Sample Business Contracts


Employment Agreement - Keebler Foods Co., Kellog Co. and David Vermylen

Employment Forms

  • Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
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  • Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
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                              EMPLOYMENT AGREEMENT


                  THIS AGREEMENT, dated and effective as of the 26th day of
October, 2000, by and among Keebler Foods Company, a Delaware corporation (the
"Company"), Kellogg Company, a Delaware corporation ("Kellogg"), and David
Vermylen (the "Executive").

                  WHEREAS, the Company has entered into an Agreement and Plan of
Merger dated as of October 26, 2000 (the "Merger Agreement"), among the Company,
Kellogg, and FK Acquisition Corp., a Georgia corporation, pursuant to which a
subsidiary of Flowers Industries, Inc., a Georgia Corporation, will merge with
and into the Company, with the Company as the surviving corporation, and the
Company will become an indirect wholly owned subsidiary of Kellogg (the
"Transaction," and references herein to the "Company" refer to the Company both
before and after the Transaction); and

                  WHEREAS, Kellogg, the Company and the Executive desire to set
forth in a written agreement the terms and conditions under which the Executive
will continue to render services to the Company after the consummation of the
Transaction;

                  NOW, THEREFORE, the parties hereto, in consideration of the
mutual covenants herein contained, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, agree as follows:

                  1. Employment Period. (a) This Agreement shall become
effective at the "Effective Time" as defined in the Merger Agreement if, but
only if, the Transaction is consummated and the Executive remains employed by
the Company through the Effective Time. If the Transaction is not consummated,
or if the Executive ceases for any reason to be employed by the Company before
the Effective Time, this Agreement shall be null and void and of no further
force or effect.

                         (b) The Company shall employ the Executive, and the
Executive shall serve the Company, on the terms and conditions set forth in this
Agreement, for the period beginning at the Effective Time and ending on the date
set forth on Exhibit A hereto (the "Employment Period").

                  2. Position and Duties. (a) During the Employment Period, the
Executive shall serve in the position set forth on Exhibit A hereto, with the
duties and responsibilities customarily assigned to such position and such other
duties and responsibilities as the Board of Directors of the Company (the
"Board") or any executive senior to the Executive and to whom the Executive
reports shall from time to time assign to the Executive.

                         (b) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive shall devote his full business attention and time to the business and
affairs of the Company and shall use his reasonable best efforts to carry out
his duties and responsibilities hereunder faithfully and efficiently.


<PAGE>   2

                         (c) The Executive's services shall be performed
primarily at the Company's offices in the Chicago, Illinois metropolitan area.

                  3. Compensation. (a) Salary. As compensation for the
Executive's services hereunder during the Employment Period, the Company shall
pay to the Executive a base salary (hereinafter the "Base Salary") at an annual
rate not less than the amount set forth in Exhibit A hereto, payable at such
times and intervals as the Company customarily pays the base salaries of its
other executive employees. During the Employment Period, the Base Salary shall
be reviewed annually for possible increase in accordance with the Company's
normal payroll practices for management personnel. The Base Salary shall not be
reduced after any such increase, and the term "Base Salary" shall thereafter
refer to the Base Salary as so increased.

                         (b) Incentive Compensation. In addition to the Base
Salary, the Executive shall be eligible to earn an annual bonus (the "Annual
Bonus"), with a target bonus equal to the amount specified in Exhibit A hereto.
In addition, the Executive shall be awarded, as of the Effective Time stock
options on the terms and conditions set forth on Exhibit B hereto, in Section
4(c) hereof, and otherwise in accordance with the terms and conditions of the
Kellogg Company 2001 Long-Term Incentive Plan (the "LTIP"). Further, beginning
in 2001, the Executive shall be eligible for regular option grants under the
LTIP on the same basis as similarly situated executives of the Company. Finally,
the Executive shall be entitled to receive special retention bonuses (the
"Retention Bonuses") in the amounts and on the dates set forth in Exhibit A
hereto, if the Executive remains employed by the Company on those dates.

                         (c) Employee Benefits and Fringe Benefits. During the
Employment Period, the Executive shall be entitled to receive employee benefits,
vacation and fringe benefits (including, without limitation, medical, life
insurance and other welfare benefits and benefits under retirement and savings
plans) to the same extent as, and on the same terms and conditions as, other
similarly situated executives of the Company from time to time.

                         (d) Expenses. The Executive shall be entitled to
receive prompt reimbursement for all reasonable business expenses incurred by
the Executive during the Term in carrying out his duties under this Agreement,
provided that the Executive complies with the policies, practices and procedures
of the Company for submission of expense reports, receipts, or similar
documentation of such expenses, as in effect from time to time.

                         (e) Change of Control: From and after the Effective
Time, the Executive shall be a "Participant" in the Kellogg Company Change of
Control Severance Policy for Key Executives (the "Change of Control Policy");
provided, that in no event shall the Executive be entitled to receive severance
benefits under both such policy and this Agreement.

                  4. Employment Termination. (a) Termination by the Company. (i)
The Executive's employment may be terminated by the Company upon the Disability
of the Executive (as defined below), for Cause (as defined below), or for any
other reason (a termination without Cause). The Company shall give the Executive
notice of termination specifying which of the foregoing provisions is applicable
and, in the case of a termination for Cause, the factual basis therefor, and the
termination shall be effective upon the 5th day after



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<PAGE>   3


such notice is given or such later day as may be specified in such notice (such
day, the "Date of Termination").


                         (ii) For purposes of this Agreement, "Disability" shall
mean a disability that would entitle Executive to receive benefits under the
long-term disability plan of the Company, Kellogg or any of their affiliates
(the Kellogg and such affiliates are hereinafter referred to as the "Affiliated
Companies"), applicable to Executive, as in effect from time to time, which
prevents the Executive from performing his duties hereunder for 180 consecutive
days or more.

                         (iii) For purposes of this Agreement, "Cause" means any
of the following:

                         (A)     malfeasance or gross misconduct by the
                                 Executive in connection with his employment or
                                 malfeasance or gross misconduct that produces
                                 material loss or damage to, or has a material
                                 adverse effect on the reputation of, the
                                 Company or any of the Affiliated Companies,
                                 which shall include but not be limited to
                                 instances of sexual harassment or violation of
                                 the Company's nondiscrimination policies.

                         (B)     continuing refusal by the Executive to perform
                                 his employment duties or any lawful direction
                                 of a senior executive of the Company or
                                 Kellogg, within ten (10) days after written
                                 notice of any such refusal to perform such
                                 duties or direction is given to the Executive;

                         (C)     any breach of the provisions of Section 5 of
                                 this Agreement by the Executive or any other
                                 material breach of this Agreement by the
                                 Executive; or

                         (D)     the conviction of the Executive of, or plea of
                                 nolo contendere by the Executive to:

                                 (I)    any felony under federal, state or local
                                        laws; or

                                 (II)   a misdemeanor that involves dishonesty
                                        or fraud or produces material loss or
                                        damage to, or has a material adverse
                                        effect on the reputation of, the Company
                                        or any of the Affiliated Companies.

                         (b) Termination by Executive. (i) The Executive's
employment may be terminated by the Executive for "Good Reason," as defined
below, or without Good Reason. The Executive shall give the Company notice of
termination, which shall, if the termination is for "Good Reason," specify the
factual basis therefor, and the termination shall be effective upon the 30th
business day after such notice is given unless the Company agrees to an earlier
day (such day, the "Date of Termination").



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<PAGE>   4

                         (iv) A termination by the Executive shall be for "Good
Reason" if it occurs within 30 days after, and as a result of, one of the
following:

                         (A)     the assignment to the Executive of any duties
                                 inconsistent in any material adverse respect
                                 with the Executive's position, duties or
                                 responsibilities as contemplated by Section 2
                                 of this Agreement, or any other action by the
                                 Company which results in a material
                                 diminishment in such position, duties or
                                 responsibilities (which shall include, but not
                                 be limited to, a change in the reporting
                                 relationship of the supply chain away from the
                                 Executive), other than action or inaction which
                                 is remedied by the Company within 15 days after
                                 receipt of written notice thereof given by the
                                 Executive;

                         (B)     any failure by the Company to comply with any
                                 of the provisions of Section 3 of this
                                 Agreement in any material respect, other than
                                 any such failure that is remedied by the
                                 Company within 15 days after receipt of written
                                 notice thereof given by the Executive; or

                         (C)     any relocation by the Company of the
                                 Executive's principal place of business away
                                 from the Chicago, Illinois metropolitan area.

                         (c) Consequences of Termination by the Company without
Cause or by the Executive for Good Reason. (i) If, during the Employment Period,
the Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall not be entitled to any further
compensation provided for under this Agreement, and shall instead receive from
the Company (A) a lump sum cash payment, within 15 days after the Date of
Termination, equal to (I) two times the Base Salary, at the rate in effect
immediately before the Date of Termination (but, in the case of a termination by
the Executive for Good Reason, disregarding any reduction thereof that was the
basis for such termination), plus (II) the Annual Bonus Amount, as defined
below, plus (III) any Retention Bonuses that have not yet been paid, plus (IV)
$30,000 in lieu of certain benefits, and (ii) continued health and life
insurance benefits on the terms and conditions set forth in Section 4(c)(iii)
below and the other benefits set forth in Section 4(c)(iv) below.

                         (ii)    The "Annual Bonus Amount" means the sum of:

                         (A)     any earned but unpaid Annual Bonus for the
                                 fiscal year ending immediately before the Date
                                 of Termination;

                         (B)     an amount equal to (I) the Recent Bonus (as
                                 defined below) times (II) a fraction, the
                                 numerator of which is the number of days in the
                                 fiscal year in which the Date of Termination
                                 occurs that precede the Date of Termination,
                                 and the denominator of which is the total
                                 number of days in such fiscal year; plus

                         (C)     two times the Recent Bonus.



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<PAGE>   5

For purposes of clauses (B) and (C) above, the "Recent Bonus" means the greatest
of (I) the amount of the Executive's 1999 fiscal year bonus paid in 2000, (II)
if the Executive's 2000 fiscal year bonus has been determined as of the Date of
Termination, the average of the 1999 fiscal year bonus paid in 2000 and the 2000
fiscal year bonus paid or payable in 2001, and (III) the most recent Annual
Bonus (if any) earned by the Executive under this Agreement.

                         (iii) The health and life insurance benefits described
above shall consist of continued coverage for the Executive and, if applicable,
his eligible dependents, under the Company's group health and life insurance
plans from the Date of Termination through the second anniversary thereof
(subject to making all required employee contributions) in the form then
available to employees of the Company. However, such continuation shall no
longer be provided when and to the extent that the Executive is entitled
(without regard to any individual waivers or other arrangements) to receive
during such two-year period the same type of coverage from another employer or
another recipient of the Executive's services (except to the extent that
pre-existing conditions would not be eligible to be covered under such successor
coverage). To the extent that such coverage cannot be provided under the terms
of the applicable plans, the Company may elect instead to provide alternative
coverage through the purchase of insurance (of equal value and coverage) at the
Company's expense. After the period during which such continued health and
dental coverage is provided, the Company may elect to continue coverage under
the "COBRA" health benefit continuation rules and, if he so elects such
continuation, he shall pay the required premiums to maintain such coverage.

                         (iv) In addition, the Executive shall continue to
receive any automobile allowance to which he was entitled immediately before the
Date of Termination until the second anniversary of the Date of Termination.
However, the Executive must deliver any Company-provided leased vehicles to the
Company within ten days after the Date of Termination. For a period of one year
after the Date of Termination, the Company shall provide outplacement
assistance, as appropriate and necessary to the Executive. The Executive shall
not, however, be entitled to any payment in lieu of accepting outplacement
assistance services. Finally, for purposes of any non-qualified retirement plan
in which the Executive is participating immediately before the Effective Time,
the Executive shall be credited with two additional years of service and the
cash amounts payable pursuant to Section 4(c)(i)(A)(I), (II), and (IV) above
shall be treated as compensation paid during the period of such additional
service.

                         (d) Other Employment Terminations. If, during the
Employment Period, the Executive's employment is terminated for any reason other
than by the Company without Cause or by the Executive for Good Reason, the
Executive shall not be entitled to any compensation provided for under this
Agreement, other than (i) Base Salary through the Employment Termination Date,
(ii) benefits under any long-term disability insurance coverage in the case of
termination because of Disability, (iii) vested benefits, if any, required to be
paid or provided by law, and (iv) any Retention Bonuses that have not yet been
paid, in the case of the Executive's death or termination because of Disability.

                         (e) Coordination of Severance Benefits. The Executive
acknowledges and agrees that if he becomes entitled to "Separation Benefits"
under Change of Control Policy during the Employment Period under this
Agreement, then notwithstanding any other provision of this Agreement, he will
be entitled to receive either such Separation Benefits or the severance


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<PAGE>   6



pay and benefits provided for under Section 4(c) or Section 4(d) of this
Agreement, as he may elect, but not both. In addition, the Executive
acknowledges and agrees that if he becomes entitled to the severance pay and
benefits provided under Section 4(c) or Section 4(d) of this Agreement, he will
not also be eligible for severance pay or benefits under any severance plan,
program or policy or similar arrangement of Kellogg, the Company, or any of
their affiliates.

                  5. Covenants. (a) Confidential Information. The Executive
shall hold in a fiduciary capacity for the benefit of the Company and the
Affiliated Companies all secret or confidential information, knowledge or data
relating to the Company or any of the Affiliated Companies and their respective
businesses (including, without limitation, any proprietary and not publicly
available information concerning any processes, methods, trade secrets,
research, secret data, costs or names of users or purchasers of their respective
products or services, business methods, operating procedures or programs or
methods of promotion and sale) that the Executive has obtained or obtains during
his employment by the Company or any of the Affiliated Companies and that is not
public knowledge (other than as a result of the Executive's violation of this
Section 5(a)) ("Confidential Information"). For the purposes of this Section
5(a), information shall not be deemed to be publicly available merely because it
is embraced by general disclosures or because individual features or
combinations thereof are publicly available. The Executive shall not
communicate, divulge or disseminate Confidential Information at any time during
or after the Executive's employment with the Company or any of the Affiliated
Companies, except with the prior written consent of the Company or such
Affiliated Company, as applicable, or as otherwise required by law or legal
process. All records, files, memoranda, reports, customer lists, drawings,
plans, documents and the like that the Executive uses, prepares or comes into
contact with during the course of the Executive's employment shall remain the
sole property of the Company and/or one or more of the Affiliated Companies, as
applicable, and shall be turned over to the Company or such Affiliated Company,
as applicable, upon termination of the Executive's employment.

                         (b) No Solicitation. The Executive agrees that he will
not, at any time during the Noncompetition Period (as defined in Section 5(c)
below), without the prior written consent of Kellogg, directly or indirectly
employ, or solicit the employment of (whether as an employee, officer, director,
agent, consultant or independent contractor), any person who is or was at any
time during the previous six (6) months an employee, representative, officer or
director of the Company or any of the Affiliated Companies (except for such
employment by the Company or any of the Affiliated Companies).

                         (c) Noncompetition. During the Noncompetition Period
(as defined below), the Executive shall not become associated with a Competitor.
The foregoing sentence shall not apply, however, if the Executive obtains prior
written permission of Kellogg to become associated with a Competitor. For
purposes of this Section 5(c): (i) the "Noncompetition Period" means (A) the
period during which the Executive is employed by the Company or any of the
Affiliated Companies, plus (B) the period of one year immediately thereafter;
(ii) a "Competitor" means any grain-based convenience foods business of
Campbell's, Danone, General Mills, Kraft, Nabisco, Nestle, Parmalat, PepsiCo,
Quaker, or any of their respective affiliates and successors; and (iii) the
Executive shall be considered to have become "associated with a Competitor" if
the Executive becomes directly or indirectly involved as an owner, principal,
employee, officer, director, independent contractor, representative,
stockholder,



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<PAGE>   7





financial backer, agent, partner, advisor, lender, or in any other
individual or representative capacity with a Competitor. Notwithstanding the
foregoing, the Executive may make and retain investments in less than one
percent of the equity of any Competitor, if such equity is listed on a national
securities exchange or regularly traded in an over-the-counter market.

                         (d) Inventions. All plans, discoveries and
improvements, whether patentable or unpatentable, made or devised by the
Executive, whether alone or jointly with others, from the date of the
Executive's initial employment by the Company and continuing until the end of
the Employment Period and any subsequent period when the Executive is employed
by the Company or any of the Affiliated Companies, relating or pertaining in any
way to the Executive's employment with or the business of the Company or any of
the Affiliated Companies, shall be promptly disclosed in writing to the Board
and are hereby transferred to and shall redound to the benefit of the Company,
and shall become and remain its sole and exclusive property. The Executive
agrees to execute any assignments to the Company or its nominee, of the
Executive's entire right, title and interest in and to any such discoveries and
improvements and to execute any other instruments and documents requisite or
desirable in applying for and obtaining patents or copyrights, at the expense of
the Company, with respect thereto in the United States and in all foreign
countries, that may be required by the Company. The Executive further agrees,
during and after the Employment Period, to cooperate to the extent and in the
manner required by the Company, in the prosecution or defense of any patent or
copyright claims or any litigation, or other proceeding involving any trade
secrets, processes, discoveries or improvements covered by this Agreement, but
all necessary expenses thereof shall be paid by the Company.

                         (e) Acknowledgement and Enforcement. The Executive
acknowledges and agrees that: (i) the purpose of the foregoing covenants,
including without limitation the noncompetition covenant of Section 5(c), is to
protect the goodwill, trade secrets and other Confidential Information of the
Company being acquired by Kellogg in the Transaction; (ii) because of the nature
of the business in which the Company and the Affiliated Companies are engaged
and because of the nature of the Confidential Information to which the Executive
has access, it would be impractical and excessively difficult to determine the
actual damages of the Company and the Affiliated Companies in the event the
Executive breached any of the covenants of this Section 5; and (iii) remedies at
law (such as monetary damages) for any breach of the Executive's obligations
under this Section 5 would be inadequate. The Executive therefore agrees and
consents that if he commits any breach of a covenant under this Section 5 or
threatens to commit any such breach, the Company shall have the right (in
addition to, and not in lieu of, any other right or remedy that may be available
to it) to temporary and permanent injunctive relief from a court of competent
jurisdiction, without posting any bond or other security and without the
necessity of proof of actual damage. With respect to any provision of this
Section 5 finally determined by a court of competent jurisdiction to be
unenforceable, the Executive and the Company hereby agree that such court shall
have jurisdiction to reform this Agreement or any provision hereof so that it is
enforceable to the maximum extent permitted by law, and the parties agree to
abide by such court's determination. If any of the covenants of this Section 5
are determined to be wholly or partially unenforceable in any jurisdiction, such
determination shall not be a bar to or in any way diminish the Company's right
to enforce any such covenant in any other jurisdiction.



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<PAGE>   8



                  6. No Mitigation. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, except as specifically provided in Section 4(c)(iii) above, such amounts
shall not be reduced, regardless of whether the Executive obtains other
employment.

                  7. Tax Gross-Up for Payments by the Company. (a) Any payment
or benefit provided by the Company or Kellogg for the benefit of the Executive
under this Agreement or otherwise under any other agreement, policy, plan,
program or arrangement, including without limitation any stock option,
performance share, performance unit, stock appreciation right, restricted stock
award, executive incentive award, or similar right, or the lapse or termination
of any restriction on, or the vesting or exercisability of, any of the foregoing
("Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or by any successor
provision) or to any similar excise or penalty tax imposed by state or local
law, or to any interest or penalties with respect to that tax (that tax or those
taxes, together with any interest and penalties, being hereinafter referred to
as the "Excise Tax"), then the Executive will be entitled to receive from the
Company a payment described in the provisions that follow (the "Gross-Up
Payment"). The Gross-Up Payment shall be in an amount such that, after payment
(out of the Gross-Up Payment) by the Executive of all taxes (including any
interest or penalties imposed on the Executive with respect to those taxes),
including any income and excise taxes imposed on the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payment and paid by the Executive.

                         (b) The determination of whether an Excise Tax is
payable by the Executive and the amount of that Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and the
amount of that Gross-Up Payment, if any, shall be made by a nationally
recognized accounting firm ("Accounting Firm") designated by the Company. If the
Accounting Firm determines that any Excise Tax is payable by the Executive, the
Company shall pay the required Gross-Up Payment to the Executive as soon as
practicable after receipt of the determination and calculations with respect to
any Payment to the Executive. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall, at the same time as it makes that
determination, furnish the Company and the Executive an opinion that the
Executive has substantial authority not to report any Excise Tax on his federal,
state or local income or other tax return.

                         (c) The Company and the Executive shall each provide
the Accounting Firm access to and copies of any books, records and documents in
the possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and shall otherwise cooperate with the
Accounting Firm in connection with the preparation and issuance of the
determinations and calculations contemplated by this Section 7. Any
determination by the Accounting Firm as to the amount of the Gross-Up Payment
shall be binding on the Company and the Executive, unless the amount of the
Excise Tax or such Gross-Up Payment is challenged by the IRS or any other taxing
authority (in which case the Gross-Up Payment shall be recalculated after such
challenge has been concluded).



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                         (d) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service or any other taxing authority that,
if successful, would require the payment by the Company of a Gross-Up Payment
(or the recalculation of the Gross-Up Payment). That notification shall be given
as promptly as practicable but no later than ten (10) business days after the
Executive actually receives notice of the claim, and the Executive shall further
apprise the Company of the nature of the claim and the date on which such claim
is requested to be paid (in each case, to the extent known by the Executive).
The Company shall be responsible for representing the Executive before any
taxing authority and shall have full authority to defend, compromise or settle
any claim, all of such shall be at the Company's full expense (including any
additional required Gross-Up Payment and any accounting or legal fees incurred
by the Company).

                  8. Notices. (a) Methods. Each notice, demand, request,
consent, report, approval or communication (hereinafter, "Notice") which is or
may be required to be given by any party to any other party in connection with
this Agreement and the transactions contemplated hereby, shall be in writing,
and given by facsimile, personal delivery, receipted delivery services, or by
certified mail, return receipt requested, prepaid and properly addressed to the
party to be served as shown in Section 8(b) below.

                         (b) Addresses. Notices shall be effective on the date
sent via facsimile, the date delivered personally or by receipted delivery
service, or three (3) days after the date mailed:


                                                          

                  If to the Company:                          Keebler Foods Company
                                                              677 Larch Ave.
                                                              Elmhurst, IL 60126

                                                              Attn.:  Corporate Secretary

                                                              Facsimile:  (630) 833-3372

                  If to the Executive:                        At his residence address most recently filed
                                                              with the Company.
                  In each case, with
                  a copy to Kellogg:

                  If to Kellogg:                              Kellogg Company
                                                              One Kellogg Square
                                                              Battle Creek, MI  49016-3599

                                                              Attn.:  General Counsel

                                                              Facsimile:  (616) 961-6598



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<PAGE>   10



                         (c) Changes. Each party may designate by Notice to the
other in writing, given in the foregoing manner, a new address to which any
Notice may thereafter be so given, served or sent.

                  9. Entire Agreement. If this Agreement becomes effective as
provided in Section 1(a), then as of the Effective Time, this Agreement shall
constitute the entire agreement of the parties with respect to the subject
matter hereof and shall supersede all prior agreements with respect thereto,
including, without limitation, the Employment and Severance Agreement between
the Company and the Executive as amended on September 5, 2000.

                  10. Successors. (a) Executive. This Agreement is personal to
the Executive and, without the prior written consent of the Company, shall not
be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.

                         (b) The Company. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns.

                         (c) Assigns. The Company and/or Kellogg shall require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and perform this Agreement in the same manner and to
the same extent that the Company and/or Kellogg would have been required to
perform it if no such assignment had taken place. As used in this Agreement,
"Company" shall mean both the Company as defined above and any such successor by
operation of law or otherwise.

                  11. Miscellaneous. (a) Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Illinois, without reference to principles of conflict of laws. This Agreement
may not be amended or modified except by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

                         (b) Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.

                         (c) Tax Withholding. Notwithstanding any other
provision of this Agreement, the Company may withhold from amounts payable under
this Agreement all federal, state, local and foreign taxes that are required to
be withheld by applicable laws or regulations.

                         (d) No Waiver. The Executive's or the Company's failure
to insist upon strict compliance with any provision of, or to assert any right
under, this Agreement shall not be deemed to be a waiver of such provision or
right or of any other provision of or right under this Agreement.



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<PAGE>   11

                         (e) Headings. The Section headings contained in this
Agreement are for convenience only and in no manner shall be construed as
part of this Agreement.

                         (f) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.


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                  IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization of its Board of Directors, each of the
Company and Kellogg has caused this Agreement to be executed in its name on its
behalf, all as of the day and year first above written.


                                                 EXECUTIVE


                                                 ------------------------------
                                                 David Vermylen


                                                 KEEBLER FOODS COMPANY

                                                 By
                                                   ----------------------------
                                                      Name:
                                                      Title:

                                                 KELLOGG COMPANY

                                                 By
                                                   ----------------------------
                                                      Name:
                                                      Title:



                                       12
<PAGE>   13
                                    EXHIBIT A
                     TERMS AND CONDITIONS FOR DAVID VERMYLEN


End of Employment Period: third anniversary of the Effective Time

Position: President and CEO of the Company. Member of the Kellogg Global
Leadership Team. Senior Vice President of Kellogg.

Minimum Annual Rate of Base Salary: $450,000

Target Annual Bonus: 60% of Base Salary

Retention Bonus Payments: $1,738,000. Executive shall receive 50% of this amount
upon the first anniversary of the Effective Time and the remaining 50% upon the
second anniversary of the Effective Time.


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