obtain or enforce any right or benefit provided by this
Plan, unless the Executive’s claim is found by a court of competent jurisdiction
to have been frivolous.  Any such reimbursements or payments that are taxable to
the Executive shall be subject to the following restriction:  each reimbursement
or payment must be paid no later than the last day of the calendar year
following the calendar year during which the expense was incurred or tax was
remitted, as the case may be.
 
Prior to a Change in Control, the Plan Administrator has the exclusive
discretionary authority to construe and to interpret the Plan, to decide all
questions of eligibility for benefits and to determine the amount of such
benefits, and its decisions on such matters are final, conclusive and binding on
all parties.  Any interpretation or determination made pursuant to such
discretionary authority shall be upheld on judicial review, unless it is shown
that the
 

 
11

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interpretation or determination was an abuse of discretion (i.e., arbitrary and
capricious).  This authority shall not apply in connection with or after a
Change in Control.
 
Benefits under the Plan may not be assigned, transferred or pledged to a third
party, for example, as security for a loan or other debt, except to repay bona
fide debts to the Employer.
 
The Employer pays the entire cost of the Plan out of its general
assets.  Benefit payments provided herein are made on the authorization of the
Compensation Committee of the Board of Directors of American Italian Pasta
Company (the “CC”) as Plan Administrator or of a delegate appointed by the CC.
 
The payments and benefits under this Plan are intended not to be subject to
Internal Revenue Code 409A and the regulations and other guidance with respect
thereto (together "409A"), and this Plan shall be interpreted and administered
to prevent 409A from applying to such payments and benefits.  However, it is
understood that 409A is ambiguous in certain respects.  The CC, Board of
Directors and Company will attempt in good faith to take any action necessary to
avoid, and will attempt in good faith to refrain from taking any action that
would result in, the imposition of tax, interest and/or penalties upon any
Executive under 409A.  To the extent the CC, Board of Directors and Company have
acted or refrained from acting in good faith as required by this Section,
neither they, their employees, contractors and agents, each member of the Board
of Directors nor any Plan fiduciary (the “Released Parties”) shall in any way be
liable for, and by participating in this Plan, each Executive automatically
releases the Released Parties from any liability due to, any failure to follow
the requirements of 409A, and no Executive shall be entitled to any damages
related to any such failure even though the Plan requires certain actions to be
taken in conformance with 409A.

The following statement is required by federal law and regulations.  As a
participant in the Plan described in this booklet, you are entitled to certain
rights and protection under the Employee Retirement Income Security Act of 1974
(ERISA).  ERISA provides that all plan participants shall be entitled to:
 
Examine, without charge, at the Plan Administrator’s office and at other
specified locations, such as work sites, all plan documents and copies of all
documents filed by the Plan with the U.S. Department of Labor, such as detailed
annual reports and plan descriptions.
 
Obtain copies of all plan documents and other plan information upon written
request to the Plan Administrator.  The Plan Administrator may make a reasonable
charge for the copies.
 
Obtain a statement telling you whether you have a right, under the Plan to
receive a benefit and, if so, what your benefit would be.  This statement must
be requested in writing and is not required to be given more than once a
year.  The Plan must provide the statement free of charge.
 
In addition to creating rights for plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the Associate benefit
plan.  The people who
 

 
12

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operate your plan, called “fiduciaries” of the plan, have a duty to do so
prudently and in the interest of you and other plan participants and
beneficiaries.  No one, including your employer, or any other person, may fire
you or otherwise discriminate against you in any way to prevent you from
obtaining a benefit or exercising your rights under ERISA.
 
If your claim for a benefit is denied, in whole or in part, you must receive a
written explanation of the reason for the denial.  You have the right to have
the Plan Administrator review and reconsider your claim, including the right to
obtain copies of documents relating to the denial without charge, all within
certain time schedules.
 
Under ERISA, there are steps you can take to enforce the above rights.  For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file a suit in a federal court.  In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to
$110.00 a day until you receive the materials, unless the materials were not
sent because of reasons beyond the control of the administrator.
 
If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court.  If it should happen that
plan fiduciaries misuse the plan’s money, or if you are discriminated against
for asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court.  The court will decide who
should pay court costs and legal fees.  If you are successful, the court may
order the person you have sued to pay these costs and fees.  If you lose, the
court may order you to pay these costs and fees, for example, if it finds your
claim is frivolous.
 
If you have any questions about your Plan, you should contact the Plan
Administrator.  If you have any questions about this statement or about your
rights under ERISA or you need assistance in obtaining documents from the Plan
Administrator, you should contact the nearest Area Office of the Pension and
Welfare Benefits Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquiries,
Pension and Welfare Benefit Administration, U.S. Department of Labor, 200
Constitution Avenue, N.W. Washington, D.C. 20210.  You may also obtain certain
publications about your rights and responsibilities under ERISA by calling the
publications hotline of the Employee Benefits Security Administration.
 
VIII.       SUMMARY PLAN INFORMATION.
 
The name of the severance plan is the American Italian Pasta Company Severance
Plan for Senior Vice Presidents and above.
 
The Plan is considered a “welfare plan” under the Employee Retirement Income
Security Act of 1974 (ERISA).  This Plan is effective May 2, 2006.
 
The Plan is sponsored by:                 American Italian Pasta Company, Inc.
Briarcliff One
400 North Mulberry Drive
Kansas City, MO 64116-1696

 
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The Internal Revenue Service has assigned American Italian Pasta Company, Inc.
the employer identification number 84-1032638.  The plan number assigned to the
Plan is 507.
 
The Compensation Committee of the Board of Directors of American Italian Pasta
Company, Inc. is the Plan Administrator for the Plan under ERISA and can be
contacted at the address set forth above.  The Plan Administrator may delegate
all or part of its duties and/or authority to any one or more persons or
entities.
 
The Plan and its records are not kept on a plan-year basis.
 
Legal process can be served on American Italian Pasta Company, Inc. by directing
such legal service to:
 
Chief Legal Officer
American Italian Pasta Company, Inc.
Briarcliff One
400 North Mulberry Drive
Kansas City, MO 64116-1696

 
14

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EXHIBIT A

               Title
Severance Period
Chief Executive Officer
104 Weeks
Executive Vice President
78 Weeks
Senior Vice President (if held
position as of Effective Date)
 
78 Weeks
Senior Vice President
52 Weeks
 
 
 

 
15

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APPENDIX A

Release and Waiver of Claims

AMERICAN ITALIAN PASTA COMPANY, INC.
AMENDED AND RESTATED SEVERANCE PLAN
FOR SENIOR VICE PRESIDENTS AND ABOVE

This Release and Waiver of Claims (the “Agreement”) is made and entered into
between AMERICAN ITALIAN PASTA COMPANY, and its past, present and future
parents, subsidiaries, divisions, affiliates, and related companies
(collectively, the “Company”) and _______________________________ (“Executive”).
 
WHEREAS, the Executive is entitled to benefits under the American Italian Pasta
Company, Inc. Amended and Restated Severance Plan for Senior Vice Presidents and
Above (the “Plan”); and
 
WHEREAS, the Plan requires that Executive provide a release of claims in favor
of the Company, confidentiality agreement, non-solicitation agreement,
noncompetition agreement, non-disparagement agreement, and cooperation
agreement, to be entitled to the payment of benefits under the Plan;
 
NOW, THEREFORE, in consideration of the above and the mutual promises contained
herein, the adequacy of which consideration is hereby acknowledged, the Company
and Executive agree as follows:
 
 
1.
The parties agree that Executive’s employment terminated effective
_____________________________.

 
 
2.
The Company agrees to pay Executive all benefits set forth in the Plan, pursuant
to its terms.

 
 
3.
The Company’s obligations to make any payments or provide any benefits pursuant
to the Plan are expressly conditioned on Executive’s continued compliance with
the provisions of this Agreement.

 
 
4.
In consideration for the benefits to be paid to Executive under the Plan, and to
the maximum extent permitted by law and without exception, Executive hereby
releases and waives any and all claims, demands, or causes of action
(collectively “claims”) known or unknown, suspected or unsuspected, that, as of
the Effective Date, Executive has or could have against the Company and/or any
or all of its current and/or former parent corporations, current and/or former
subsidiary corporations, current and/or former directors, current and/or former
officers, current and/or former fiduciaries, current and/or former employees,
current and/or former agents, current and/or former successors, current and/or
former assigns, and/or other entities currently and/or formerly affiliated with
or related to the Company (collectively hereinafter “the Company
Affiliates”).  The claims

 

 
 

--------------------------------------------------------------------------------

 

 
released and waived under this Agreement include, but are not limited to, any
and all claims Executive and/or anyone acting on Executive’s behalf hold or own
or have at any time before the Effective Date held or owned against the Company
and/or the Company Affiliates, including but not limited to, to the maximum
extent permitted by law, claims under any federal and/or state Constitution;
claims under any federal, state, and/or local common law, including claims
sounding in tort and/or contract; claims under any federal, state, and/or local
public policy; claims under the Executive Retirement Income Security Act; claims
under the Family and Medical Leave Act; claims under the Equal Pay Act; claims
for workers’ compensation retaliation and/or discrimination; claims under the
Fair Labor Standards Act and/or any other federal, state, and/or local wage
payment law; claims for discrimination (including harassment) and/or retaliation
under any federal, state, and/or local law, including but not limited to the
Missouri Human Rights Act, the Kansas Act Against Discrimination, 42 U.S.C. §
1981, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Americans with Disabilities Act, the Age Discrimination in Employment Act,
and/or any other federal, state, and/or local law, statute, ordinance, and/or
regulation; claims under any and all other federal, state, and/or local laws,
statutes, ordinances, regulations, and/or common law, including any Missouri or
Kansas statutes, ordinances, regulations and/or common law; and claims under any
practice and/or policy of the Company, including but not limited to any benefit
plan of the Company and/or any of the Company Affiliates.  Notwithstanding
anything in this Agreement to the contrary, Executive specifically does not,
however, disclaim, release or waive any claim or right to any compensation or
benefits contemplated under the Plan, nor any payments to which Executive is, or
may become, entitled under any compensation or benefit plan, agreement or
arrangement of the Company and/or any of the Company Affiliates with respect to
which the time for receiving that compensation or benefit, or exercising rights
with respect to that compensation or benefit, has not yet been reached on the
date Executive signs this Agreement.

 
 
5.
Executive acknowledges Company has given Executive at least 21 days to consider
this Agreement, although Executive may execute it at any time within those 21
days.  Executive further acknowledges Company has advised/hereby advises
Executive to consult with independent legal counsel before signing this
Agreement.  Executive further acknowledges Executive may revoke this Agreement
within 7 calendar days after signing it by providing written notice of such
revocation via hand-delivery to Executive Vice President and General Counsel,
American Italian Pasta Company, 4100 North Mulberry Drive, Kansas City,
Missouri, 64116.  This Agreement is effective and enforceable on the eighth
(8th) calendar day following the date Executive signs it (“Effective Date”).

 
 
6.
Executive agrees that, for a period of eighteen (18) months after the
termination of employment, Executive will not compete with the business of
Company whether as an employee, employer, consultant, agent, principal, partner,
shareholder, corporate officer, director, or through any other kind of ownership
(other than ownership of securities of publicly held corporations of which the
Executive owns less than 5% of any class of outstanding securities) or in any

 

 
 

--------------------------------------------------------------------------------

 

 
other representative or individual capacity, engage in or render any services to
any business engaged in the manufacture, production, distribution, selling,
and/or marketing of pasta products for human consumption in the United States or
Canada.  It is expressly understood and agreed that although Executive and the
Company consider the restrictions contained in this paragraph 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 paragraph
is an unenforceable restriction against Executive, the provisions of this
paragraph shall not be rendered void, but shall be deemed amended to apply as to
such maximum time and territory and to such other maximum extent as such court
may judicially determine or indicate to be enforceable.

 
 
7.
Executive agrees that for a period of eighteen (18) months after termination of
Executive’s employment, Executive (a) will not employ, hire, or respond to any
employment-related inquiry from an employee of Company; (b) will not assist,
either directly or indirectly, in the employment or hiring of an employee of
Company; and/or (c) will not recruit, solicit, or induce, or attempt to recruit,
solicit, or induce any employee of Company to terminate his/her employment with,
or otherwise cease a relationship with, Company for any reason.

 
 
8.
Executive acknowledges that Executive has held positions of trust and confidence
with the Company and that during the course of Executive’s employment Executive
has been exposed to and worked with others in the employ of the Company sharing
data, trade secrets, research and development information, technical processes
and material which are proprietary in nature, confidential to the Company and
not generally available to the public or its competitors and which, if divulged,
would be potentially damaging to the Company's ability to compete in the
marketplace.  Executive agrees to immediately provide the Company with access to
(and the opportunity to transfer) any Company information stored outside the
Company’s offices.  Executive agrees that Executive will immediately return to
the Company any documents or other form of memorialization in Executive’s
possession or under Executive’s control affecting such information, including,
but not limited to, computer programs and software, and will further maintain
such information in strict confidence and not disclose such information to any
person except as required by law.  Notwithstanding the foregoing, Executive
shall not be deemed to breach or violate this paragraph if Executive is
subpoenaed and required to disclose information; provided, however, that if
Executive is required to disclose information pursuant to a court order or other
government process or such disclosure is necessary to comply with applicable law
or defend against such claims, Executive shall: (a) notify the Company promptly
before any such disclosure is made; (b) at the Company's request and expense,
take all reasonably necessary steps to defend against such process or claims;
and (c) permit the Company to participate with counsel of its choice in any
proceeding relating to any such court order, other government process or claims.

 

 
 

--------------------------------------------------------------------------------

 

 
9.
Executive acknowledges and agrees that the Company’s remedies at law for a
breach or threatened breach of paragraphs 6, 7, and/or 8 of this Agreement would
be inadequate and, in recognition of this fact, Executive agrees that, in the
event of a breach or threatened breach, in addition to any remedies at law, the
Company, without posting any bond, shall be entitled to obtain equitable relief
in the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be
available.  Should the Company obtain legal or equitable relief in any form for
Executive’s breach of paragraphs 6, 7, and/or 8 of this Agreement, Executive
agrees to pay Company’s reasonable attorneys’ fees and expenses necessarily
incurred to obtain the legal or equitable relief.

 
 
10.
Executive agrees not to disparage or otherwise speak negatively about the
Company, its management, its staff members, its customers, and/or its
vendors.  Notwithstanding the foregoing, Executive shall not be deemed to breach
or violate this paragraph if Executive is subpoenaed and required to testify
under oath about the Company; provided that Executive testifies truthfully and
in good faith.

 
 
11.
The Company agrees not to disparage or otherwise speak negatively about
Executive.  Notwithstanding the foregoing, the Company shall not be deemed to
breach or violate this paragraph if the Company or its officers, employees, or
directors are subpoenaed and required to testify under oath about Executive;
provided that such testimony is truthful and in good faith.

 
 
12.
Executive agrees that upon reasonable request by the Company, Executive will
participate in the investigation, prosecution, or defense of any matter
involving the Company, any of the Company Affiliates, or any other matter that
arose during Executive’s employment, provided the Company shall reimburse
Executive for any reasonable travel and out-of-pocket expenses incurred in
providing such participation at its request, the purpose of which reimbursement
is to avoid cost to Executive and not to influence Executive’s participation.

 
 
13.
Nothing in this Agreement is to be construed as either an admission of liability
or admission of wrongdoing on the part of either party, each of which denies any
liability or wrongdoing on its part.

 
 
14.
Executive acknowledges that Executive has read this Agreement; that Executive
has had an opportunity and is specifically advised to review this Agreement with
Executive’s attorney prior to its execution; that Executive understands all of
the terms of this Agreement; and that Executive executes this Agreement
voluntarily and with full knowledge of the significance and the consequences of
this Agreement.

 
 
15.
Except to the extent governed by the Executive Retirement Income Security Act of
1974 (“ERISA”), this Agreement shall be construed in accordance with the laws of
the State of Missouri, any and all actions regarding this Agreement shall be
brought in the federal or state courts situated in that state (as applicable),
and

 

 
 

--------------------------------------------------------------------------------

 

 
the parties hereto consent to the venue of, and the exercise of personal
jurisdiction by, the federal/state courts situated in that state,
notwithstanding any law or authority to the contrary.

 
 
16.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which taken together shall constitute one
and the same instrument. Any party hereto may execute this Agreement by signing
any such counterpart.

 
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day
and year written below.

 

 Date:__________________________  __________________________      (EMPLOYEE)  
 
State of __________________)
                                                        ) ss.
County of ________________)
 
   

Subscribed to before me this ___ day of __________________________________,
20__.
 
My Commission Expires:

___________________________         ___________________________ 

 

   AMERICAN ITALIAN PASTA COMPANY          Date:__________________________
 By:__________________________        
 
State of __________________)
                                                        ) ss.
County of ________________)
 
   

Subscribed to before me this ___ day of __________________________________,
20__.
 
My Commission Expires:

___________________________         ___________________________