Sample Business Contracts

Severance Agreement and Release of Claims - Kellogg Co. and Jacobus Groot

Sponsored Links

                          (PRESENTED: OCTOBER 12, 2000)

This Leave of Absence and Severance Agreement hereafter, (the "Agreement") made
and entered into as of October 12, 2000, by and between Kellogg Company, a
Delaware corporation ("the Company") and Jacobus Groot ("Employee").


The purpose of this Severance Agreement and Release of Claims is to set forth
the arrangements with respect to Employee's termination of active employment as
an officer of the Company, and its subsidiaries, divisions and affiliates, and
related matters, effective January 1, 2001. As of that date, Employee is
relieved of all his titles, duties, responsibilities, and authority as an
officer and otherwise with respect to the Company. This date shall be considered
the Employee's "last day worked."


    A.   For the period beginning January 1, 2001 and continuing to January 1,
         2003, Employee will be an "employee" on an UNPAID LEAVE OF ABSENCE for
         the sole purpose of stock option and stock grant vesting, as more
         particularly described in Paragraph G. During Employee's unpaid leave
         of absence, Employee shall not hold any title or position with the
         Company, and Employee shall have no titles, duties, responsibilities or
         authority with respect to the Company, its business and/or operations.

    B.   As more fully provided below, the capital sum payment described herein
         is in consideration of Employee's release of any and all cause or
         causes of action he has, has had, or may have against the Company.

    C.   On account of the termination and in order to compensate for the loss
         of employment and loss of office and in full settlement of all claims,
         demands, causes of action against the Company, Employee shall be paid
         the sum of U.S. $1,090,000 (one million ninety thousand dollars) with
         the capital sum of U.S. $1,000,000 (one million dollars), paid on
         Employee's termination date, January 1, 2001, and the balance U.S.
         $90,000 (ninety thousand dollars) paid in equal monthly installments
         over the period of unpaid leave of absence from January 1, 2001 to
         January 1, 2003.

    D.   Employee shall receive pension benefits from Kellogg Company tax
         qualified, Excess Benefit, Supplemental and Key Executive Benefit
         Retirement Plans in the amount of U.S. $475,000, which shall be paid in
         a capital sum payment within 14 days of Employee's termination date.
         This payment shall be based on the interest rate for determining
         capital sum pension amounts at the time of termination.

                                   Page 1 of 9

<PAGE>   2

     E.  Short-term disability and long-term disability benefits cease as
         of your last day worked. Except as otherwise provided herein, benefits
         for Employee and his eligible dependents, as outlined in "A Guide To
         Your Medical/Mental/Prescription Drug Benefits" effective 1995, and
         under the Executive Income Survivor Plan, subject to the respective
         terms and provisions thereof, including any amendment or alteration
         thereof after the date of this Agreement, will be continued for
         Employee as an "employee", (i.e., or on leave of absence). During the
         unpaid leave of absence period, health benefits will be provided to the
         Employee, his spouse and dependents, and shall terminate on January 1,
         2003. Employee shall be solely responsible for payment of medical
         benefit premiums during any unpaid leave periods.

         Continued insurance coverage pursuant to COBRA regulations and
         conversion privileges will be available to Employee when the unpaid
         leave of absence benefits end. Employee will be responsible for the
         payment of all premiums for that continuation period. Additional
         information will be forwarded to Employee regarding COBRA.

     F.  Within sixty (60) days of the last day worked, the Company will pay to
         Employee that sum which is equivalent to all unused, earned, accrued
         prorated vacation of Employee as of the last day worked. Employee shall
         not be entitled to any future vacation pay accruals from and after the
         last day worked.

     G.  Employee's right to exercise all nonqualified stock options and stock
         grants pursuant to the Company the 1991 Key Employee Long-Term
         Incentive Plan ("the Plans"), shall continue only through January 1,
         2003 of the unpaid leave of absence period, subject to and administered
         in accordance with the respective option grants and Plan provisions.

         This includes employee's right to exercise the 45,000 (forty five
         thousand) stock option grants awarded as part of Employee's sign-on
         bonus and 35,000 options as part of the grant made in January 1999 and
         Employment Agreement terms and conditions dated December 17, 1998 and
         the 100,000 stock options awarded on January 31, 2000. The ability to
         utilize the accelerated ownership feature of the Plans shall continue
         for eligible stock options, throughout the unpaid leave of absence
         period, unless this feature is altered, modified and/or otherwise
         terminated earlier. Any stock option grants and/or stock grants not
         exercised in accordance with and subject to "the Plans", by January 1,
         2003, shall expire.

     H.  In consideration for Employee continuing to perform assigned duties and
         responsibilities through December 31, 2000 Employee shall be paid as

     I.  The Company shall pay to Employee a goods and services differential
         allowance for the unpaid leave period to July 1, 2001 which shall be
         paid in monthly installments based upon the current differential which
         is U.S. $77,197 (seventy seven thousand one hundred ninety seven
         dollars) annually.

                                  Page 2 of 9

<PAGE>   3

    J.   The Company shall continue to provide current housing in Hong Kong,
         including utilities, by maintaining the current lease on such property
         through August 31, 2001.

    K.   The Company shall provide continued use of the current Company car to
         August 31, 2001. During this time, the service and running costs will
         be the employee's responsibility. At such time, the car will be
         returned to the Company at a mutually agreeable location.

    L.   The Company shall continue to pay the monthly AMC Club Membership fee
         to July 1, 2001 at which time such payments by the Company shall be
         terminated. Employee shall pay all other usage fees. After July 1,
         2001, Kellogg will maintain the debenture to July 1, 2003 and Employee
         may continue to use the AMC Club Membership at his own expense paying
         monthly fees and usage fees during that period.

    M.   The Company shall continue to pay school fees at the current
         international school for employee's 3 children and continue current
         payments for Dutch language training to July 1, 2001 at which time such
         payments by the Company shall be terminated.

    N.   The Company shall pay the expenses incurred for the services of
         PricewaterhouseCoopers to provide the Employee with tax preparation for
         2000/2001, 2001/2002, and 2002/2003 tax years. Employee shall be liable
         for and shall pay any personal income tax liability.

    O.   As repatriation, the Company shall pay for one (1) relocation of
         Employee's family and household goods to a location of Employee's
         choice. The Company's obligation to pay for such relocation shall
         terminate on July 31, 2003, whether or not Employee has elected to
         relocate by that date. Such relocation shall also include the continued
         storage costs of personal household goods through July 31, 2003. Such
         relocation benefits shall not be paid in the event that employment is
         secured by Employee prior to July 31, 2003.

         In connection with such relocation, the Company shall pay the airfare
         costs of business class tickets for Employee and his family from Hong
         Kong to Amsterdam or the equivalent provided Employee relocates within
         30 days of the unpaid leave of absence period on July 31, 2003.

    P.   Employee will be eligible for outplacement assistance at the Company's
         expense, by a mutually agreeable agency. The company will also cover
         certain expenses connected with Employee maintaining office at home.
         Specifically, the Company will loan the Employee a fax/copy machine,
         computer, printer and will cover costs for a third party telephone
         answering service, as well as standard secretarial assistance, provided
         by Eunice Lai as long as practical, after which this will be provided
         by third party business center. The Company's support of Employee's
         home office and loaning of equipment will cease on January 1, 2003 or
         if Employee secures employment, whichever occurs sooner.

                                  Page 3 of 9

<PAGE>   4

    Q.   In further consideration of the following noncompete provisions,
         Employee agrees that monetary consideration and benefits provided under
         this Agreement includes separate consideration for agreeing to the
         following non-competition restrictions. Employee agrees that, for the
         respective Restricted Periods (as hereinafter defined), Employee shall

         (i) accept full-time employment, for or on behalf of the following
         companies that compete in the cereal, meat alternative and/or
         convenience foods business: Gardenburger, General Mills, Post, Quaker
         (foods), Nabisco, Pillsbury, Malto Meal, Ralcorp Cereal, and/or other
         private label cereal companies and/or

         (ii) provide consulting services to, for or with any person, firm,
         partnership, corporation or other business relating directly or
         indirectly to the manufacture, production, distribution, selling and/or
         marketing of any of the products (as defined below) in the geographic
         areas (as defined herein), including specifically, but not limited to,
         the following competing companies: Gardenburger, Post, General Mills,
         Quaker (foods), Nabisco, Pillsbury, Malto Meal, Ralcorp Cereal and/or
         other private label cereal company.

         (iii) directly or indirectly, permit any business firm which Employee,
         individually or jointly with others may own, manage, operate, or
         control, to engage in the manufacture, production, distribution, sale
         or marketing of any of the Products in the Geographic Area excluding
         ownership of publicly traded securities, and/or

         (iv) directly or indirectly participate with any person, firm,
         partnership, corporation, or other business whose efforts and/or
         intentions include purchasing and/or considering or evaluating for
         purchase, acquisition, or takeover the Company and/or any of its
         divisions, subsidiaries, affiliates, or related entities during the
         Restricted Period within the Geographic Area, as defined under this
         Agreement and/or

         (v) directly or indirectly solicit or attempt to solicit for employment
         any employee, manager, director, officer of Kellogg Company or its
         affiliates or related businesses and/or

         (vi) call upon, solicit, divert or take away or attempt to take away
         the business or patronage of any customer of the Company.

         For purposes of this non-compete provision, the term "Products" shall
         mean any ready-to-eat cereal products, any meat alternative product,
         toaster pastries, cereal bars, granola bars, frozen waffles, crispy
         marshmallow squares, and/or any other similar grain-based convenience
         food. For purposes of this non-compete provision, the term "Geographic

                                  Page 4 of 9

<PAGE>   5

         Area" shall mean any country in the world where the Company (including
         any subsidiary, division or affiliate thereof) manufactures, produces,
         distributes, sells or markets any of the Products at any time during
         the applicable Restricted Period (as defined below). For purposes of
         this paragraph, the Restricted Period with respect to the Products
         shall be eighteen (18) months from the date of this Agreement.

         To prevent any misunderstanding and conflicts regarding activities that
         may violate these promises Employee has made in this noncompetition
         agreement, Employee may, at his option, consult with the Company
         (specifically, the Executive Vice President, Corporate Development,
         General Counsel and Secretary, Janet L. Kelly) to discuss proposed
         actions to determine whether or not they may be violative from the
         Company's point of view.

         Employee acknowledges that a violation of the terms of this Noncompete
         provision may give rise to irreparable injury to the Company
         inadequately compensable in damages, and accordingly, Employee agrees
         that the Company may seek injunctive relief against such breach or
         threatened breach, in addition to any other legal remedies which may be
         available, including recovery of monetary damages. In any action
         successfully brought by the Company against Employee to enforce the
         rights of the Company under this Noncompete provision, the Company
         shall also be entitled to recover cost of the action, (exclusive of
         attorney's fees) and the period of the restrictions stated above shall
         be deemed to commence upon the entry of the Court's Order for relief.

    R.   As a result of these lump sum payments, the Company, its subsidiaries,
         divisions and affiliates (including the directors, officers and
         employees of any of them) shall have no further obligations of any kind
         or nature to Employee, including, without limitation, obligations for
         any other termination, severance, bonus, etc., except as specifically
         provided herein, and except as may be provided under the applicable
         eligible Company benefit plans in accordance with their terms.

    S.   Employee further agrees to and shall return to the Company no later
         than his last day worked, without limitation, all files, documents,
         correspondence, memoranda, customer and client lists, prospect lists,
         subscription lists, contracts, pricing policies, operational methods,
         marketing plans or strategies, product development techniques or plans,
         business acquisition plans, employee records, technical processes,
         designs and design projects, inventions, research project
         presentations, proposals, quotations, data, notes, records,
         photographic slides, photographs, posters, manuals, brochures, internal
         publications, books, films, drawings, videos, sketches, plans,
         outlines, computer disks, computer files, work plans, specifications,
         credit cards, keys (including elevator, pass, building and door keys),
         identification cards, and any other documents, writings and materials
         that Employee came to possess or otherwise acquire as a result of
         and/or in connection with the Company. Should Employee later find any
         Company property in his possession, Employee agrees to immediately
         return it.

                                  Page 5 of 9

<PAGE>   6

    T.   Employee agrees that he will not divulge any/all proprietary and/or
         confidential business information, except to the extent required
         pursuant to a legal subpoena or a legal proceeding. Employee agrees
         that any and all information regarding the terms and conditions of this
         Agreement shall be kept confidential and not disclosed to anyone,
         except Employee's spouse, tax accountant and/or attorney.

    U.   Employee agrees not to take any wrongful action with the intention of
         damaging the Company. Employee agrees to cooperate with the Company in
         connection with any and all existing or future investigations or
         litigation of any nature brought against it or its affiliates involving
         events which occurred during his employment with the Company. The
         Company will consider the convenience to the Employee and his other
         commitments in the timing and nature of its request for his cooperation
         hereunder and he shall not be considered in breach of his obligations
         hereunder if these commitments preclude his availability to the Company
         at any time or place. Employee agrees to notify the Company immediately
         if subpoenaed or asked to appear as a witness in any matter related to
         the Company or its affiliates. Nothing herein shall prevent Employee
         from communicating with or participating in any government

    V.   Employee has carefully read this Severance Agreement and Release of
         Claims and understands its contents. Employee recognizes that he will
         have no further job responsibilities at the Company.

    W.   Subject to the Company's performance of its obligations under this
         Agreement, on behalf of Employee, his heirs, executors and
         administrators, Employee irrevocably and unconditionally releases,
         waives and forever discharges the Company, its owners, stockholders,
         affiliates, subsidiaries, agents, directors, officers, employees,
         attorneys, representatives, insurance carriers, attorneys, advisors,
         and their predecessors, successors, heirs, executors, administrators
         and assigns from any and all claims, demands and causes of action he
         now has or may claim to now have arising from or relating in any way to
         his employment, leave of absence, or separation of employment. This
         includes, but is not limited to, all claims under the Age
         Discrimination in Employment Act of 1967 (as amended), Title VII of the
         Civil Rights Act of 1964, as amended, Section 1981 of the Civil Rights
         Act of 1986, as amended, the Civil Rights Act of 1991, the
         Elliott-Larsen Civil Rights Act and any other employment discrimination
         laws, the Family Medical Leave Act of 1993, the Rehabilitation Act of
         1993, the Equal Pay Act of 1963, the Uniform Services Employment and
         Reemployment Rights Act of 1964, Americans with Disabilities Act, the
         Workers Adjustment and Retraining Notification Act (WARN), claims for
         attorney fees, and any common law or other federal, state or local law
         or ordinance.

         Employee agrees that this Severance Agreement and Release of Claims is
         intended to and shall preclude any claim that his separation was in
         retaliation for exercising any right to which Employee is entitled
         under the provisions of an employee benefit plan, or for the purpose of
         interfering with the attainment of any right to which Employee may

                                  Page 6 of 9

<PAGE>   7

         become entitled under such a plan or under the Employee Retirement
         Income Security Act of 1974, as amended, in violation of Section 510 of
         ERISA, 29 USC Sec. 1140, except as specifically altered and/or modified
         by the Severance Agreement and Release of Claims. Nothing in the
         Agreement shall be construed as barring any other claims under Section
         502 ERISA.

         Employee agrees he has not filed any charges, claims, or lawsuits
         against the Company involving any aspect of his employment that have
         not been terminated as of the date of this Agreement. If Employee has
         filed any charges, claims, or lawsuits against the Company, Employee
         agrees to seek immediate dismissal with prejudice and provide written
         confirmation immediately (i.e., court order, and/or agency
         determination) as a condition to receiving any benefits under this
         Agreement. Employee additionally waives and releases any right he may
         have to recover in any lawsuit or proceeding brought by him, an
         administrative agency, or any other person on his behalf or which
         includes him in any class involving any aspect of his employment. If
         Employee intentionally breaches any portion of this Paragraph, Employee
         acknowledges that he will be liable for all expenses, including costs
         and reasonable attorney's fees incurred by any entity released in
         defending the lawsuit or claim, regardless of the outcome.

    X.   Employee has been advised to seek legal counsel to understand its full
         force and effect. Employee has been given the opportunity to consult
         with a lawyer.

    Y.   Employee agrees and acknowledges that the consideration (severance pay
         and benefits) described in this Agreement is in full settlement of any
         and all such aforementioned claims, demands and causes of action he has
         or may have.

    Z.   The Company agrees to indemnify, hold and save harmless Employee from
         and against any and all claims, liens, demands, damages, liability,
         actions, causes of action, cooperation with future investigations,
         settlement costs, and approved attorney's fees and expenses sustained
         or asserted against Employee arising out of, resulting from, or
         attributable to any acts or omissions or alleged acts or omissions of
         Employee during his employment with the Company or in connection with
         the Employee's fulfillment of his obligations under Paragraph H of this
         Agreement; provided however, that the Company shall not be liable
         hereunder to indemnify or hold and save harmless Employee against
         liability for damages arising during the term of his employment
         involving willful misconduct, theft, malfeasance, unlawful activity,
         and/or immorality. The Company hereby releases Employee from any and
         all claims, liens, demands, damages, liability, actions, causes of
         action it may have against Employee as a result of Employee's
         employment, or any services rendered by him in the performance of his
         duties for the Company.

   AA.   Employee has disclosed to the Company any information in his possession
         concerning any conduct involving the Company that Employee has any
         reason to believe involves

                                  Page 7 of 9

<PAGE>   8

         any false claims to the United States or is or may be unlawful or
         violates Company Policy in any respect.

    BB.  Employee signs this Severance Agreement and Release of Claims knowingly
         and voluntarily and without coercion with full intent to release the
         Company, its subsidiaries, affiliates, agents, employees, directors,
         shareholders and any other parties acting on behalf of the Company, to
         the extent provided in this Agreement.

    CC.  Employee understands and agrees that signing this Severance Agreement
         and Release of Claims and accepting the consideration for it shall not
         be deemed or construed as an admission of liability or responsibility
         at any time for any purpose. Liability for any and all claims is
         expressly denied by Kellogg Company.

    DD.  Employee also understands that the Company is not obligated to offer
         employment to him now or in the future.

    EE.  Employee understands that the Nondisclosure Confidentiality Agreement
         that he signed on his date of hire shall remain in full force and
         effect indefinitely.

    FF.  Employee and Company agree, subject to any obligations under applicable
         law, that neither will make or cause to be made any statements that
         disparage each other and/or damage the reputation of the Company or any
         of its affiliates, agents, officers, directors, managers, or employees.

    GG.  Employee agrees that if any provision of this Severance Agreement and
         Release of Claims is invalid or unenforceable, it will not affect the
         validity or enforceability of any other provision of this Agreement
         which shall remain in full force and effect.

    HH.  Employee agrees that the construction, interpretation, and performance
         of this Agreement shall be governed by the laws of Michigan, including
         conflict of laws. It is agreed that any controversy, claim or dispute
         between the parties, directly or indirectly, concerning this Agreement
         or the breach thereof shall only be resolved in the Circuit Court of
         Calhoun County, or the United States District Court for the Western
         District of Michigan, whichever court has jurisdiction over the subject
         matter thereof, and the parties hereby submit to the jurisdiction of
         said courts.

    II.  For purposes of any construction or interpretation of this Severance
         Agreement and Release of Claims, all terms and provisions thereof shall
         be deemed to have been mutually drafted by both of the parties.

    JJ.  Employee acknowledges and agrees that this is the entire Severance
         Agreement and Release of Claims and the only promises made to him are
         those contained within this document.

                                  Page 8 of 9

<PAGE>   9

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and date first above written in Battle Creek, Michigan.


By:      /s/ Carlos M. Gutierrez                              /s/ Jacobus Groot
    --------------------------------                 -----------------------------------
Carlos M. Gutierrez                                  Jacobus Groot
Chairman of the Board,                               Employee
President and Chief Executive Officer

October 12, 2000                                     October 12, 2000
------------------------------------                 -----------------------------------

                                  Page 9 of 9