Sample Business Contracts

Leave of Absence Agreement - Kellogg Co. and Thomas A. Knowlton

                           LEAVE OF ABSENCE AGREEMENT

     This Agreement (the "Agreement") made and entered into as of October 1,
1998, by the between Kellogg Company, a Delaware corporation ("the Company") and
Thomas A. Knowlton, an individual ("Employee").

     The purpose of this 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, effective October 1, 1998, and related matters. 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.

     Except as otherwise provided in this Agreement, for the period beginning
October 1, 1998, and continuing through June 30, 2001, Employee will be an
employee on a paid leave-of-absence. During Employee's paid leave-of-absence,
Employee will receive the salary continuation payments as described herein, but
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.

     As more fully provided hereinbelow, 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 October 1, 1998 and ending December 31, 1998, Employee will
receive salary continuation payments at Employee's present salary equal to
$48,333.33 per month. Commencing January 1, 1999 and ending June 30, 2001,
Employee shall receive salary continuation payments equal to $33,833.33 per
month. The amounts payable to Employee under this Agreement are in lieu of any
amounts which may be payable to Employee for termination pay. The Company will
pay to Employee that sum which is equivalent to all unused, earned and accrued
vacation of Employee as of October 1, 1998. Employee shall not be entitled to
any future vacation pay accruals from and after the date of this Agreement.

     Usual and customary withholding for tax purposes will be withheld from all
monthly salary continuation payments through June 30, 2001, 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 employer payroll taxes), will be
Employee's responsibility.

     Employee will be eligible to participate in the Second Restated Kellogg
Company Salaried Savings and Investment Plan, subject to the terms and
provisions thereof, including
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any amendment or alteration thereof after the date of this Agreement,
throughout Employee's paid leave-of-absence. Usual and customary withholding
for personal designated deductions, including participation in such Savings
Plan, will be withheld throughout Employee's paid leave-of-absence.

     Employee's right to exercise nonqualified stock options that Employee
received pursuant to the Company 1982 Stock Option Plan and the 1991 Key
Employee Long-Term Incentive 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 Company will continue Employee's coverage under the existing Company
Executive Survivor Income Plan, based upon Employee's most recent compensation
rate of $942,000.

     Employee will be eligible, at the Company's expense, for outplacement
assistance, not to exceed $60,000, by an outplacement agency mutually agreeable
to Employee and Company. Arrangements for these services will be coordinated by
R.L. Creviston of Kellogg Company.

     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, and, to the extent provided in such plans, upon
Employee's retirement. However, 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.

     Price Waterhouse will provide to Employee, at Company's expense, for the
tax year 1998 only, not to exceed $15,000 in fees and costs of Price
Waterhouse, tax preparation and tax counseling services.

     For a period of one year commencing October 1, 1998, or until Employee is
reemployed, whichever first occurs, Employee will be eligible to participate in
the Company's Relocation Program from Employee's home in Michigan. The Company
will also pay the cost of one move to a destination, of Employee's choice,
within North America. Payments hereunder are subject to required withholding
taxes.

     Employee shall and does hereby irrevocably elect to retire upon reaching
age 55 and then be eligible for pension benefits through the Kellogg Company
Salaried Pension Plan,


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the Kellogg Company Excess Benefit or Supplemental Retirement Plan
(collectively the "Pension Plans"). Pension benefits for which Employee will be
eligible will be based upon Employee's highest consecutive three-year earnings
during his last ten years of employment with the Company. Years of service for
this program will include the period while Employee is on leave-of-absence. At
the time Employee elects to begin receiving such benefits, he should contact
the Employee Benefits Department of the Company.

     The Company will not modify the Pension Plans or any other plans or
benefits under which Employee is entitled to participate pursuant to this
Agreement in a manner which would treat Employee differently than other
participants.

     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
hereinbelow defined) in the Geographic Area (as hereinafter defined), 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 paragraph, 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 product and 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 three (3) years from
the date of this Agreement.

     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, except as specifically provided herein
and except as may be provided under the Company benefit plans in accordance
with their terms. Employee agrees not to divulge any confidential or
proprietary information regarding the Company and Employee further agrees to
and shall immediately return to the Company 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 projects presentations, proposals, quotations,
data, notes,


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<PAGE>   4
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. 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. Nothing
contained in this Agreement, nor any actions taken by the Company, its
subsidiaries, divisions and affiliates (including the directors, officers and
employees of any of them) constitute any admission of fault, liability or
wrongdoing of any kind, and the Company, its subsidiaries, divisions and
affiliates (including the directors, officers and employees of any of them)
each specifically denies any liability to Employee on any theory.

     It is understood that the monthly salary continuation payments as provided
in this Agreement shall continue to be made to Employee through June 30, 2001,
whether or not Employee secures new employment. For purposes of this Agreement,
Employee will be deemed to have secured new employment upon being employed by
another company and becoming eligible for coverage under the health plan of
that company, whereupon such company's health coverage shall be and be deemed
to be the primary health coverage for Employee and his eligible dependents.
Employee will not be deemed to have secured new employment as a result of
business activities or services rendered by Employee to others on a part-time
basis or otherwise as an independent contractor; provided, however, that
nothing herein shall release Employee of Employee's obligation hereunder not to
render such activities or services in connection with the manufacture,
production, distribution, sale or marketing the Products in the Geographical
Area, as above provided.

     Employee hereby acknowledges and agrees that these arrangements set forth
the sole and entire obligations of the Company, its subsidiaries, divisions and
affiliates (including the directors, officers and employees of any of them) to
Employee. Employee's signature in the space below shall conclusively evidence
his acceptance of the terms set forth herein. Employee hereby resigns all of
his titles, offices and positions with the Company and its subsidiaries,
divisions and affiliates, effective October 1, 1998. Employee's signature also
releases, remises and discharges the Company, its subsidiaries, divisions and
affiliates (including the directors, officers and employees of any of them),
fully, absolutely and unconditionally, of and from any and all claims, demands,
actions, cause or causes of action, known or unknown, which Employee has, has
had or have against any of them, including, but not limited to, the Age
Discrimination in Employment Act, from the beginning of time to the day and
date of these presents, except for matters arising under or contemplated by
this Agreement. Execution on behalf of the Company releases, remises and
discharges Employee fully, absolutely and unconditionally, of and from any and
all claims,

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<PAGE>   5
demands, actions, cause or causes of action, known or unknown, which the
Company, its subsidiaries, divisions and affiliates has, has had or may have
against him, from the beginning of time to the day and date of these presents,
except for matters arising under or contemplated by this Agreement.

     This Agreement shall be construed and interpreted under the laws of the
State 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.

     Employee acknowledges that he has reviewed this Agreement with his own
independent counsel of his choosing and has been advised by such counsel with
respect thereto.

     For purposes of any construction or interpretation of this Agreement, all
terms and provisions thereof shall be deemed to have been mutually drafted by
both of the parties.

     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/ Richard M. Clark                            /s/ Thomas A. Knowlton  
   ----------------------------                     ----------------------------
   Richard M. Clark                                 Thomas A. Knowlton
   General Counsel and
   Secretary
                                                                      Sept 25/98

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