Exhibit 10 (f) (5)
AGREEMENT UPON SEPARATION OF EMPLOYMENT
This Agreement Upon Separation Of Employment ("Agreement") is made and
entered into by and between Xxxxxx X. Xxxxxxxx, his successors, heirs,
administrators, executors, personal representatives and assigns ("Xxxxxxxx")
and The Quaker Oats Company, its officers, directors, shareholders, employees,
agents, assigns, subsidiaries, divisions, parents, affiliates and successors
("Quaker"), collectively "the parties." The Agreement shall become effective
seven (7) days after it is executed by Xxxxxxxx.
1. Consideration to Xxxxxxxx
A. Quaker shall treat Xxxxxxxx'x resignation as "involuntary" for
purposes of The Quaker Officers' Severance Program ("the Program") and The
Quaker Supplemental Executive Retirement Program ("the SERP"). This will
render him eligible for benefits under the Program and the SERP.
B. From December 1, 1996 through November 30, 1997, after severance
payments under the Program have expired, Quaker shall pay Xxxxxxxx an amount
equal to one year of severance pay under the Program. These payments shall be
made in equal semi-monthly installments, and Xxxxxxxx shall be credited with
inactive service time while he receives them. These payments are consideration
for the covenants in this Agreement, not ordinary severance pay, and are
something to which Xxxxxxxx would not be entitled in the absence of this
Agreement.
Specifically, the payments due in December 1996 are part of the
consideration for Xxxxxxxx'x resignation (paragraph 2), waiver of potential
claims (paragraph 3), and miscellaneous agreements contained herein (para-
graph 4). The payments from January 1, 1997 through November 30, 1997 are
solely consideration for the restrictive covenants in paragraph 5 of this
Agreement.
If Xxxxxxxx dies before November 30, 1997, then any payments that would
have been due to him under this provision were he still alive shall be paid to
his estate in a lump sum, within forty five (45) days of his death. In
addition, while receiving payments under this provision, Xxxxxxxx also shall
receive the same benefits, such as insurance coverage, that are provided under
the Program.
C. The parties hereby amend the January 13, 1993 Restricted Shares Award
to Xxxxxxxx, pursuant to which he was awarded 60,000 shares that contingently
vest on January 13, 1997. The number of shares and all other rules governing
the restricted shares shall remain the same, but the Restricted Period for
30,000 of the shares is hereby changed to November 30, 1997 (i.e., they will
not vest until then). The Restricted Period for the remaining 30,000 shares
will expire on January 13, 1997, as originally scheduled.
For purposes of the Restricted Shares Award, as amended, and for purposes
of any outstanding stock options issued to Xxxxxxxx under the Long Term
Incentive Plan of 1990, Xxxxxxxx shall be considered employed (on inactive
status) for so long as he receives severance pay under the Program or payments
under paragraph 1(B) of this Agreement. In the absence of this Agreement, none
of the restricted shares or outstanding options would vest, because Xxxxxxxx'x
employment would terminate before the current vesting date. Quaker's agreement
with respect to the restricted shares and options is made solely as
consideration for the restrictive covenants in paragraph 5 of this Agreement.
X. Xxxxxxxx shall receive the outplacement services, club membership
dues and financial counseling benefits described in Xxxxxxx'x October 23, 1995
letter, in accordance with Quaker's applicable policies and practice. In
addition, Quaker shall provide Xxxxxxxx with a "bridge" to retiree medical
benefits, just as if he were covered by paragraph 5(b)(3) of the Quaker
Severance Pay Plan (the "Plan"). Further, as provided in the Plan's bridge
provision, if Xxxxxxxx makes the COBRA payments necessary to continue his
benefits until he reaches age 55, then he shall be considered eligible for
benefits under the Retiree Health Incentive Plan. Quaker's provision of these
benefits is part of the consideration for Xxxxxxxx'x waiver of potential claims
(paragraph 3).
2. Resignation of Employment
Xxxxxxxx already has resigned his position as President and Chief
Operating Officer of Quaker, and his position on Quaker's Board of Directors.
He hereby irrevocably resigns his employment with Quaker in any other
capacities, effective November 30, 1995, subject to the inactive status
provisions set forth in paragraph 1. Xxxxxxxx understands and agrees that his
active employment relationship with Quaker, its parent companies, affiliates
and successors, will be permanently and irrevocably severed as of the effective
date of his resignation. Xxxxxxxx agrees he shall not attempt to rescind his
resignation, nor apply or otherwise seek reinstatement or reemployment by
Quaker at any time, and that Quaker has no obligation, contractual or
otherwise, to rehire, reemploy or recall him in the future. Xxxxxxxx further
stipulates that this agreement is sufficient cause for Quaker to deny any
request of rescission, rehire, reemployment or recall.
Xxxxxxxx agrees that prior to the effective date of his resignation, he
will return all Quaker property, including but not limited to key, office pass,
credit cards, computers, office equipment, sales records and data. Xxxxxxxx
further agrees that within sixty (60) days after his resignation date, he will
submit all outstanding expenses and clear all advances and his personal advance
account, if any.
3. Waiver & Release
X. Xxxxxxxx waives, releases and discharges Quaker from any and all
claims and liabilities, demands, actions and causes of action, including
attorneys' fees and costs and participation in a class action lawsuit, whether
known or unknown, fixed or contingent, that he may have or claim to have
against Quaker as of the date of this Agreement. Xxxxxxxx further covenants
not to file a lawsuit or participate in a class action lawsuit to assert such
claims. Without limitation, Xxxxxxxx specifically waives all claims for back
pay, future pay or any other form of compensation or income, except as provided
below. This waver includes but is not limited to claims arising out of or in
any way related to Xxxxxxxx'x employment or termination of employment with
Quaker, including age discrimination claims under the Age Discrimination In
Employment Act (as amended), discrimination claims under Title VII of the Civil
Rights Act of 1964 (as amended) or the Americans with Disabilities Act, claims
for breach of contract, and any other statutory or common law cause of action
under state, federal or local law.
However, Xxxxxxxx does not waive, release, discharge or covenant not to
xxx for enforcement of any rights or claims that arise out of conduct or
omissions which occur entirely after the date this Agreement becomes effective.
In addition, he does not waive any rights he may have (as an employee on
inactive status until November 30, 1997 and as a former employee thereafter)
under any of Quaker's fringe benefit or incentive plans (e.g., its pension
plan, the Program, the SERP, the Long Term Incentive Plan of 1990, etc.), nor
does he waive his right to payment for unused vacation, if any, pursuant to
Quaker's vacation policy. Notwithstanding anything to the contrary in
paragraph 9, such benefits shall continue to be governed by separate ERISA
plans, existing contracts and/or Quaker policies (except that the Restricted
Share Award is hereby amended pursuant to paragraph 1(C)).
B. Quaker waives, releases and discharges Xxxxxxxx from any and all
claims and liabilities, demands, actions and causes of action, including
attorneys' fees and costs, that it may have or claim to have against Xxxxxxxx
as of the date this Agreement becomes effective; provided, this waiver, release
and discharge only apply to claims as to which Quaker's senior officers were
aware, on or before the effective date of this Agreement, of all material facts
necessary to establish Xxxxxxxx'x liability; and further provided, Quaker does
not waive, release, discharge or covenant not to xxx for enforcement of any
rights or claims that arise out of conduct or omissions which occur entirely
after the date this Agreement becomes effective.
C. The parties stipulate that nothing contained in this Agreement shall
be construed as an admission by either of them of any liability, wrongdoing or
unlawful conduct. It is understood that both Quaker and Xxxxxxxx deny any
liability, wrongdoing or unlawful conduct, and each is providing consideration
for this waiver and release solely in order to resolve any disputes between
them amicably and to avoid the expense of potential litigation.
4. Miscellaneous agreements
The covenants and agreements set forth in this paragraph shall remain in
effect until November 30, 1997:
X. Xxxxxxxx shall provide accurate information or testimony or both in
connection with any legal matter if so requested by Quaker. He shall make
himself available upon request to provide such information and/or testimony, in
a formal and/or an informal setting in accordance with Quaker's request,
subject to reasonable accommodation of his schedule and reimbursement of
reasonable expenses, including reasonable and necessary attorney fees (if
independent legal counsel is reasonably necessary).
X. Xxxxxxxx shall cooperate with media requests for interviews regarding
his termination and/or Quaker, unless directed otherwise by Quaker in a
particular instance. He shall not disparage The Quaker Oats Company, its
products, or any of its directors, officers or employees in these interviews,
nor in any other private or public setting; provided, if Xxxxxxxx is compelled
to provide testimony under oath, such testimony shall be protected by the same
privilege that would apply to a defamation claim.
C. The Quaker Oats Company, and any officer or director acting on its
behalf, shall answer all reference inquiries directed to The Quaker Oats
Company regarding Xxxxxxxx by stating only his positions held, compensation and
dates of employment. No additional information shall be provided unless
authorized in advance, in writing, by Xxxxxxxx. Xxxxxxxx agrees to direct all
requests for references to the highest ranking Human Resources officer within
Quaker.
5. Prohibited Conduct During First Two Years Following Termination
X. Xxxxxxxx covenants and agrees that from December 1, 1995 through
November 30, 1997, he shall not engage in any of the following activities
anywhere in the world:
i. Non-competition. Xxxxxxxx shall not accept any employment,
consulting position or ownership interest which involves his Participation in
the management of a business entity that markets, sells, distributes or
produces Covered Products, unless that business entity's sole involvement with
Covered Products is that it makes retail sales or consumes Covered Products,
without competing in any way against Quaker.
a. "Participation" shall be construed broadly to include,
without limitation: (1) holding a position in which he directly manages such a
business entity; (2) holding a position in which anyone else who directly
manages such a business entity is in Xxxxxxxx'x reporting chain or chain-of-
command (regardless of the number of reporting levels between them); (3)
providing input, advice, guidance, or suggestions regarding the management of
such a business entity to anyone responsible therefor; (4) providing a
testimonial on behalf of such a business entity or the product it produces; or
(5) doing anything else that clearly falls within a common sense definition of
the term "participate" as used in the present context.
b. "Covered Products" mean any product which falls into one or
more of the following categories, so long as Quaker is producing, marketing,
distributing, selling or licensing such product anywhere in the world: non-
carbonated beverages other than dairy or alcoholic beverages, including without
limitation sports drinks, premium iced tea and juice drinks; hot cereals;
pancake mixes; grain-based snacks (which do not include potato chips); value-
added rice products; pancake syrup; value-added pasta products; ready-to-eat
cereals; dry pasta products; items Quaker produces for the food service market;
and frozen waffles, pancakes and french toast.
ii. Raiding Employees. Xxxxxxxx shall not in any way, directly or
indirectly (including through someone else acting on Xxxxxxxx'x recommendation,
suggestion, identification or advice), facilitate or solicit any existing
Quaker employee to leave the employment of Quaker or to accept any position
with any other company or corporation. For purposes of this provision, the
following definitions apply:
a. "Existing Quaker employee" means someone: (1) who is
employed by Quaker on the date when Xxxxxxxx'x Quaker employment terminates;
(2) who is still employed by Quaker as of the date when the facilitating act or
solicitation takes place; and (3) who holds a manager, director or officer
level position at Quaker (or an equivalent position based on job duties and/or
Hay points, regardless of the employee's title).
b. The terms "solicit" and "facilitate" shall be given the
ordinary, common sense meaning appropriate in the present context.
iii. Non-disclosure. Xxxxxxxx shall not use or disclose to anyone
any confidential information regarding Quaker. For purposes of this provision,
the term "confidential information" shall be construed as broadly as Illinois
law permits and shall include all non-public information Xxxxxxxx acquired by
virtue of his positions with Quaker which might be of any value to a competitor
or which might cause any economic loss (directly or via loss of an opportunity)
or substantial embarrassment to Quaker or its customers, distributors or
suppliers if disclosed. Examples of such confidential information include,
without limitation, non-public information about Quaker's customers, suppliers,
distributors and potential acquisition targets; its business operations and
structure; its product lines, formulas and pricing; its processes, machines and
inventions; its research and know-how; its financial data; and its plans and
strategies.
B. In the event of a breach or threatened breach of any term of this
paragraph by Xxxxxxxx, Quaker shall be entitled to an injunction compelling
specific performance, restraining any future violations and/or requiring
affirmative acts to undo or minimize the harm to Quaker, in addition to damages
for any actual breach that occurs. The parties stipulate and represent that
breach of any provision of this paragraph would cause irreparable injury to
Quaker, for which there would be no adequate remedy at law, due among other
reasons to the inherent difficulty of determining the precise causation for
loss of customers, confidential information and/or employees and of determining
the amount and ongoing effects of such losses.
C. In the event Xxxxxxxx breaches any term of this paragraph, Quaker
shall have the option of seeking injunctive relief or terminating all remaining
payments due under paragraph 1(B) of this Agreement, except payments due in
December 1996 (which cannot be terminated). Terminating payments due under
paragraph 1(B) would have the effect of terminating Xxxxxxxx'x inactive
employment status and, accordingly, would prevent the restricted shares and
stock options discussed in paragraph 1(C) from vesting.
D. In the event Quaker elects to pursue injunctive relief, then the
following rules shall apply:
i. While litigation over the requested injunction is pending,
Quaker may, in its discretion, withhold payments otherwise due to Xxxxxxxx
pursuant to paragraph 1(B), except that payments due in December 1996 cannot be
withheld. Xxxxxxxx'x employment shall be terminated (i.e., he will cease to be
considered employed on inactive status) as soon as Quaker sends notice that it
intends to terminate remaining payments under paragraph 1(B), which means that
outstanding restricted shares and stock options would not vest.
ii. If , at the conclusion of the litigation, Quaker successfully
obtains full injunctive enforcement of all provisions in this paragraph 5 that
it attempts to enforce, then Quaker shall pay Xxxxxxxx all amounts otherwise
due under paragraph 1(B) that were withheld, shall resume making all payments
required under paragraph 1(B), and shall retroactively restore Xxxxxxxx'x
status as an inactive employee on all dates for which payments were withheld
(which may result in retroactive vesting of the restricted shares and/or
options).
iii. If, at the conclusion of the litigation, Quaker obtains some,
but not all, of the injunctive relief it seeks under this paragraph, then
Quaker shall make an election. It may either accept the injunction and proceed
as specified in subparagraph (ii) above, or it may elect to voluntarily vacate
and/or not enforce the injunction, in which event it shall have no obligation
to resume paying Xxxxxxxx under paragraph 1(B), nor to pay withheld amounts,
nor to retroactively restore his inactive employment status.
iv. If a court entirely declines to enforce paragraph 5 of this
Agreement or holds it invalid or void, then Quaker shall have no further
obligation to pay Xxxxxxxx under paragraph 1(B), including sums withheld while
litigation was pending, and shall not retroactively reinstate his inactive
employment status.
v. If a court holds that the provisions of paragraph 5 are
enforcible, but further finds that Xxxxxxxx did not breach any of them, then
Quaker shall pay Xxxxxxxx all amounts otherwise due under paragraph 1(B) that
were withheld, shall resume making all payment required under paragraph 1(B),
and shall retroactively reinstate his inactive employment status.
vi. If Xxxxxxxx'x inactive employment status is retroactively
reinstated and that reinstatement results in the vesting of restricted shares
or stock options, he shall have no claim against Quaker for any change in the
value of said shares or options between the date when the shares/options would
have vested but for the withholding and the date when the retroactive
reinstatement occurs.
vii. For purposes of this paragraph, litigation shall not be deemed
to have concluded until all potential appeals by all parties are waived or
exhausted.
E. Recitals: Employee stipulates and represents that the following
facts are true, and further understands and agrees that they are material
representations upon which Quaker is relying in entering into this Agreement:
x. Xxxxxxxx has been the President and Chief Operating Officer of
Quaker for several years, and was a key executive before then. In these
positions, he participated in forming and/or was informed about the details of
operational plans and strategic long range plans for Quaker as a whole and each
of its operating units. Without limitation, he has detailed knowledge
regarding business plans, new product development, merger and acquisition
plans, pricing structure for all of Quaker's products, marketing plans, sales
plans, distribution plans, supply chain plans, plans to realign business units
within Quaker, and plans to integrate Snapple into Quaker. This is: (1)
information Xxxxxxxx gained by virtue of his employment at Quaker; (2) highly
confidential and secret information from which Quaker derives economic value,
actual or potential, from its not being generally known to other persons
outside Quaker who could obtain economic value from its disclosure or use; (3)
information known within Quaker only to key employees and those who need to
know it to perform their jobs; (4) information regarding which Quaker has taken
reasonable measures to preserve its confidentiality; (5) information that could
not easily be duplicated by others, and which Quaker required considerable time
and effort to develop; and (6) information which is likely to remain valuable
and secret for at least two years.
ii. By virtue of his employment at Quaker, Xxxxxxxx has developed
personal and business relationships with existing Quaker employees, which he
otherwise would not have had. By virtue of his position, he also has acquired
knowledge as to which existing Quaker employees are critical to Quaker's
success and future plans, and which ones have skills or contacts that would be
valuable to a competitor.
6. Advance Determination of Permitted/Prohibited Conduct
Xxxxxxxx may request an advance written determination from Quaker's
highest ranking human resources officer as to whether taking a proposed action
or job would, in Quaker's opinion, constitute a breach of this Agreement. In
that event, and provided that Xxxxxxxx discloses in writing all material facts
about the proposed action or job, the advance written determination shall be
made as soon as practicable in the circumstances, without any unreasonable
delay or withholding; PROVIDED, that if circumstances materially change after
the advance determination is made (e.g., if the duties of a job change after
Xxxxxxxx accepts it), the determination may be reconsidered and
revised/reversed upon thirty days advance written notice to Xxxxxxxx.
7. Independence of SERP
No definition contained in this Agreement, nor any determination made by
Quaker or a court in construing this Agreement, in advance or after-the-fact,
shall limit, bind or in any way constrain the Compensation Committee in making
determinations under The Quaker Supplemental Executive Retirement Program ("the
SERP").
8. Choice of Law And Forum; Attorney Fees
A. This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, without giving effect to choice of law
principles.
B. In the event of any litigation over this Agreement or an alleged
breach thereof, Xxxxxxxx consents to submit to the personal jurisdiction of any
court, state or federal, in the State of Illinois. The parties agree that the
Illinois courts, state or federal, shall be the exclusive jurisdiction for any
litigation over this Agreement or an alleged breach thereof.
C. In the event either party breaches this Agreement, in addition to any
damages, injunction, or other relief awarded by a court, the party in violation
of this Agreement shall reimburse the other party for its litigation costs and
expenses including reasonable attorney fees.
9. Full Agreement
This written document contains the entire understanding and agreement of
the parties on the subject matter set forth herein, and supercedes any prior
agreement relating to these matters. No promises or inducements have been made
other than those reflected herein, and no party is relying on any statement or
representation by any person except those set forth herein, including without
limitation oral or written summaries of this Agreement.
This Agreement cannot be modified or altered except by a subsequent
written agreement signed by the parties; and only Quaker's highest ranking
Human Resources officer or his direct superior shall have authority to sign
such an amendment on behalf of Quaker.
Without limitation, nothing in this document shall eliminate or reduce
Xxxxxxxx'x obligation to comply with the Quaker Code of Ethics, to the extent
that certain provisions in the Code (such as non-disclosure rules) remain
applicable to employees after termination. Likewise, nothing in this document
shall eliminate or reduce Quaker's obligation to indemnify Xxxxxxxx in certain
situations, pursuant to Quaker's by-laws or applicable law.
10. Severability
Each term of this Agreement is deemed severable, in whole or in part, and
if any provision of this Agreement or its application in any circumstance is
found to be illegal, unlawful or unenforceable, the remaining terms and
provisions shall not be affected thereby and shall remain in full force and
effect, except as expressly provided below.
Unless Quaker consents, the provisions in paragraph 5 of this Agreement
are not severable from each other or from the provisions designated as
consideration for the covenants in paragraph 5. If any provision or aspect of
paragraph 5 is held invalid, illegal, unlawful or unenforceable, then there is
no consideration for payments under paragraph 1(B) covering January 1, 1997
through November 30, 1997, nor for treating Xxxxxxxx as employed on inactive
status during that time period; PROVIDED, if any provision in paragraph 5 is
invalid or broader than the law allows, a court is authorized to award the
broadest injunctive relief permitted by law, and Quaker shall thereafter make
its election pursuant to paragraph 5(D)(iii) -- if Quaker elects to accept the
limited injunctive relief, then it shall consent to sever the invalid
provision(s). Quaker's consent to sever one or more provisions in paragraph 5
may be given at any time: before, during, or after litigation, in Quaker's
sole discretion.
The Quaker Oats Company
/sic/X. Xxxxxxx
By its Senior Vice President
XXXXXXXX HAS BEEN ADVISED IN WRITING, VIA THIS NOTICE, TO CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS AGREEMENT. HE ACKNOWLEDGES THAT HE RECEIVED IT ON
October 23, 1995, AND THAT SINCE THAT TIME HE HAS REVIEWED IT; CONSULTED WITH
AN ATTORNEY, AND NEGOTIATED SEVERAL CHANGES WITH QUAKER. XXXXXXXX FURTHER
ACKNOWLEDGES THAT THIS AGREEMENT WAS RE-TYPED AND RE-SIGNED BY QUAKER TO
INCORPORATE THE CHANGES HE NEGOTIATED, RATHER THAN INSERTING THE CHANGES IN THE
ORIGINAL DOCUMENT BY HAND OR ADDING AN ADDENDUM TO THE ORIGINAL DOCUMENT.
XXXXXXXX UNDERSTANDS THAT HE HAS TWENTY EIGHT (28) DAYS FROM October 23, 1995
TO CONSIDER AND DECIDE WHETHER TO SIGN THE AGREEMENT. XXXXXXXX FURTHER
UNDERSTANDS THAT HE MAY RESCIND THE AGREEMENT WITHIN SEVEN (7) DAYS AFTER
SIGNING IT. XXXXXXXX AFFIRMS THAT HE HAS CAREFULLY READ AND FULLY UNDERSTANDS
ALL PROVISIONS OF THIS AGREEMENT, THAT THE CONSIDERATION HE IS RECEIVING IS
FAIR AND ADEQUATE, AND THAT HE HAS NOT BEEN THREATENED OR COERCED INTO SIGNING
IT.
/sic/November 20, 1995 /sic/Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
