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EXHIBIT 10.01
LEAVE OF ABSENCE AND SEVERANCE AGREEMENT
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(PRESENTED: FEBRUARY 24, 1999)
This Leave of Absence and Severance Agreement hereafter, (the "Agreement") is
made and entered into as of March 1, 1999, by, and between Xxxxxxx Company, a
Delaware corporation ("the Company"), and Xxxxxx X. Xxxxxxxx an individual
("Employee").
PURPOSE
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The purpose of this Leave of Absence and Severance Agreement is to set forth the
arrangements with respect to Employee's resignation as an officer of the
Company, and its subsidiaries, divisions and affiliates, and related matters,
effective August 1, 1999. As of that date, Employee is relieved of all his
titles, duties, responsibilities, and authority as an officer and otherwise with
respect to the Company.
TERMS AND CONDITIONS
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A. As more fully provided herein below, the salary continuation payments
described herein are in consideration of Employee's release of any and
all cause or causes of action he has, has had, or may have against the
Company and also in consideration of Employee's agreement not to
compete.
Commencing March 1, 1999 and continuing through April 30, 1999,
Employee shall receive his regularly scheduled salary payments.
Commencing May 1, 1999 and ending July 31, 1999, (i.e., last day
worked), Employee will receive salary continuation payments of $265,867
(two hundred sixty-five thousand, eight hundred sixty-seven dollars)
per month. On August 1, 1999 Employee shall receive a residual
severance payment of $259,896.69 (two hundred fifty-nine thousand,
eight hundred ninety-six dollars and sixty-nine cents). Commencing
August 1, 1999, Employee shall begin receiving retirement benefits from
the Xxxxxxx Company tax qualified, Excess Benefit and Supplemental
Retirement Plans, estimated today to be $348,552.16 (three hundred
forty-eight thousand, five hundred fifty-two dollars and sixteen cents)
per year as determined by single life annuity amounts. The amounts
payable to Employee under this Agreement are in lieu of any amounts
which may be payable to Employee for termination pay, including but not
limited to, any prior agreement and/or standard severance (i.e., one
week per year of service) policy. Employee expressly waives any right
to request a lump sum payment option for any portion of his annual
pension benefits in excess of $75,000 (seventy-five thousand dollars)
per year.
Usual and customary withholding for tax purposes will be withheld from
all monthly salary continuation payments and from any other payments
made to Employee, to the extent required by law. All tax liability,
with respect to any and all payments or services received by Employee
under this Agreement (other than employer withholding and
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employer payroll taxes), will be Employee's responsibility. It is
understood that the monthly salary continuation payments as provided in
this Agreement shall continue to be made to Employee whether or not
Employee secures new employment subject to the non-compete provision of
this Agreement.
B. Within sixty (60) days of the last day worked (i.e., July 31, 1999),
the Company will pay to Employee that sum which is equivalent to all
unused, earned, accrued prorated vacation of Employee as of the last
day worked. Employee shall not be entitled to any future vacation pay
accruals from and after the last day worked.
C. Employee will be eligible to participate in the Second Restated Xxxxxxx
Company Salaried Savings and Investment Plan, subject to the terms and
provisions thereof, including any amendment or alteration thereof after
the date of this Leave of Absence and Severance Agreement, throughout
Employee's leave of absence. Usual and customary withholding for
personal designated deductions, including participation in such Savings
Plan, will be withheld throughout Employee's leave of absence.
D. Employee's right to exercise nonqualified stock options that Employee
received pursuant to the Company 1982 Stock Option, the 1991 Key
Employee Long-Term Incentive Plan, and the Xxxxxxx Company Bonus
Replacement Stock Option Plan, will be administered in accordance with
and be subject to the respective provisions of those Plans, and shall
continue so long as Employee is employed by the Company and for such
period of time as provided by such Plans upon Employee's retirement.
The ability to utilize the accelerated ownership feature of the Plans
shall continue through August 15, 1999.
E. The Company will continue Employee's coverage under the existing
Company Executive Survivor Income Plan, based upon Employee's
compensation rate defined under this Agreement for the purposes of the
Plan as $726,090 (seven hundred twenty-six thousand and ninety
dollars).
F. Group Term Insurance coverage provided during this leave of absence
shall be calculated by using a base pay amount of $470,000 (four
hundred seventy thousand dollars).
G. Employee hereby irrevocably elects to retire August 1, 1999 and shall
be eligible for pension benefits through Xxxxxxx Company Salaried
Pension Plan, the Xxxxxxx Company Excess Benefit or Supplemental
Retirement Plan as amended by the February 10, 1998 Participation
Agreement (collectively the "Pension Plans"). Employee will be eligible
for annual pension benefits based upon Employee's highest consecutive
three-year earnings during his last ten years of employment with the
Company, i.e., average pay for 1997 - 1999 equals $726,090 (seven
hundred twenty-six thousand and ninety dollars). At the time Employee
elects to begin receiving such benefits, he should contact the Employee
Benefits Department of the Company.
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H. Except as otherwise provided herein, benefits for Employee and his
eligible dependents, as outlined in "A Guide To Your
Medical/Mental/Prescription Drug Benefits" effective 1995, and under
the Executive Income Survivor Plan, subject to the respective terms and
provisions thereof, including any amendment or alteration thereof after
the date of this Agreement, will be continued for Employee as an
"employee", (i.e., or on leave of absence) and, to the extent provided
in such plans, upon Employee's retirement. However, prior to his
retirement, at such time as Employee is eligible for coverage by the
health plan of another employer, such health insurance shall be deemed
the primary health insurance coverage for Employee and his eligible
dependents. Employee shall remain eligible for a Company paid physical
at Mayo Clinic, currently scheduled for September 1999.
I. The Company will pay for financial planning and/or tax advice provided
to Employee, up to $10,000 for the 1999 tax year. Employee's
predetermined allowance for such advice for the tax year 1998 remains
unchanged.
J. Employee will be eligible for outplacement assistance, at the Company's
expense, not to exceed $60,000, by an outplacement agency mutually
agreeable upon by Employee and Company.
K. In further consideration of the foregoing, Employee agrees that, for
the respective Restricted Periods (as hereinafter defined), Employee
shall not:
(i) directly or indirectly, accept any employment, consult for or with,
or otherwise provide or perform any services of any nature to, for or
on behalf of any person, firm, partnership, corporation or other
business or entity that manufactures, produces, distributes, sells or
markets any of the Products (as herein below defined) in the Geographic
Area (as hereinafter defined), including, but not limited to, General
Xxxxx, Xxxxx/Post, Quaker, Nabisco, Pepsi/Frito Lay, Xxxxxx-Xxxxxxx,
M&M/Mars, Pillsbury /Grand Met, Malto Meal, Ralcorp Cereal, and /or any
private label cereal company and/or
(ii) directly or indirectly, permit any business firm which Employee,
individually or jointly with others may own, manage, operate, or
control, to engage in the manufacture, production, distribution, sale
or marketing of any of the Products in the Geographic Area.
For purposes of this non-compete provision, the term "Products" shall
mean ready-to-eat cereal products, toaster pastries, cereal bars,
granola bars, frozen waffles, crispy marshmallow squares, bagels, and
any other similar grain-based convenience food. For purposes of this
non-compete provision, the term "Geographic Area" shall mean any
country in the world where the Company (including any subsidiary,
division or affiliate thereof) manufactures, produces, distributes,
sells or markets any of the Products at any time during the applicable
Restricted Period (as defined below). For purposes of this paragraph,
the Restricted Period with respect to the Products shall be two (2)
years from the date of this Agreement.
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L. As a result of this extension of salary and benefits eligibility, the
Company, its subsidiaries, divisions and affiliates (including the
directors, officers and employees of any of them) shall have no further
obligations of any kind or nature to Employee, including, without
limitation, obligations for any termination, severance or vacation pay,
bonus, etc., except as specifically provided herein and except as may
be provided under the applicable eligible Company benefit plans in
accordance with their terms.
M. Employee further agrees to and shall return to the Company no later
than his last day worked, without limitation, all files, documents,
correspondence, memoranda, customer and client lists, prospect lists,
subscription lists, contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans,
business acquisition plans, employee records, technical processes,
designs and design projects, inventions, research project
presentations, proposals, quotations, data, notes, records,
photographic slides, chromes, photographs, posters, manuals, brochures,
internal publications, books, films, drawings, videos, sketches, plans,
outlines, computer disks, computer files, work plans, specifications,
credit cards, keys (including elevator, pass, building and door keys),
identification cards, and any other documents, writings and materials
that Employee came to possess or otherwise acquire as a result of
and/or in connection with the Company. Should Employee later find any
Company property in his possession, Employee agrees to immediately
return it.
N. Employee agrees that he will not divulge any/all proprietary and/or
confidential business information, except to the extent required
pursuant to a legal subpoena or a legal proceeding.
O. Employee agrees to conduct himself in a manner that reflects positively
on the Company. Similarly, the Company agrees to conduct itself in a
manner that reflects positively on Employee. Employee agrees to
cooperate truthfully and fully with the Company in connection with any
and all existing or future investigations or litigation of any nature
brought against it or its affiliates involving events which occurred
during his employment with the Company. Employee agrees to notify the
Company immediately if subpoenaed or asked to appear as a witness in
any matter related to the Company or its affiliates. The Company will
reimburse Employee for reasonable out-of-pocket expenses and, if
approved in advance, attorneys' fees incurred as a result of such
cooperation. Nothing herein shall prevent Employee from communicating
with or participating in any government investigation.
P. Employee has carefully read this Leave of Absence and Severance
Agreement and understands its contents. Employee recognizes that he
will have no further job responsibilities at Xxxxxxx Company.
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Q. Employee has been advised to seek legal counsel to understand its full
force and effect. Employee has been given the opportunity to consult
with a lawyer.
R. On behalf of Employee, his relatives, executors and administrators,
Employee irrevocably and unconditionally releases, waives and forever
discharges the Company, its owners, stockholders, affiliates,
subsidiaries, agents, directors, officers, employees, representatives,
insurance carriers, attorneys, advisors, and their predecessors,
successors, heirs, executors, administrators and assigns (collectively
"Releasees") from any and all claims, demands and causes of action he
has or may claim to have arising from or relating in any way to his
employment, leave of absence, or separation of employment. This
includes, but is not limited to, all claims under the Age
Discrimination in Employment Act of 1967 (as amended), Title VII of the
Civil Rights Act of 1964, as amended, Section 1981 of the Civil Rights
Act of 1986, as amended, the Civil Rights Act of 1991, the
Xxxxxxx-Xxxxxx Civil Rights Act and any other employment discrimination
laws, the Family Medical Leave Act of 1993, the Rehabilitation Act of
1993, the Equal Pay Act of 1963, the Uniform Services Employment and
Reemployment Rights Act of 1964, ERISA, Americans with Disabilities
Act, the Workers Adjustment and Retraining Notification Act (WARN), and
any common law or other federal, state or local law or ordinance.
Employee agrees that this Leave of Absence and Severance Agreement is
intended to and shall preclude any claim that his separation was in
retaliation for exercising any right to which Employee is entitled
under the provisions of an employee benefit plan, or for the purpose of
interfering with the attainment of any right to which Employee may
become entitled under such a plan or under the Employee Retirement
Income Security Act of 1974, as amended, in violation of Section 510 of
ERISA, 29 USC Sec. 1140, except as specifically altered and/or modified
by the Leave of Absence and Severance Agreement. Nothing in the
Agreement shall be construed as barring any other claims under Section
502 ERISA.
Employee agrees he has not filed any charges, claims, or lawsuits
against the Company involving any aspect of his employment that have
not been terminated as of the date of this Agreement. If Employee has
filed any charges, claims, or lawsuits against the Company, Employee
agrees to seek immediate dismissal with prejudice and provide written
confirmation immediately (i.e., court order, and/or agency
determination) as a condition to receiving any benefits under this
Agreement. Employee additionally waives and releases any right he may
have to recover in any lawsuit or proceeding brought by him, an
administrative agency, or any other person on his behalf or which
includes him in any class. If Employee breaches any portion of this
Release of Claims, Employee acknowledges that he will be liable for all
expenses, including costs and reasonable attorney's fees incurred by
any entity released in defending the lawsuit or claim, regardless of
the outcome.
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S. Employee accepts the terms and conditions of the Agreement knowingly
and voluntarily.
T. Employee agrees and acknowledges that the consideration (severance pay
and benefits) described in this Agreement is in full settlement of any
and all such aforementioned claims, demands and causes of action he has
or may have.
U. The Company agrees to indemnify, hold and save harmless Employee from
and against any and all claims, liens, demands, damages, liability,
actions, causes of action, settlement costs, and approved attorney's
fees and expenses sustained or asserted against Employee arising out
of, resulting from, or attributable to Employee's conduct during his
employment with the Company; provided however, that the Company shall
not be liable hereunder to indemnify or hold and save harmless Employee
against liability for damages arising during the term of his employment
involving willful misconduct, theft, malfeasance, unlawful activity,
and/or immorality. Nothing in this provision shall waive any eligible
coverage provided in surviving provisions of any applicable Directors
and Officers Liability insurance policy.
V. Employee understands and agrees that signing this Leave of Absence and
Severance Agreement and accepting the consideration for it shall not be
deemed or construed as an admission of liability or responsibility at
any time for any purpose. Liability for any and all claims is expressly
denied by Xxxxxxx Company.
W. Employee has disclosed to the Company any information in his possession
concerning any conduct involving the Company that Employee has any
reason to believe involves any false claims to the United States or is
or may be unlawful or violates Company Policy in any respect.
X. Employee signs this Leave of Absence and Severance Agreement knowingly
and voluntarily with full intent to release the Company, its
subsidiaries, affiliates, agents, employees, directors, shareholders
and any other parties acting on behalf of the Company.
Y. Employee has had at least twenty-one (21) days to consider this
Agreement. Employee is aware that he may sign and return the Agreement
before the end of twenty-one (21) days. If Employee does so, Employee
agrees that his signature was done knowingly and voluntarily, without
any improper inducement by the Company.
Z. Employee understands that this Leave of Absence and Severance Agreement
shall not affect any right to any vested benefits under the terms and
provisions of the Company's defined benefit plans in which Employee is
eligible and participates, except as specifically altered and/or
modified by this Leave of Absence and Severance Agreement.
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AA. Employee also understands that the Company is not obligated to offer
employment to him now or in the future.
BB. Employee understands that the Nondisclosure Confidentiality Agreement
that he signed shall remain in full force and effect indefinitely.
CC. Employee understands that if he disavows or revokes this Agreement, or
if the Agreement is found to be unenforceable by a court of law in an
action initiated by Employee, Employee agrees to immediately pay to
Xxxxxxx Company all amounts received, or to authorize the Company to
offset this indebtedness from any account he may have.
DD. Employee agrees that if any provision of this Leave of Absence and
Severance Agreement is invalid or unenforceable by a court of law, it
will not affect the validity or enforceability of any other provision
of this Agreement which shall remain in full force and effect.
EE. Employee agrees that the construction, interpretation, and performance
of this Agreement shall be governed by the laws of Michigan, including
conflict of laws. It is agreed that any controversy, claim or dispute
between the parties, directly or indirectly, concerning this Agreement
or the breach thereof shall only be resolved in the Circuit Court of
Xxxxxxx County, or the United States District Court for the Western
District of Michigan, whichever court has jurisdiction over the subject
matter thereof, and the parties hereby submit to the jurisdiction of
said courts.
FF. For purposes of any construction or interpretation of this Leave of
Absence and Severance Agreement, all terms and provisions thereof shall
be deemed to have been mutually drafted by both of the parties.
GG. Employee acknowledges and agrees that this is the entire Leave of
Absence and Severance Agreement and the only promises made to him are
those contained within this document.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and date first above written in Battle Creek, Michigan.
XXXXXXX COMPANY
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxx
Chief Executive Officer
March 17, 1999 3/24/99
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Date Date
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