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EXHIBIT 10.06
LEAVE OF ABSENCE AND SEVERANCE AGREEMENT
(PRESENTED: JULY 13, 2000)
This Leave of Absence and Severance Agreement hereafter, (the "Agreement") made
and entered into as of July 13, 2000, by and between Xxxxxxx Company, a Delaware
corporation ("the Company") and Xxxx X. Xxxx, an individual ("Employee").
PURPOSE
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 July 21, 2000. As of that date, Employee is relieved of all his
titles, duties, responsibilities, and authority as an officer and otherwise with
respect to the Company. This date shall be considered the Employee's "last day
worked."
TERMS AND CONDITIONS
A. Except as otherwise provided in this Agreement, for the period
beginning July 21, 2000, through August 31, 2000, Employee will be an
"employee" ON A PAID LEAVE OF ABSENCE. During this paid leave of
absence, Employee shall receive his regularly scheduled salary
payments. Except as otherwise provided herein, benefits for Employee
and his eligible dependents (as outlined in "A Guide To Your
Medical/Mental/Prescription Drug Benefits", as amended, 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) shall be continued during the paid leave of
absence period ending August 31, 2000.
For the period beginning September 1, 2000 and continuing through July
20, 2003, Employee will be an "employee" on an UNPAID LEAVE OF ABSENCE
for the sole purpose of stock option and stock grant vesting, as more
particularly described in Paragraph D. During Employee's paid and
unpaid leaves of absence, Employee shall not hold any title or position
with the Company, and Employee shall have no titles, duties,
responsibilities or authority with respect to the Company, its business
and/or operations.
B. As more fully provided herein below, the lump sum payment described
herein is in consideration of Employee's release of any and all cause
or causes of action he has, has had, or may have against the Company.
Within thirty (30) days of September 1, 2000 Employee shall be paid a
lump sum payment equal to $2,121,600 (two million, one hundred
twenty-one thousand, six hundred dollars), less applicable deductions,
upon execution of this Agreement. The amount payable to Employee under
this Agreement is consistent with the severance
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terms of Employee's January 26, 1999 (revised from original January 20,
1999) Employment Agreement.
All tax liability, with respect to any and all payments or services
received by Employee under this Agreement (other than employer
withholding and employer payroll taxes), will be Employee's
responsibility.
Upon payment of the lump sum amounts in this Agreement, Employee's
right to all other benefits including, but not limited to, medical,
dental, short- and long-term disability life/AD&D insurances,
eligibility for pension credited service, EAP assistance, eligibility
to participate in the Matching Grants Program, eligibility to
contribute and/or receive matching for the savings and investment plan,
except as specifically provided in this Agreement, shall terminate at
the end of the PAID leave of absence period (i.e., August 31, 2000).
Continued insurance coverage pursuant to COBRA regulations and
conversion privileges, if any, will be available to Employee at the end
of the paid leave of absence period. Employee shall be responsible for
the payment of all premiums for any continuation period. Additional
information will be sent at a later date.
C. Within sixty (60) days of the last day worked, the Company will pay to
Employee that sum which is equivalent to all unused, earned, accrued
prorated vacation of Employee as of the last day worked. Employee shall
not be entitled to any future vacation pay accruals from and after the
last day worked.
D. Employee's right to exercise all nonqualified stock options and stock
grants pursuant to the Company the 1991 Key Employee Long-Term
Incentive Plan ("the Plans"), shall continue only through July 20, 2003
of the unpaid leave of absence period, subject to and administered in
accordance with the respective option grants and Plan provisions.
This includes employee's right to exercise the 200,000 (two hundred
thousand) stock option grants awarded as part of Employee's sign-on
bonus and Employment Agreement terms and conditions dated January 26,
1999. The ability to utilize the accelerated ownership feature of the
Plans shall continue for eligible stock options, throughout the unpaid
leave of absence period, unless this feature is altered, modified
and/or otherwise terminated earlier. Any stock option grants and/or
stock grants not exercised in accordance with and subject to "the
Plans", by July 20, 2003, shall expire.
E. The Company will pay Employee for financial planning and/or tax advice
for 2000 only, up to $10,000.
F. Employee will be eligible, at the Company's expense, for secretarial
assistance from a designated Kellogg employee during the consulting
period as outlined in this Paragraph H of this Agreement.
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G. The Company shall pay a one-time lump sum of $150,000 (one hundred
fifty thousand dollars) for any and all moving expenses incurred
post-termination. Applicable taxes and withholding shall be deducted
from this lump sum amount. This lump sum relocation payment shall be
paid within thirty (30) days of the end of the paid leave of absence
period.
H. Employee agrees to make himself available at mutually convenient times
for consulting to the Company until December 31, 2000 or until he
secures full-time employment, whichever is earlier. Employee agrees
that no further consideration shall be paid for such consulting
services.
I. Employee will be eligible for outplacement assistance at the Company's
expense, by a mutually agreeable agency.
J. In further consideration of the following noncompete provisions,
Employee agrees that monetary consideration and benefits provided under
this Agreement includes separate consideration for agreeing to the
following non-competition restrictions. Employee agrees that, for the
respective Restricted Periods (as hereinafter defined), Employee shall
not:
(i) accept full-time employment, for or on behalf of the following
companies that compete in the cereal, meat alternative and/or
convenience foods business: Gardenburger, General Xxxxx, Post, Quaker
(foods), Nabisco, Frito Lay, Pillsbury, Malto Meal, Ralcorp Cereal,
and/or other private label cereal companies and/or
(ii) provide consulting services to, for or with any person, firm,
partnership, corporation or other business relating directly or
indirectly to the manufacture, production, distribution, selling and/or
marketing of any of the products (as defined below) in the geographic
areas (as defined herein), including specifically, but not limited to,
the following competing companies: Gardenburger, Post, General Xxxxx,
Quaker, Nabisco, Frito Lay, Pillsbury, Malto Meal, Ralcorp Cereal
and/or other private label cereal company. However, nothing in this
paragraph shall prohibit Employee from providing consulting services to
food and/or beverage companies and/or their respective divisions with
respect to products other than the Products.
(iii) directly or indirectly, permit any business firm which Employee,
individually or jointly with others may own, manage, operate, or
control, to engage in the manufacture, production, distribution, sale
or marketing of any of the Products in the Geographic Area excluding
ownership of publicly traded securities, and/or
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(iv) directly or indirectly participate with any person, firm,
partnership, corporation, or other business whose efforts and/or
intentions include purchasing and/or considering or evaluating for
purchase, acquisition, or takeover the Company and/or any of its
divisions, subsidiaries, affiliates, or related entities during the
Restricted Period within the Geographic Area, as defined under this
Agreement and/or
(v) directly or indirectly solicit or attempt to solicit for employment
any employee, manager, director, officer of Xxxxxxx Company or its
affiliates or related businesses and/or
(vi) call upon, solicit, divert or take away or attempt to take away
the business or patronage of any customer of the Company.
For purposes of this non-compete provision, the term "Products" shall
mean any ready-to-eat cereal products, any meat alternative product,
toaster pastries, cereal bars, granola bars, frozen waffles, crispy
marshmallow squares, and/or any other similar grain-based convenience
food. For purposes of this non-compete provision, the term "Geographic
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.
To prevent any misunderstanding and conflicts regarding activities that
may violate these promises Employee has made in this noncompetition
agreement, Employee may, at his option, consult with the Company
(specifically, the Executive Vice President, Corporate Development,
General Counsel and Secretary, Xxxxx X. Xxxxx) to discuss proposed
actions to determine whether or not they may be violative from the
Company's point of view.
Employee acknowledges that a violation of the terms of this Noncompete
provision may give rise to irreparable injury to the Company
inadequately compensable in damages, and accordingly, Employee agrees
that the Company may seek injunctive relief against such breach or
threatened breach, in addition to any other legal remedies which may be
available, including recovery of monetary damages. In any action
successfully brought by the Company against Employee to enforce the
rights of the Company under this Noncompete provision, the Company
shall also be entitled to recover cost of the action, (exclusive of
attorney's fees) and the period of the restrictions stated above shall
be deemed to commence upon the entry of the Court's Order for relief.
K. As a result of these lump sum payments, the Company, its subsidiaries,
divisions and affiliates (including the directors, officers and
employees of any of them) shall have no further obligations of any kind
or nature to Employee, including, without limitation,
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obligations for any other termination, severance, bonus, etc., except
as specifically provided herein, and except as may be provided under
the applicable eligible Company benefit plans in accordance with their
terms.
L. Employee further agrees to and shall return to the Company no later
than his last day worked, without limitation, all files, documents,
correspondence, memoranda, customer and client lists, prospect lists,
subscription lists, contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans,
business acquisition plans, employee records, technical processes,
designs and design projects, inventions, research project
presentations, proposals, quotations, data, notes, records,
photographic slides, photographs, posters, manuals, brochures, internal
publications, books, films, drawings, videos, sketches, plans,
outlines, computer disks, computer files, work plans, specifications,
credit cards, keys (including elevator, pass, building and door keys),
identification cards, and any other documents, writings and materials
that Employee came to possess or otherwise acquire as a result of
and/or in connection with the Company. Should Employee later find any
Company property in his possession, Employee agrees to immediately
return it. Except for key/pass for access to temporary office/secretary
and any materials used while consulting to Kellogg as per paragraph H.
M. Employee agrees that he will not divulge any/all proprietary and/or
confidential business information, except to the extent required
pursuant to a legal subpoena or a legal proceeding. Employee agrees
that any and all information regarding the terms and conditions of this
Agreement shall be kept confidential and not disclosed to anyone,
except Employee's spouse, tax accountant and/or attorney.
N. Employee agrees not to take any wrongful action with the intention of
damaging the Company. Employee agrees to cooperate with the Company in
connection with any and all existing or future investigations or
litigation of any nature brought against it or its affiliates involving
events which occurred during his employment with the Company. The
Company will consider the convenience to the Employee and his other
commitments in the timing and nature of its request for his cooperation
hereunder and he shall not be considered in breach of his obligations
hereunder if these commitments preclude his availability to the Company
at any time or place. Employee agrees to notify the Company immediately
if subpoenaed or asked to appear as a witness in any matter related to
the Company or its affiliates. Nothing herein shall prevent Employee
from communicating with or participating in any government
investigation.
O. 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 the Company.
P. Subject to the Company's performance of its obligations under this
Agreement, on behalf of Employee, his heirs, executors and
administrators, Employee irrevocably and
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unconditionally releases, waives and forever discharges the Company,
its owners, stockholders, affiliates, subsidiaries, agents, directors,
officers, employees, attorneys, representatives, insurance carriers,
attorneys, advisors, and their predecessors, successors, heirs,
executors, administrators and assigns from any and all claims, demands
and causes of action he now has or may claim to now have arising from
or relating in any way to his employment, leave of absence, or
separation of employment. This includes, but is not limited to, all
claims under the Age Discrimination in Employment Act of 1967 (as
amended), Title VII of the Civil Rights Act of 1964, as amended,
Section 1981 of the Civil Rights Act of 1986, as amended, the Civil
Rights Act of 1991, the 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, Americans with
Disabilities Act, the Workers Adjustment and Retraining Notification
Act (WARN), claims for attorney fees, and any common law or other
federal, state or local law or ordinance.
Employee agrees that this 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 involving any aspect of his employment. If
Employee intentionally breaches any portion of this Paragraph, Employee
acknowledges that he will be liable for all expenses, including costs
and reasonable attorney's fees incurred by any entity released in
defending the lawsuit or claim, regardless of the outcome.
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.
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R. 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.
S. The Company agrees to indemnify, hold and save harmless Employee from
and against any and all claims, liens, demands, damages, liability,
actions, causes of action, cooperation with future investigations,
settlement costs, and approved attorney's fees and expenses sustained
or asserted against Employee arising out of, resulting from, or
attributable to any acts or omissions or alleged acts or omissions of
Employee during his employment with the Company or in connection with
the Employee's fulfillment of his obligations under Paragraph H of this
Agreement; provided however, that the Company shall not be liable
hereunder to indemnify or hold and save harmless Employee against
liability for damages arising during the term of his employment
involving willful misconduct, theft, malfeasance, unlawful activity,
and/or immorality. The Company hereby releases Employee from any and
all claims, liens, demands, damages, liability, actions, causes of
action it may have against Employee as a result of Employee's
employment, or any services rendered by him in the performance of his
duties for the Company.
T. 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.
U. Employee signs this Leave of Absence and Severance Agreement knowingly
and voluntarily and without coercion with full intent to release the
Company, its subsidiaries, affiliates, agents, employees, directors,
shareholders and any other parties acting on behalf of the Company, to
the extent provided in this Agreement.
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 also understands that the Company is not obligated to offer
employment to him now or in the future.
X. Employee understands that the Nondisclosure Confidentiality Agreement
that he signed on his date of hire shall remain in full force and
effect indefinitely.
Y. Employee and Company agree, subject to any obligations under applicable
law, that neither will make or cause to be made any statements that
disparage each other and/or damage the reputation of the Company or any
of its affiliates, agents, officers, directors, managers, or employees.
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Z. Employee agrees that if any provision of this Leaves of Absence and
Severance Agreement is invalid or unenforceable, it will not affect the
validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect.
AA 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.
BB 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.
CC 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:
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Xxxxxx X. Xxxxxxxxx Xxxx X. Xxxx
Chairman of the Board,
President and Chief Executive Officer
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Date Date
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