Exhibit 10.3


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT (the “Agreement” or
“Employment Agreement”) is made and entered into as of the 7th day
of March, 2003, by and between INTERSTATE BRANDS CORPORATION, a Delaware
corporation, (the “Company”) and Robert P. Morgan (“Employee”).


 


The Company and Employee hereby mutually agree as
follows:


 


1.             Employment.


 


(a)           The
Company shall employ Employee, and Employee shall serve the Company on the
terms and subject to the conditions set forth herein for a period commencing on
January 1, 2003, and terminating on January 1, 2005 (the “Expiration Date”),
except as provided in Section 1(b) below. 
Employee shall serve in the capacity of Executive Vice President of the
Central Division of the Company.  The
duties, responsibilities and authority of Employee shall be those that are
normally incident to the office to be held by Employee.  Employee shall devote his best efforts and
abilities and all his business time to the affairs and interests of the Company
(except as may be otherwise authorized by the Board of Directors of the
Company).  Employee’s principal office
shall be at Kansas City, Missouri.


 


(b)           On
the first anniversary of the Effective Time (as defined in paragraph 15) of the
Employment Agreement and annually thereafter, the Employment Agreement shall be
automatically extended for an additional one (1) year period unless


 

















 


terminated by either the Company or Employee by delivery, on or prior
to June 1 of such year, of a termination notice to the other party.


 


2.             Compensation.  For his services to the Company, Employee
shall be entitled:


 


(a)           To
receive (i) commencing January 1, 2003, an aggregate base annual salary in the
amount not less than Two Hundred Four Thousand dollars ($204,000) and (ii) an
annual bonus pursuant to the terms of the Incentive Compensation Plan (“Plan”)
at the level specified for an Executive Vice President under the Plan, as the
same may be amended from time to time. 
At annual or approximate annual intervals, the Company shall conduct, or
cause to be conducted, a review of Employee’s salary, giving attention to all
pertinent factors, including without limitation the performance of the Company,
the performance of Employee and compensation practices inside and outside the
Company.  The Company shall, after such
review, determine Employee’s base salary to be paid until the completion of the
next review.


 


(b)           To
be covered by noncash benefit plans and programs of the Company that are the
same as those that are provided to executives with comparable responsibilities
and pay grade, including without limitation retirement plans and programs,
health and medical insurance coverage, long-term disability insurance coverage
and life insurance coverage.


 


(c)           To
participate in any other benefit programs that are made available to other
executives of the Company.


 


(d)           To
receive perquisites that are the same as those that are provided to executives
with comparable responsibilities and pay grade, including without limitation
monthly club dues, a new company car every three (3) years, an annual


 


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allowance for financial counseling (any unused amount may be rolled
over to the next succeeding year provided that the amount available in any
given year will not exceed twice the annual allowance) and paid vacations.


 


3.             Termination;
Effect of Termination.


 


(a)           Employee’s
employment hereunder shall be terminated prior to the Expiration Date if
Employee dies or becomes permanently disabled under circumstances in which he
would be entitled to the benefits therefor under the long-term disability
insurance coverage referred to in Section 2(b), in which case the Company and
Employee shall be released from all further obligations and liabilities
hereunder (except as provided in this Section 3, for obligations accrued but
not yet paid, for those set forth in Section 5, for liability arising from any
breach of this Agreement occurring prior to such termination and except that
Employee and his beneficiaries shall be entitled to receive all disability and
other benefits payable upon his death or disability).


 


(b)           If
Employee’s employment hereunder is terminated by the Company without his
consent or for any reason specified in Section 3(a) (each a “Termination
Event”), then the Company shall be obligated for a period of time equal to the
balance of the term of this Employment Agreement as set forth in Section 1
remaining as of such Termination Event (the “Severance Period”) to continue to
make the full salary payments to Employee required by Section 2(a)(i).  The Company shall also continue to provide
to Employee during such Severance Period all health, medical, disability and
insurance coverage provided for in Section 2(b).


 


(c)           For
purposes hereof, during the Severance Period Employee shall be deemed to be in
service and shall continue to accrue benefits under any retirement plan of the
Company and any supplemental retirement benefits agreement in effect


 


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between the Company and Employee immediately prior to the Severance
Period.  All such payments shall be made
without reference to or deduction for any subsequent employment obtained or
obtainable by Employee.  In the event
that Employee would be ineligible to participate in or be covered by any
noncash benefit plan or program by reason of such termination of his
employment, the Company shall provide substantially similar benefits or
coverage through other sources.


 


(d)           During
the Severance Period the Company shall continue to make all payments of their
portion of the premiums for the life insurance in effect with respect to
Employee’s life.  Employee shall also be
entitled to receive or exercise during the Severance Period all other benefits
and rights available under any benefit plans or programs to terminated or
discharged employees.


 


(e)           Notwithstanding
any of the other provisions of this Employment Agreement to the contrary, in
the event that the Employee is convicted in a court of competent jurisdiction,
or the Employee pleads guilty or makes a plea of nolo contendere of any felony
crime, the Employee’s employment with the Company shall be terminated and all
of the Employee’s rights to any and all compensation and benefits provided
under and pursuant to the terms of this Employment Agreement, except to the
extent protected by law, shall terminate.


 


4.             Travel
Expense.  Employee’s duties under
this Agreement may require a reasonable amount of travel and the incurrence of
travel and other business expenses.  The
Company shall pay or reimburse Employee for all such reasonable expenses
incurred or paid by him upon presentation of expense statements or vouchers and
such other information as the Company may reasonably require.


 


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5.             Confidentiality.  Employee shall not at any time during or
after the term of this Agreement (and without regard to the circumstances under
which this Agreement or Employee’s employment hereunder may have terminated),
directly or indirectly, disclose or permit those under his control to disclose,
or use, or permit those under his control to use, except as shall be necessary
in the performance of his duties hereunder, any trade secrets or other
proprietary information owned by or confidential to the Company or any of its
affiliates (as affiliate is defined in Rule 144 promulgated under the
Securities Act of 1933 (“Affiliate”)) without the prior written consent of the
Company including but not limited to (i) any confidential information
concerning the business, affairs, properties, management or prospects
(financial or otherwise) of the Company or any of its Affiliates that he may
have acquired in the course of, or as an incident to, his employment by the
Company or any of its Affiliates or predecessors or (ii) any confidential
information entrusted to the Company or any of its Affiliates or predecessors
which any such company is obligated to keep confidential.


 


6.             Restrictions.  The Employee agrees, as a condition of
entering into this Employment Agreement, that during the Severance Period the
Employee will not, as an individual or as a partner, employee, agent, advisor,
consultant or in any other capacity of or to any person, firm, corporation or
other entity (excluding the Company or one of its Affiliates), directly or
indirectly, other than as a 2% or less shareholder of a publicly traded
corporation, do any of the following:


 


(a)                                 carry
on any business, or become involved in any business activity, which is
competitive with the business conducted by the Company (or one of its
Affiliates) immediately prior to a Termination Event; or


 


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(b)                                
induce or attempt to induce, or assist anyone else to induce or attempt to
induce, any customer of the Company (or one of its Affiliates) to discontinue
its business with the Company (or one of its Affiliates) or disclose to anyone
else any confidential information relating to the identities, preferences,
and/or requirements of any such customer.


 


The Employee agrees (i) that the restraints contained
in this Section 6, both separately and in total, are reasonable in view of the
legitimate interests of the Company in protecting its trade secret information
and business relationships; and (ii) to disclose to any potential future employer
during the Severance Period, the terms of the restrictions against competition
contained in this Section 6.


 


If any provision or subpart of this Section 6 is
adjudicated to be invalid or unenforceable under applicable law, the validity
or enforceability of the remaining provisions and subparts shall be
unaffected.  If any provision or subpart
of this Section 6 is adjudicated to be invalid or unenforceable because it is
overbroad or unreasonable, that provision or subpart shall not be void but
rather shall be limited to the extent required to make it reasonable and shall
be enforced as so limited.


 


In the event of a breach of this Section 6, the
Company (i) shall have no further liability for any of the severance benefits
described in Section 3(b) that have not been paid as of the date of the breach,
and (ii) shall be entitled, in addition to any other legal or equitable
remedies it may have, to temporary, preliminary and permanent injunctive relief
restraining such breach.


 


7.             Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, or the breach or asserted breach of its terms, will
be settled by arbitration


 


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before a single arbitrator in Kansas City, Missouri, in accordance with
the rules then in effect under the Federal Arbitration Act, and judgment upon
the award rendered may be entered in any court having jurisdiction
thereof.  No claim may be arbitrated
unless written notice of the basis of the claim is received within 180 days
after the party first knew of the existence of the general facts upon which the
claim is based.  All arbitration
hearings must commence within 90 days after the written notice of the claim.  Employee and the Company shall share equally
any fees and expenses of any arbitrator. 
The arbitrator will decide what amount, if any, of the prevailing
party’s legal fees and expenses will be paid by the non-prevailing party.  For all purposes, this Agreement will be
interpreted and enforced under Missouri and United States law, as respectively
applicable.


 


8.             Entire
Agreement.  This Agreement is the
entire agreement between the parties hereto with respect to Employee’s
employment and shall not be amended, altered or modified in any manner
whatsoever, except by a written instrument executed by the parties hereto.  This Agreement supersedes all prior
agreements between the Company (or one of its Affiliates) and Employee and all
such prior agreements shall be void and of no further force or effect as of the
Effective Time.


 


9.             No
Continuous Waiver.  The waiver by
any party hereto of a breach of any provision of this Agreement by the other
party hereto shall not operate or be construed as a waiver of any subsequent
breach by such party.


 


10.           Governing
Law.  This Agreement shall be
subject to, and be governed by, the laws of the State of Missouri.


 


11.           Transfer,
Assignment, Modification, etc.  This
Agreement may not be transferred, assigned, modified, amended or waived without
the prior written


 


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consent of all parties except that the Company may assign this
Agreement without the consent of the Employee in the event any person,
corporation or other entity, by merger, consolidation, purchase of assets,
liquidation, voluntary or involuntary assignment or otherwise, acquires all or
a substantial part of the assets of the Company (or one of its Affiliates) or
succeeds to one or more lines of business of the Company (or one of its
Affiliates.)


 


12.           Severability.  If any one or more of the provisions of this
Agreement, as applied to any party or any circumstance, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained in the
Agreement.  If any one or more of the
provisions of this Agreement shall, for any reason, be held to be unenforceable
as to duration, scope, activity or subject, such provision shall be construed
by limiting and reducing it so as to make such provision enforceable to the
extent compatible with the then existing applicable law.


 


13.           Notices.  All notices hereunder shall be in writing,
shall be delivered personally or sent by certified or registered mail, postage
prepaid, return receipt requested, or by overnight delivery utilizing a
recognized national express delivery carrier such as FedEx, if to Employee, to
his attention at the principal office of the Company, and if to the Company, to
its principal office, Attention: 
General Counsel.  No notice shall
be effective if given otherwise than as provided herein.


 


14.           Effect
of Management Continuity Agreement. 
In the event of a Qualifying Termination, as defined under the
Management Continuity Agreement dated


 


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February 3, 2003, by and between Interstate Bakeries Corporation, a
Delaware corporation, and the Employee (the “Continuity Agreement”), all of the
Employee’s rights to any compensation and benefits to be provided to Employee
in connection with such Qualifying Termination shall be solely governed by and
paid pursuant to the terms of the Continuity Agreement and the Employee shall
have no rights to any of the compensation and benefits provided for under this
Agreement.


 


15.           Effective
Time.  This Agreement may be signed
in any number of counterparts each of which shall be an original and all of
which, when taken together, shall constitute one and the same instrument and
shall become effective as of January 1, 2003 (the “Effective Time”) upon the
execution and delivery hereof by the parties hereto.


 


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IN WITNESS WHEREOF, the parties hereto have duly
executed and delivered this Agreement as of the day and year first above
written.


 


THIS
CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.


 


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  INTERSTATE BRANDS CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/  James R.
  Elsesser

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  /s/  Robert
  P. Morgan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Robert P. Morgan

  



 


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