Kellogg Co. Contracts
Sample Business Contracts
Severance Agreement and Release of Claims - Kellogg Co. and Jacobus Groot
SEVERANCE AGREEMENT AND RELEASE OF CLAIMS
(PRESENTED: OCTOBER 12, 2000)
This Leave of Absence and Severance Agreement hereafter, (the "Agreement") made
and entered into as of October 12, 2000, by and between Kellogg Company, a
Delaware corporation ("the Company") and Jacobus Groot ("Employee").
PURPOSE
The purpose of this Severance Agreement and Release of Claims is to set forth
the arrangements with respect to Employee's termination of active employment as
an officer of the Company, and its subsidiaries, divisions and affiliates, and
related matters, effective January 1, 2001. 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. For the period beginning January 1, 2001 and continuing to January 1,
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 G. During Employee's unpaid leave
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 below, the capital 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.
C. On account of the termination and in order to compensate for the loss
of employment and loss of office and in full settlement of all claims,
demands, causes of action against the Company, Employee shall be paid
the sum of U.S. $1,090,000 (one million ninety thousand dollars) with
the capital sum of U.S. $1,000,000 (one million dollars), paid on
Employee's termination date, January 1, 2001, and the balance U.S.
$90,000 (ninety thousand dollars) paid in equal monthly installments
over the period of unpaid leave of absence from January 1, 2001 to
January 1, 2003.
D. Employee shall receive pension benefits from Kellogg Company tax
qualified, Excess Benefit, Supplemental and Key Executive Benefit
Retirement Plans in the amount of U.S. $475,000, which shall be paid in
a capital sum payment within 14 days of Employee's termination date.
This payment shall be based on the interest rate for determining
capital sum pension amounts at the time of termination.
Page 1 of 9
<PAGE> 2
E. Short-term disability and long-term disability benefits cease as
of your last day worked. 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). During the
unpaid leave of absence period, health benefits will be provided to the
Employee, his spouse and dependents, and shall terminate on January 1,
2003. Employee shall be solely responsible for payment of medical
benefit premiums during any unpaid leave periods.
Continued insurance coverage pursuant to COBRA regulations and
conversion privileges will be available to Employee when the unpaid
leave of absence benefits end. Employee will be responsible for the
payment of all premiums for that continuation period. Additional
information will be forwarded to Employee regarding COBRA.
F. 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.
G. 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 January 1,
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 45,000 (forty five
thousand) stock option grants awarded as part of Employee's sign-on
bonus and 35,000 options as part of the grant made in January 1999 and
Employment Agreement terms and conditions dated December 17, 1998 and
the 100,000 stock options awarded on January 31, 2000. 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 January 1,
2003, shall expire.
H. In consideration for Employee continuing to perform assigned duties and
responsibilities through December 31, 2000 Employee shall be paid as
follows:
I. The Company shall pay to Employee a goods and services differential
allowance for the unpaid leave period to July 1, 2001 which shall be
paid in monthly installments based upon the current differential which
is U.S. $77,197 (seventy seven thousand one hundred ninety seven
dollars) annually.
Page 2 of 9
<PAGE> 3
J. The Company shall continue to provide current housing in Hong Kong,
including utilities, by maintaining the current lease on such property
through August 31, 2001.
K. The Company shall provide continued use of the current Company car to
August 31, 2001. During this time, the service and running costs will
be the employee's responsibility. At such time, the car will be
returned to the Company at a mutually agreeable location.
L. The Company shall continue to pay the monthly AMC Club Membership fee
to July 1, 2001 at which time such payments by the Company shall be
terminated. Employee shall pay all other usage fees. After July 1,
2001, Kellogg will maintain the debenture to July 1, 2003 and Employee
may continue to use the AMC Club Membership at his own expense paying
monthly fees and usage fees during that period.
M. The Company shall continue to pay school fees at the current
international school for employee's 3 children and continue current
payments for Dutch language training to July 1, 2001 at which time such
payments by the Company shall be terminated.
N. The Company shall pay the expenses incurred for the services of
PricewaterhouseCoopers to provide the Employee with tax preparation for
2000/2001, 2001/2002, and 2002/2003 tax years. Employee shall be liable
for and shall pay any personal income tax liability.
O. As repatriation, the Company shall pay for one (1) relocation of
Employee's family and household goods to a location of Employee's
choice. The Company's obligation to pay for such relocation shall
terminate on July 31, 2003, whether or not Employee has elected to
relocate by that date. Such relocation shall also include the continued
storage costs of personal household goods through July 31, 2003. Such
relocation benefits shall not be paid in the event that employment is
secured by Employee prior to July 31, 2003.
In connection with such relocation, the Company shall pay the airfare
costs of business class tickets for Employee and his family from Hong
Kong to Amsterdam or the equivalent provided Employee relocates within
30 days of the unpaid leave of absence period on July 31, 2003.
P. Employee will be eligible for outplacement assistance at the Company's
expense, by a mutually agreeable agency. The company will also cover
certain expenses connected with Employee maintaining office at home.
Specifically, the Company will loan the Employee a fax/copy machine,
computer, printer and will cover costs for a third party telephone
answering service, as well as standard secretarial assistance, provided
by Eunice Lai as long as practical, after which this will be provided
by third party business center. The Company's support of Employee's
home office and loaning of equipment will cease on January 1, 2003 or
if Employee secures employment, whichever occurs sooner.
Page 3 of 9
<PAGE> 4
Q. 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 Mills, Post, Quaker
(foods), Nabisco, 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 Mills,
Quaker (foods), Nabisco, Pillsbury, Malto Meal, Ralcorp Cereal and/or
other private label cereal company.
(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
(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 Kellogg 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
Page 4 of 9
<PAGE> 5
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 eighteen (18) months 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, Janet L. Kelly) 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.
R. 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, 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.
S. 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.
Page 5 of 9
<PAGE> 6
T. 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.
U. 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.
V. Employee has carefully read this Severance Agreement and Release of
Claims and understands its contents. Employee recognizes that he will
have no further job responsibilities at the Company.
W. Subject to the Company's performance of its obligations under this
Agreement, on behalf of Employee, his heirs, executors and
administrators, Employee irrevocably and 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
Elliott-Larsen 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 Severance Agreement and Release of Claims 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
Page 6 of 9
<PAGE> 7
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 Severance Agreement and Release of Claims. 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.
X. 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.
Y. 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.
Z. 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.
AA. 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
Page 7 of 9
<PAGE> 8
any false claims to the United States or is or may be unlawful or
violates Company Policy in any respect.
BB. Employee signs this Severance Agreement and Release of Claims 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.
CC. Employee understands and agrees that signing this Severance Agreement
and Release of Claims 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 Kellogg Company.
DD. Employee also understands that the Company is not obligated to offer
employment to him now or in the future.
EE. Employee understands that the Nondisclosure Confidentiality Agreement
that he signed on his date of hire shall remain in full force and
effect indefinitely.
FF. 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.
GG. Employee agrees that if any provision of this Severance Agreement and
Release of Claims 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.
HH. 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
Calhoun 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.
II. For purposes of any construction or interpretation of this Severance
Agreement and Release of Claims, all terms and provisions thereof shall
be deemed to have been mutually drafted by both of the parties.
JJ. Employee acknowledges and agrees that this is the entire Severance
Agreement and Release of Claims and the only promises made to him are
those contained within this document.
Page 8 of 9
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and date first above written in Battle Creek, Michigan.
KELLOGG COMPANY
By: /s/ Carlos M. Gutierrez /s/ Jacobus Groot
-------------------------------- -----------------------------------
Carlos M. Gutierrez Jacobus Groot
Chairman of the Board, Employee
President and Chief Executive Officer
October 12, 2000 October 12, 2000
------------------------------------ -----------------------------------
Page 9 of 9