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Sample Business Contracts

Employment Agreement - Kellogg Co. and Carlos M. Gutierrez

Employment Forms

  • Employment Contract. Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
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  • Executive Employment Agreement. Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
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                              EMPLOYMENT AGREEMENT


              AGREEMENT, dated as of the      day of            , 2000 (this
"Agreement"), by and between Kellogg Company, a Delaware corporation (the
"Company"), and Carlos M. Gutierrez (the "Executive").

              WHEREAS, the Board of Directors of the Company (the "BOARD"), has
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined herein). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the current Company and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
that ensure that the compensation and benefits expectations of the Executive
will be satisfied and that are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.

              NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

              SECTION 1. CERTAIN DEFINITIONS. (a) "Effective Date" means the
first date during the Change of Control Period (as defined herein) on which a
Change of Control occurs. Notwithstanding anything in this Agreement to the
contrary, if a Change of Control occurs and if the Executive's employment with
the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (1) was at the request of a third party that has taken
steps reasonably calculated to effect a Change of Control or (2) otherwise arose
in connection with or anticipation of a Change of Control, then "Effective Date"
means the date immediately prior to the date of such termination of employment.

              (b) "Change of Control Period" means the period commencing on the
date hereof and ending on the third anniversary of the date hereof; provided,
however, that, commencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each annual anniversary
thereof, the "Renewal Date"), unless previously terminated, the Change of
Control Period shall be automatically extended so as to terminate three years
from such Renewal Date, unless, at least 60 days prior to the Renewal Date, the
Company shall give notice to the Executive that the Change of Control Period
shall not be so extended.

              (c) "affiliated company" means any company controlled by,
controlling or under common control with the Company.




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              (d) "Change of Control" means:

              (1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of (A) 20% or more
of either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities"), if
immediately following such acquisition the W.K. Kellogg Foundation Trust and
George Gund III together with the Gund family trusts that have a common trustee
(collectively, the "Trusts") do not own, in the aggregate, more than 35% of the
Outstanding Company Common Stock or Outstanding Company Voting Securities or (B)
30% or more of either (i) the Outstanding Company Common Stock or (ii) the
Outstanding Company Voting Securities, if immediately following such acquisition
the Trusts own, in the aggregate, more than 35% of the Outstanding Company
Common Stock or Outstanding Company Voting Securities; provided, however, that,
for purposes of this Section 1(d)(1), the following acquisitions shall not
constitute a Change of Control: (a) any acquisition directly from the Company,
(b) any acquisition by the Company, (c) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any affiliated
company, (d) any acquisition by the Trusts or (e) any acquisition by any
corporation pursuant to a transaction that complies with Sections 1(d)(3)(A),
1(d)(3)(B) and 1(d)(3)(C); or

              (2) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

              (3) Consummation of a reorganization, merger, consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals and
entities that were the beneficial owners of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of 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 corporation resulting from such Business
Combination (including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries)



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in substantially the same proportions as their ownership immediately prior to
such Business Combination of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination;
or

              (4) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

              SECTION 2. EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company, subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
third anniversary of the Effective Date (the "Employment Period").

              SECTION 3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (1)
During the Employment Period, (A) the Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other location less
than 35 miles from such office.

              (2) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.



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              (b) COMPENSATION. (1) BASE SALARY. During the Employment Period,
the Executive shall receive an annual base salary (the "Annual Base Salary"),
which Annual Base Salary shall be paid in 12 equal monthly installments at an
annual rate at least equal to 12 times the highest monthly base salary paid or
payable, including any base salary that has been earned but deferred, to the
Executive by the Company and the affiliated companies in respect of the 12-month
period immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be reviewed at least
annually, beginning no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date. Any increase in the Annual
Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. The Annual Base Salary shall not be reduced
after any such increase and the term "Annual Base Salary" shall refer to the
Annual Base Salary as so increased.

              (2) ANNUAL BONUS. In addition to the Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's highest bonus under the Company's or an affiliated company's annual
incentive plans, or any comparable bonus under any predecessor or successor
plan, for the last three full fiscal years prior to the Effective Date
(annualized, in the event that the Executive was not employed by the Company for
the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.

              (3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies, and programs applicable generally to
other peer executives of the Company and the affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and the affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and the affiliated companies.

              (4) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and the affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and the affiliated companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
that are less favorable, in the aggregate, than the



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most favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
the affiliated companies.

              (5) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and the affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and the
affiliated companies.

              (6) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and the
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the affiliated companies.

              (7) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and the affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and the affiliated companies.

              (8) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and the affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and the affiliated companies.

              SECTION 4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically if the Executive dies
during the Employment Period. If the Company determines in good faith that the
Disability (as defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of "Disability"), it may give to
the Executive written notice in accordance with Section 11(b) of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days


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after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. "Disability" means the absence of the
Executive from the Executive's duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or
physical illness that is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative.

              (b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. "Cause" means:

              (1) the willful and continued failure of the Executive to perform
         substantially the Executive's duties with the Company or any affiliated
         company (other than any such failure resulting from incapacity due to
         physical or mental illness), after a written demand for substantial
         performance is delivered to the Executive by the Board or the Chief
         Executive Officer of the Company that specifically identifies the
         manner in which the Board or the Chief Executive Officer of the Company
         believes that the Executive has not substantially performed the
         Executive's duties, or

              (2) the willful engaging by the Executive in illegal conduct or
         gross misconduct that is materially and demonstrably injurious to the
         Company.

For purposes of this Section 4(b), no act, or failure to act, on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel for
the Executive, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
Section 4(b)(1) or 4(b)(2), and specifying the particulars thereof in detail.

              (c) GOOD REASON. The Executive's employment may be terminated by
the Executive for Good Reason. "Good Reason" means:

              (1) the assignment to the Executive of any duties inconsistent in
         any respect with the Executive's position (including status, offices,
         titles and reporting requirements), authority, duties or
         responsibilities as contemplated by Section 3(a), or any other action
         by the Company that results in a diminution in such position,
         authority, duties or responsibilities, excluding for this purpose an
         isolated, insubstantial




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         and inadvertent action not taken in bad faith and that is remedied by
         the Company promptly after receipt of notice thereof given by the
         Executive;

              (2) any failure by the Company to comply with any of the
         provisions of Section 3(b), other than an isolated, insubstantial and
         inadvertent failure not occurring in bad faith and that is remedied by
         the Company promptly after receipt of notice thereof given by the
         Executive;

              (3) the Company's requiring the Executive to be based at any
         office or location other than as provided in Section 3(a)(1)(B) or the
         Company's requiring the Executive to travel on Company business to a
         substantially greater extent than required immediately prior to the
         Effective Date;

              (4) any purported termination by the Company of the Executive's
         employment otherwise than as expressly permitted by this Agreement; or

              (5) any failure by the Company to comply with and satisfy Section
         10(c).

              For purposes of this Section 4(c), any good faith determination of
Good Reason made by the Executive shall be conclusive.

              (d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b).
"Notice of Termination" means a written notice that (1) indicates the specific
termination provision in this Agreement relied upon, (2) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, and (3) if the Date of Termination (as defined herein)
is other than the date of receipt of such notice, specifies the Date of
Termination (which Date of Termination shall be not more than 30 days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance that contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Company's respective rights hereunder.

              (e) DATE OF TERMINATION. "Date of Termination" means (1) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified in the Notice of Termination, as the case may be, (2)
if the Executive's employment is terminated by the Company other than for Cause
or Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (3) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.



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              SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD
REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment
Period, the Company terminates the Executive's employment other than for Cause
or Disability or the Executive terminates employment for Good Reason:

              (1)  the Company shall pay to the Executive, in a lump sum in cash
         within 30 days after the Date of Termination, the aggregate of the
         following amounts:

                   (A) the sum of (i) the Executive's Annual Base Salary through
              the Date of Termination to the extent not theretofore paid, (ii)
              the product of (x) the highest of (I) the Annual Bonus equal to
              the product of (1) the Executive's Annual Base Salary and (2) the
              Executive's target Annual Bonus percentage in effect for the year
              in which the Effective Date occurs, or if higher, the year in
              which the Date of Termination occurs, (II) the Recent Annual Bonus
              and (III) the Annual Bonus paid or payable, including any bonus or
              portion thereof that has been earned but deferred (and annualized
              for any fiscal year consisting of less than 12 full months or
              during which the Executive was employed for less than 12 full
              months), for the most recently completed fiscal year during the
              Employment Period, if any and (y) a fraction, the numerator of
              which is the number of days in the current fiscal year through the
              Date of Termination and the denominator of which is 365, and (iii)
              any compensation previously deferred by the Executive (together
              with any accrued interest or earnings thereon) and any accrued
              vacation pay, in each case, to the extent not theretofore paid
              (the sum of the amounts described in subclauses (i), (ii) and
              (iii), the "Accrued Obligations"); and

                   (B) the amount equal to the product of (i) three and (ii) the
              sum of (x) the Executive's Annual Base Salary and (y) the higher
              of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or
              payable, including any bonus or portion thereof that has been
              earned but deferred (and annualized for any fiscal year consisting
              of less than 12 full months or during which the Executive was
              employed for less than 12 full months), for the most recently
              completed fiscal year during the Employment Period, if any; and

                   (C) an amount equal to the excess of (i) the actuarial
              equivalent of the benefit under the Company's or an affiliated
              company's qualified defined benefit retirement plan or plans,
              including any plan or arrangement maintained or sponsored in a
              jurisdiction other than the United States pursuant to statute or
              otherwise, in which the Executive participates (the "Retirement
              Plan") (utilizing actuarial assumptions no less favorable to the
              Executive than those in effect under the Retirement Plan
              immediately prior to the Effective Date) and any excess or
              supplemental retirement plan or plans in which the Executive
              participates, including any individual contract, agreement, letter
              or other arrangement to which the Executive is a party (taking
              into account, without limitation, any additional age and/or
              service credit that would have been earned



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              thereunder) (collectively, the "SERP") that the Executive would
              receive if the Executive's employment continued for three years
              after the Date of Termination (and using the additional three
              years of age and service for purposes of determining actuarial
              equivalency), assuming for this purpose that all accrued benefits
              are fully vested and assuming that the Executive's compensation in
              each of the three years is that required by Sections 3(b)(1) and
              3(b)(2), over (ii) the actuarial equivalent of the Executive's
              actual benefit (paid or payable), if any, under the Retirement
              Plan and the SERP as of the Date of Termination (for purposes of
              this Section 5(a)(1)(C), actuarial equivalent shall mean the
              approximate basis at which insured annuities could be purchased in
              the open market on the Date of Termination or, in the case of
              plans where such equivalency is explicitly defined, actuarial
              equivalency shall be calculated on the basis specified in the
              applicable plan document; furthermore, all currency translations
              shall be made based on the rate in effect on the Date of
              Termination, and such rate shall apply to both the benefit accrued
              on the Date of Termination, as well as to the value of the benefit
              calculated that includes the additional three years of age and
              service; furthermore, for purposes of calculating actuarial
              equivalence of a pension benefit (with or without the additional
              three years of age and service), the Executive's eligibility to
              receive, and the amount of, an immediately commencing early
              retirement benefit shall be reflected in the calculation of the
              actuarial equivalent benefit);

              (2) for three years after the Executive's Date of Termination, or
         such longer period as may be provided by the terms of the appropriate
         plan, program, practice or policy, the Executive shall be deemed to be
         on a leave of absence from the Company and the Company shall continue
         to provide welfare benefits to the Executive and/or the Executive's
         family at least equal to those that would have been provided to them in
         accordance with the plans, programs, practices and policies described
         in Section 3(b)(4) if the Executive's employment had not been
         terminated or, if more favorable to the Executive, as in effect
         generally at any time thereafter with respect to other peer executives
         of the Company and the affiliated companies and their families,
         provided, however, that, if the Executive becomes reemployed with
         another employer and is eligible to receive medical or other welfare
         benefits under another employer provided plan, the medical and other
         welfare benefits described herein shall be secondary to those provided
         under such other plan during such applicable period of eligibility. For
         purposes of determining eligibility (but not the time of commencement
         of benefits) of the Executive for retiree benefits pursuant to such
         plans, practices, programs and policies, the Executive shall be
         considered to have remained employed until three years after the Date
         of Termination and to have retired on the last day of such period;

              (3) for all purposes of the vesting and exercisability of
         equity-based awards granted under the Company's stock incentive plans
         and the award agreements thereunder, the Executive shall be deemed to
         be on a leave of absence from the



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         Company for three years after the Date of Termination and the
         Executive's termination of employment from the Company shall be deemed
         to occur on the third anniversary of the Date of Termination;

              (4) the Company shall, at its sole expense as incurred, provide
         the Executive with outplacement services the scope and provider of
         which shall be selected by the Executive in the Executive's sole
         discretion; and

              (5) to the extent not theretofore paid or provided, the Company
         shall timely pay or provide to the Executive any other amounts or
         benefits required to be paid or provided or that the Executive is
         eligible to receive under any plan, program, policy or practice or
         contract or agreement of the Company and the affiliated companies (such
         other amounts and benefits, the "Other Benefits").

              (b) DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of the Other Benefits. The Accrued Obligations shall
be paid to the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision
of the Other Benefits, the term "Other Benefits" as utilized in this Section
5(b) shall include, without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and the affiliated companies to the
estates and beneficiaries of peer executives of the Company and the affiliated
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and the affiliated
companies and their beneficiaries.

              (c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
the Other Benefits. The Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. With respect to the
provision of the Other Benefits, the term "Other Benefits" as utilized in this
Section 5(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and the
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with



                                       10
<PAGE>   11









respect to other peer executives of the Company and the affiliated companies and
their families.

              (d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment is terminated for Cause during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive (1) the Executive's Annual Base Salary
through the Date of Termination, (2) the amount of any compensation previously
deferred by the Executive, and (3) the Other Benefits, in each case, to the
extent theretofore unpaid. If the Executive voluntarily terminates employment
during the Employment Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the Executive, other
than for the Accrued Obligations and the timely payment or provision of the
Other Benefits. In such case, all the Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.

              SECTION 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or the affiliated
companies and for which the Executive may qualify, nor, subject to Section
11(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or the
affiliated companies. Amounts or benefits that are vested or that the Executive
is otherwise entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Company or the affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement, except as explicitly
modified by this Agreement.

              SECTION 7. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses that the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").





                                       11
<PAGE>   12









              SECTION 8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

              (a) (1) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by the Company or the affiliated companies to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise but
determined without regard to any additional payments required under this Section
8) (the "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, collectively, the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (the "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8(a)(1), if it shall be
determined that the Executive is entitled to the Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount that could be paid to the
Executive such that the receipt of the Payments would not give rise to any
Excise Tax (the "Reduced Amount"), then no Gross-Up Payment shall be made to the
Executive and the Payments, in the aggregate, shall be reduced to the Reduced
Amount.

              (2) Notwithstanding the provisions of Section 8(a)(1), if the
payment of the Gross-Up Payment as provided in Section 8(a)(1) would make a
transaction entered into in connection with a Change of Control that would
otherwise be eligible for pooling-of-interests accounting treatment under APB
No. 16 ineligible for such treatment, then the following conditions shall apply:
(A) no Gross-Up Payment shall be made unless it shall be determined that a
Gross-Up Payment would have been payable pursuant to the preceding sentence
(without regard to this sentence) if the Executive had not received any Payments
that are considered to be "parachute payments" as defined in Section 280G of the
Code that consist of, or relate to, common stock or other equity interest in the
Company or any of its affiliated companies ("Equity Payments"); and (B) if a
Gross-Up Payment is permitted to be made after application of clause (A) of this
sentence, the amount of such Gross-Up Payment shall be only that amount
necessary so that after payment of all taxes (including any interest or
penalties imposed with respect to such taxes), by the Executive with respect to
Payments other than the Equity Payments, including without limitation, any
income taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment (as computed in accordance with
this clause (B)), the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments other than the Equity Payments. In
determining the Gross-Up Payment pursuant to clause (B) of the preceding
sentence, the rules for allocation of the "base amount" set forth in Question
and Answer 38 of Proposed Treasury Regulation 1.280G-1, or any successor
provision in any proposed, temporary or final regulations that may hereinafter
be promulgated, shall be applied.





                                       12
<PAGE>   13







              (b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Ernst & Young
LLP or such other nationally recognized certified public accounting firm as may
be designated by the Executive (the "Accounting Firm") that shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been
made (the "Underpayment"), consistent with the calculations required to be made
hereunder. In the event the Company exhausts its remedies pursuant to Section
8(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.

              (c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that the Company desires to contest such claim,
the Executive shall:

              (1) give the Company any information reasonably requested by the
         Company relating to such claim,

              (2) take such action in connection with contesting such claim as
         the Company shall reasonably request in writing from time to time,
         including, without limitation, accepting legal representation with
         respect to such claim by an attorney reasonably selected by the
         Company,





                                       13
<PAGE>   14









              (3) cooperate with the Company in good faith in order effectively
         to contest such claim, and

              (4) permit the Company to participate in any proceedings relating
         to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in connection
with such contest, and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that, if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which the Gross-Up
Payment would be payable hereunder, and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

              (d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 8(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 8(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.






                                       14
<PAGE>   15







              SECTION 9. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or the affiliated
companies, and their respective businesses, which information, knowledge or data
shall have been obtained by the Executive during the Executive's employment by
the Company or the affiliated companies and which information, knowledge or data
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those persons designated
by the Company. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

              SECTION 10. SUCCESSORS. (a) This Agreement is personal to the
Executive, and, without the prior written consent of the Company, shall not be
assignable by the Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.

              (b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.

              (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. "Company" means the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes and agrees to
perform this Agreement by operation of law or otherwise.

              SECTION 11. MISCELLANEOUS. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

              (b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

               if to the Executive:      At the last address on file on
                                         the Company's records.


                                       15
<PAGE>   16








               if to the Company:        Kellogg Company
                                         One Kellogg Square
                                         Battle Creek, MI  49016-3599

                                         Attention:  General Counsel


or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

              (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

              (d) The Company may withhold from any amounts payable under this
Agreement such United States federal, state or local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

              (e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.

              (f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a), prior to the Effective Date, the Executive's
employment and/or this Agreement may be terminated by either the Executive or
the Company at any time prior to the Effective Date, in which case the Executive
shall have no further rights under this Agreement; provided that this Agreement
may not be terminated by the Company if it is reasonably demonstrated by the
Executive that such termination (1) was at the request of a third party that has
taken steps reasonably calculated to effect a Change of Control or (2) otherwise
arose in connection with or anticipation of a Change of Control. From and after
the Effective Date, this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof, provided that, this
Agreement shall not supersede any provisions in such other agreement to the
extent such provisions provide for rights or benefits in addition to those
provided herein (but in no event shall the Executive be entitled to duplicate
severance benefits upon termination of employment).









                                       16
<PAGE>   17


              IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board, the Company has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.




                                    --------------------------------------------
                                                 CARLOS M. GUTIERREZ



                                    KELLOGG COMPANY



                                    By
                                      ------------------------------------
                                      Name:  Janet L. Kelly
                                      Title: Executive Vice President





















                                       17