Exhibit 10(f)(4)
EXECUTIVE SEPARATION AGREEMENT
THIS AGREEMENT is made between The Quaker Oats Company, a
New Jersey corporation (the "Company"), and Xxxxxxx X. Xxxxxx (the
"Executive"), dated this 7th day of February, 1996.
WITNESSETH THAT:
WHEREAS, the Company wishes to attract and retain well-
qualified executive and key personnel and to assure both itself
and the Executive of continuity of management in the event of any
actual or threatened change in control of the Company;
NOW, THEREFORE, it is hereby agreed by and between the
parties as follows:
1. Operation of Agreement. The "effective date of this
Agreement" shall be the date on which the Executive declares
it effective, by notice to the Company in writing, but only
if a change in control of the Company (as defined in Section
2) has occurred on or before the date of the notice.
2. Change in Control. A "change in control of the Company"
shall be deemed to have occurred if:
a. any "Person," which shall mean a "person" as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary
holding securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
voting securities; provided, however, that this paragraph
a. shall not apply to any Person who becomes such a
beneficial owner of such Company securities pursuant to an
agreement with the Company approved by the Company's Board
of Directors (the "Board"), entered into before such
Person has become such a beneficial owner of Company
securities representing 5% or more of the combined
voting power of the Company's then outstanding voting
securities;
b. during any period of 24 consecutive months (not
including any period prior to the execution of this
Agreement), individuals, who at the beginning of such
period constitute the Board, and any new director (other
than a director designated by a Person who has entered
into an agreement with the Company to effect a transaction
described in paragraph a., c.(2) or d. of this Section)
whose election by the Board, or whose nomination for
election by the Company's stockholders, was approved by a
vote of at least two-thirds (2/3) of the directors before
the beginning of the period cease for any reason to
constitute at least a majority thereof;
c. the stockholders of the Company approve (1) a plan of
complete liquidation of the Company or (2) the sale or
disposition by the Company of all or substantially all of
the Company's assets unless the acquirer of the assets or
its directors shall meet the conditions for a merger or
consolidation in subparagraphs d.(1) or d.(2); or
d. the stockholders of the Company approve a merger or
consolidation of the Company with any other company other
than:
(1) such a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 70% of the
combined voting power of the Company's or such surviving
entity's outstanding voting securities immediately after
such merger or consolidation; or
(2) such a merger or consolidation which would
result in the directors of the Company who were directors
immediately prior thereto continuing to constitute at
least 50% of the directors of the surviving entity
immediately after such merger or consolidation.
In this paragraph d., "surviving entity" shall mean only an
entity in which all of the Company's stockholders immediately
before such merger or consolidation become stockholders by
the terms of such merger or consolidation, and the phrase
"directors of the Company who were directors immediately
prior thereto" shall include only individuals who were
directors of the Company at the beginning of the 24
consecutive month period preceding the date of such merger or
consolidation, or who were new directors (other than any
director designated by a Person who has entered into an
agreement with the Company to effect a transaction described
in paragraph a., c.(2), d.(1) or d.(2) of this Section) whose
election by the Board, or whose nomination for election by
the Company's stockholders, was approved by a vote of at
least two-thirds (2/3) of the directors before the beginning
of such period.
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3. 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, for the period
commencing on the effective date of this Agreement and ending
on the earlier to occur of the third anniversary of such
effective date or the 65th birthday of the Executive (the
"employment period"), to exercise such authorities and
powers, and perform such duties and functions, as are
commensurate with the authorities and powers being exercised,
and duties and functions being performed, by the Executive
immediately prior to the effective date of this Agreement,
which services shall be performed at the current location
where the Executive was employed immediately prior to the
effective date of this Agreement or at such other location
within a 30-mile radius of such current location. The
Executive shall not be required to accept any other location.
The Executive agrees that during the employment period he
shall devote his full business time exclusively to his
executive duties as described herein and perform such duties
faithfully and efficiently.
4. Compensation, Compensation Plans, Benefit Plans, Perquisites.
During the employment period and prior to termination
(as defined in Section 5) of the Executive, the Executive
shall be compensated as follows:
a. He shall receive an annual salary which is not less
than his annual salary immediately prior to the effective
date of this Agreement, with the opportunity for
increases, from time to time thereafter, which are in
accordance with the Company's regular practices.
b. He shall be eligible to participate on a reasonable
basis in bonus, stock option, restricted stock and other
incentive compensation plans, which shall provide benefits
comparable to those to which he was provided immediately
prior to the effective date of this Agreement.
c. He shall be eligible to participate on a reasonable
basis in tax-qualified employee benefit plans (including
but not limited to pension, profit sharing and employee
stock ownership plans), and supplemental nonqualified
employee benefit plans relating thereto, which shall
provide benefits comparable to those to which he was
provided immediately prior to the effective date of this
Agreement.
d. He shall be entitled to receive employee benefits
(including, but not limited to, medical and life insurance
benefits) and perquisites which are comparable to those to
which he was provided immediately prior to the effective
date of this Agreement.
5. Termination. "Termination" shall mean either (a) termination
by the Company of the employment of the Executive with the
Company for any reason other than death, physical or mental
incapacity, or cause (as defined below), or (b) resignation
of the Executive upon the occurrence of any of the following
events:
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(1) a significant change in the nature or scope of the
Executive's authorities, powers, functions, or duties
from those described in Section 3;
(2) a reduction in total compensation from that provided
in Section 4;
(3) the breach by the Company of any other provision of
this Agreement; or
(4) a reasonable determination by the Executive that, as
a result of a change in control of the Company his
position is significantly affected so that he is unable
to exercise the authorities, powers, functions or duties
attached to his position as described in Section 3.
"Cause" means gross misconduct or willful and material breach
of this Agreement by the Executive. No act, or failure to
act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the action or
omission was in the best interest of the Company.
6. Confidentiality. The Executive agrees that during and after
the employment period, he will not divulge or appropriate to
his own use or the use of others any secret or confidential
information or knowledge pertaining to the business of the
Company, or any of its subsidiaries, obtained during his
employment by the Company or any of its subsidiaries.
7. Severance and Benefit Payments.
a. In the event of termination of the Executive during
the employment period, the Company shall pay the Executive
a lump-sum severance allowance equal to salary and bonus
payments for the following 24 calendar months at the rate
which he would have been entitled to receive in accordance
with Section 4. Such a severance allowance shall be
adjusted to include expected increases to the Executive's
salary and bonus for such period, but shall not be
adjusted on a present value basis.
b. In the event of termination of the Executive during
the employment period, the Company shall also pay the
Executive a lump-sum benefit payment in an amount
equivalent to (1) the benefits he would have accrued or
been allocated under any tax-qualified employee benefit
plan (including but not limited to pension, profit sharing
and employee stock ownership plans) and any nonqualified
supplemental benefit plan relating thereto, maintained by
the Company if he had remained in the employ of the
Company for 24 calendar months after his termination,
which benefits will be paid in addition to the benefits
provided under such plans, and (2) any other employee
benefits (including, but not limited to, coverage under
any medical and life insurance arrangements or programs)
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to which he would have been entitled under all such
employee benefit plans, programs or arrangements
maintained by the Company if he had remained in the employ
of the Company for 24 calendar months after his
termination. Such a benefit payment shall be adjusted to
include expected increases to the Executive's salary,
bonus and other compensation having an effect on such
benefits for such period, but shall not be adjusted on a
present value basis.
c. The amount of the severance allowance and benefit
payment described in this Section shall be determined and
such payment shall be made as soon as it is reasonably
possible.
d. The severance allowance and benefit payment to be
provided pursuant to this Section 7 shall be in addition
to, and shall not be reduced by, any other amounts or
benefits provided by separate agreement with the
Executive, or plan or arrangement of the Company or its
subsidiaries, unless specifically stipulated in an
agreement which constitutes an amendment to this Agreement
as provided in Section 14.
8. Tax Reimbursement. If any payment to the Executive under
this Agreement or under any other compensation agreement,
plan or arrangement of the Company or its subsidiaries is
subject to an excise tax under section 4999 of the Internal
Revenue Code of 1986, as amended, (the "Code"), the Company
shall pay the Executive an additional amount which is equal
to the amount of such excise tax. The Company will provide
complete compensation and tax data on a timely basis to the
Executive and to an accounting firm or law firm designated by
the Executive in order to enable the Executive to determine
the extent to which any payments under this Agreement or
under any other compensation agreement, plan or arrangement
of the Company or its subsidiaries constitute "parachute
payments" or "excess parachute payments" under section 280G
of the Code. Any additional amount payable under this
Section 8 shall be due and paid no later than ten business
days after the other payment to which such additional payment
relates; provided, however, that if such additional amount
cannot be determined on or before such due date, the Company
shall pay an amount on the due date which it in good faith
estimates to be payable and shall pay the remainder of such
additional amount (together with interest at a rate equal to
120% of the applicable Federal rate determined under Section
1274(d) of the Code) as soon as such amount can be
determined, but no later than 30 days after the date on which
Executive becomes subject to the payment of the excise tax.
9. Mitigation and Set Off. The Executive shall not be required
to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise. The
Company shall not be entitled to set off against the amounts
payable to the Executive under this Agreement any amounts
owed to the Company by the Executive, any amounts earned by
the Executive in other employment after termination of his
employment with the Company, or any amounts which might have
been earned by the Executive in other employment had he
sought such other employment.
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10. Arbitration of All Disputes. Any controversy or claim
arising out of or relating to this Agreement or the breach
thereof, except with respect to Section 8, shall be settled
by arbitration in the City of Chicago in accordance with the
laws of the State of Illinois by three arbitrators appointed
by the parties. If the parties cannot agree on the
appointment, one arbitrator shall be appointed by the Company
and one by the Executive, and the third shall be appointed by
the first two arbitrators. If the first two arbitrators
cannot agree on the appointment of a third arbitrator, then
the third arbitrator shall be appointed by the Chief Judge of
the United States Court of Appeals for the Seventh Circuit.
The arbitration shall be conducted in accordance with the
rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as
provided in this Section 10. Judgement upon the award
rendered by the arbitrators may be entered in any court
having jurisdiction thereof. In the event that it shall be
necessary or desirable for the Executive to retain legal
counsel or incur other costs and expenses in connection with
enforcement of his rights under this Agreement, Executive
shall be entitled to recover from the Company his reasonable
attorneys' fees and costs and expenses in connection with
enforcement of his rights (including the enforcement of any
arbitration award in court). Payment shall be made to the
Executive by the Company at the time these attorneys' fees
and costs and expenses are incurred by the Executive. If,
however, the arbitrators should later determine that under
the circumstances the Executive could have had no reasonable
expectation of prevailing on the merits at the time he
initiated the arbitration based on the information then
available to him, he shall repay any such payments to the
Company in accordance with the order of the arbitrators. Any
award of the arbitrators shall include interest at a rate or
rates considered just under the circumstances by the
arbitrators.
11. Notices. Any notices, requests, demands, and other
communications provided for by this Agreement shall be
sufficient if in writing and if sent by registered or
certified mail to the Executive at the last address he has
filed in writing with the Company or, in the case of the
Company, at its principal executive offices.
12. Non-Alienation. The Executive shall not have any right to
pledge, hypothecate, anticipate or in any way create a lien
upon any amounts provided under this Agreement; and no
benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary
acts, or by operation of law. Nothing in this paragraph
shall limit the Executive's rights or powers which his
executor or administrator would otherwise have.
13. Governing Law. The Agreement shall be construed and enforced
according to the Employee Retirement Income Security Act of
1974 ("ERISA"), and the laws of the State of Illinois, other
than its laws respecting choice of law, to the extent not pre-
empted by ERISA.
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14. Amendment. This Agreement may be amended or cancelled by
mutual agreement of the parties in writing without the
consent of any other person and, so long as the Executive
lives, no person, other than the parties hereto, shall have
any rights under or interest in this Agreement or the subject
matter hereof.
15. Term. Unless the Executive has theretofore declared this
Agreement effective, pursuant to Section 1 of this Agreement,
this Agreement shall terminate (a) March 31, 1998 or (b) when
the Executive has been placed on inactive service by the
Company prior to a change in control of the Company.
16. Successors to the Company. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company.
17. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain
in full force and effect.
18. Prior Agreement. Any prior Executive Separation Agreement
between the Executive and the Company which has not yet
terminated pursuant to its terms, is cancelled by mutual
consent of the Executive and the Company pursuant to
execution of this Agreement, effective as of the day and year
first above written.
IN WITNESS WHEREOF, the Executive has hereunto set his
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed
in its name on its behalf, and its corporate seal to be hereunto
affixed and attested by its Assistant Secretary, all as of the
day and year first above written.
S/XXXXXXX X. XXXXXX
XXXXXXX X. XXXXXX
THE QUAKER OATS COMPANY
By S/XXXXXXX X. XXXXXXX
ATTEST:
S/XXXXXX X. XXX
Assistant Secretary
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