EXHIBIT 10iii
AGREEMENT UPON SEPARATION OF EMPLOYMENT
This Agreement Upon Separation Of Employment ("Agreement") is made and
entered into by and between Xxxxxxx X. Xxxxxxxxx, his successors, heirs,
administrators, executors, personal representatives and assigns ("Xxxxxxxxx")
and The Quaker Oats Company, its officers, directors, shareholders, employees,
agents, assigns, subsidiaries, divisions, parents, affiliates and successors
("Quaker"), collectively "the parties." The Agreement shall become effective
seven (7) days after it is executed by Xxxxxxxxx and delivered to Quaker's
highest ranking Human Resources officer.
1. Consideration to Xxxxxxxxx
A. Quaker shall treat Xxxxxxxxx'x retirement as "involuntary" for
purposes of The Quaker Officers' Severance Program ("the Program"). Upon the
effective date of his retirement, this will render him eligible for benefits
under the Program, including (but not limited to) payment of his salary at the
annual rate of $875,000 for a period of one year commencing on the first day of
the month immediately following the effective date of his retirement.
B. Immediately upon the date of Xxxxxxxxx'x retirement, which retirement
shall become effective on any date selected by Quaker's Board of Directors
("Board"), the Board and/or Compensation Committee shall exercise its discretion
under The Quaker Supplemental Executive Retirement Program ("SERP") to credit
Xxxxxxxxx with a Supplemental SERP Benefit, the amount of which shall result in
providing Xxxxxxxxx with a total annual retirement benefit of $971,033 when his
Basic Retirement Benefit (under the pension plans), his Supplemental Program
Benefit (i.e., his basic SERP benefit, "SPB"), and his Supplemental SERP Benefit
are added together. Provided, that prior to the commencement of payment of SERP
benefits, Xxxxxxxxx may irrevocably elect any alternative form of payment
available under the SERP, subject to the specified reduction of the $971,033
annual payment he otherwise would have received: e.g., one such option, the
joint and 50% survivor benefit option, would provide an annual benefit of
$873,930 during Xxxxxxxxx'x lifetime (a 10% reduction of the $971,033 figure),
followed by an annual survivor benefit of $436,965 payable to his spouse for the
remainder of her lifetime (if she survives him). Payment of this Supplemental
SERP Benefit shall begin immediately after the expiration of Xxxxxxxxx'x salary
continuation under the Program.
C. Immediately upon the effective date of Xxxxxxxxx'x retirement, the
Board and/or Compensation Committee shall exercise its discretion under all
applicable equity incentive programs, including without limitation The Quaker
Long Term Incentive Plan of 1990 and Quaker's Investment Incentive Program,
such that all of Xxxxxxxxx'x previously awarded stock options and shares of
restricted stock which are still unvested on his last day of inactive service
under the Program shall become fully vested as of such date.
D. Commencing immediately upon the effective date of Xxxxxxxxx'x
retirement, Quaker shall provide Xxxxxxxxx with offsite office space and
secretarial support for up to five years, both of his choosing, provided that
the total expense to Quaker shall not exceed $50,000.00 during any one year
period. To the extent that such office space and secretarial support are
treated as benefits on which Xxxxxxxxx must pay taxes without being able to
take a corresponding deduction for business expenses, Quaker shall make an
additional cash payment in an amount sufficient to cover the increase in taxes
payable by Xxxxxxxxx due to the combination of those benefits and that
additional cash payment.
2. Retirement
Xxxxxxxxx hereby irrevocably agrees to retire from his position as
President and Chief Executive Officer of Quaker, his positions as Chairman of
the Board and as a Director of Quaker, and his employment with Quaker in all
other capacities, which retirement shall become effective on any date selected
by the Board. Xxxxxxxxx agrees that prior to the effective date of his
retirement, he will return all Quaker property, including but not limited to
keys, office pass, credit cards, computers, office equipment, sales records and
data. Xxxxxxxxx further agrees that within sixty (60) days after his
retirement date, he will submit all outstanding expenses and clear all advances
and his personal advance account, if any.
3. Waiver & Release
X. Xxxxxxxxx waives, releases and discharges Quaker from any and all
claims and liabilities, demands, actions and causes of action, including
attorneys' fees and costs and participation in a class action lawsuit, whether
known or unknown, fixed or contingent, that he may have or claim to have
against Quaker as of the effective date of this Agreement. Xxxxxxxxx further
covenants not to file a lawsuit or participate in a class action lawsuit to
assert such claims. This waiver includes but is not limited to claims arising
out of or in any way related to Xxxxxxxxx'x employment or termination of
employment with Quaker, including age discrimination claims under the Age
Discrimination In Employment Act, discrimination claims under Title VII of the
Civil Rights Act of 1964 or the Americans with Disabilities Act, claims for
breach of contract, and any other statutory or common law cause of action under
state, federal or local law.
B. However, Xxxxxxxxx does not waive, release, discharge or covenant not
to xxx for enforcement of any rights or claims that arise out of conduct or
omissions which occur entirely after the date this Agreement becomes effective;
nor does he waive any vested rights he may have under any of Quaker's welfare,
pension or incentive plans, nor any right to payment for unused vacation
accrued during the year in which his retirement becomes effective.
Notwithstanding anything to the contrary in paragraph 9, such benefits shall
continue to be governed by separate Quaker plans, existing contracts and/or
policies.
C. Quaker waives, releases and discharges Xxxxxxxxx from any and all
claims and liabilities, demands, actions and causes of action, including
attorneys' fees and costs, that it may have or claim to have against Xxxxxxxxx
as of the date this Agreement becomes effective; provided, this waiver, release
and discharge only apply to claims as to which the Board (excluding Xxxxxxxxx)
was aware, on or before the effective date of this Agreement, of all material
facts necessary to establish Xxxxxxxxx'x liability; and further provided,
Quaker does not waive, release, discharge or covenant not to xxx for
enforcement of any rights or claims that arise out of conduct or omissions
which occur entirely after the date this Agreement becomes effective.
D. The parties stipulate that nothing contained in this Agreement shall
be construed as an admission by either of them of any liability, wrongdoing or
unlawful conduct. It is understood that both Quaker and Xxxxxxxxx deny any
liability, wrongdoing or unlawful conduct, and each is providing consideration
for this waiver and release solely in order to resolve any disputes between
them amicably and to avoid the expense of potential litigation.
4. Miscellaneous Agreements
The covenants and agreements set forth in this paragraph shall remain in
effect until three (3) years after the termination of Xxxxxxxxx'x active
employment.
X. Xxxxxxxxx shall provide accurate information or testimony or both in
connection with any legal matter if so requested by Quaker. He shall make
himself available upon request to provide such information and/or testimony, in
a formal and/or an informal setting in accordance with Quaker's request,
subject to reasonable accommodation of his schedule and reimbursement of
reasonable expenses, including reasonable and necessary attorney fees (if
independent legal counsel is reasonably necessary).
X. Xxxxxxxxx shall cooperate with media requests for interviews
regarding his termination and/or Quaker, unless directed otherwise by Quaker in
a particular instance. He shall not disparage The Quaker Oats Company, its
products, or any of its directors, officers or employees in these interviews,
nor in any other private or public setting; provided, if Xxxxxxxxx is compelled
to provide testimony under oath, he shall testify truthfully and such testimony
shall be protected by the same privilege that would apply to a defamation
claim.
C. The Quaker Oats Company, and any officer or director acting on its
behalf, shall answer all reference inquiries directed to The Quaker Oats
Company regarding Xxxxxxxxx by stating only his positions held, compensation
and dates of employment. No additional information shall be provided unless
authorized in advance, in writing, by Xxxxxxxxx. Xxxxxxxxx agrees to direct
all requests for references to Quaker's highest ranking Human Resources
officer.
5. Prohibited Conduct During First Two Years Following Termination
X. Xxxxxxxxx covenants and agrees that during the two years immediately
following his termination from active service, the following restrictions shall
apply:
i. Non-competition. Xxxxxxxxx shall not accept any employment,
consulting position or ownership interest which involves his Participation in
the management of a business entity that markets, sells, distributes or
produces Covered Products anywhere in the world, unless that business entity's
sole involvement with Covered Products is that it makes retail sales or
consumes Covered Products, without competing in any way against Quaker.
a. "Participation" shall be construed broadly to include,
without limitation: (1) holding a position in which he directly manages such a
business entity; (2) holding a position in which anyone else who directly
manages such a business entity is below Xxxxxxxxx in the reporting chain or
chain-of-command (regardless of the number of reporting levels between them);
(3) providing input, advice, guidance, or suggestions regarding the management
of such a business entity to anyone responsible therefor; (4) providing a
testimonial on behalf of such a business entity or the product it produces; or
(5) doing anything else that falls within a common sense definition of the term
"participate" as used in the present context.
b. "Covered Products" means any product which falls into one or
more of the following categories, so long as Quaker is still producing,
marketing, distributing, selling or licensing such product anywhere in the
world: sports drinks; hot cereals; pancake mixes; grain-based snacks
(excluding potato chips); value-added rice products; pancake syrup; value-added
pasta products; ready-to-eat cereals; dry pasta products; items Quaker produces
for the food service market; and frozen waffles, pancakes and french toast.
ii. Raiding Employees. Xxxxxxxxx shall not in any way, directly or
indirectly (including through someone else acting on Xxxxxxxxx'x
recommendation, suggestion, identification or advice), facilitate or solicit
any existing Quaker employee to leave the employment of Quaker or to accept any
position with any other company or corporation. For purposes of this
provision, "existing Quaker employee" means someone: (1) who is employed by
Quaker on the date when Xxxxxxxxx'x active employment terminates; (2) who is
still employed by Quaker as of the date when the facilitating act or
solicitation takes place; and (3) who holds a manager, director or officer
level position at Quaker (or an equivalent position based on job duties and/or
Hay points, regardless of the employee's title). The parties agree and
stipulate that by virtue of his employment at Quaker, Xxxxxxxxx developed
personal and business relationships with existing Quaker employees which he
otherwise would not have had, and also acquired knowledge as to which existing
Quaker employees are critical to Quaker's success and future plans, and which
ones have skills or contacts that would be valuable to a competitor.
iii. Non-disclosure. Xxxxxxxxx shall not use or disclose to anyone
any confidential information regarding Quaker, nor undertake any job or
assignment in which use of such information is inevitable. For purposes of
this provision, the term "confidential information" shall be construed as
broadly as Illinois law permits and shall include all non-public information
Xxxxxxxxx acquired by virtue of his positions with Quaker which might be of any
value to a competitor or which might cause any economic loss (directly or via
loss of an opportunity) or substantial embarrassment to Quaker or its
customers, distributors or suppliers if disclosed. Examples of such
confidential information include, without limitation, non-public information
about Quaker's customers, suppliers, distributors and potential acquisition
targets; its business operations and structure; its product lines, formulas and
pricing; its processes, machines and inventions; its research and know-how; its
financial data; and its plans and strategies.
B. In the event of a breach or threatened breach of any term of this
paragraph 5 by Xxxxxxxxx, Quaker shall be entitled to an injunction compelling
specific performance, restraining any future violations and/or requiring
affirmative acts to undo or minimize the harm to Quaker, in addition to damages
for any actual breach that occurs. The parties stipulate and represent that
breach of any provision of this paragraph would cause irreparable injury to
Quaker, for which there would be no adequate remedy at law, due among other
reasons to the inherent difficulty of determining the precise causation for
loss of customers, confidential information and/or employees and of determining
the amount and ongoing effects of such losses.
C. The parties stipulate that the preceding restrictive covenants do not
unduly interfere with or limit Xxxxxxxxx'x ability to earn a living or
comfortably support himself. Nonetheless, if (and only if) a court reaches a
contrary conclusion, it may condition the issuance of an injunction enforcing
the terms of paragraph 5(A) on Quaker's agreement, at Quaker's option, to
resume making payments under the SERP during the time the injunction is in
effect.
6. Advance Determination Of Permitted/Prohibited Conduct
Xxxxxxxxx may request an advance written determination from Quaker's
highest ranking Human Resources officer as to whether taking a proposed action
or job would, in Quaker's opinion, constitute a breach of this Agreement or the
SERP. In that event, and provided that Xxxxxxxxx discloses in writing all
material facts about the proposed action or job, the advance written
determination shall be made as soon as practicable in the circumstances,
without any unreasonable delay or withholding; PROVIDED, that if circumstances
materially change after the advance determination is made (e.g., if the duties
of a job change after Xxxxxxxxx accepts it), the determination may be
reconsidered and revised/reversed upon thirty days advance written notice to
Xxxxxxxxx.
7. Independence of SERP
Nothing in this Agreement shall limit, bind or in any way constrain the
Compensation Committee's right to terminate or interrupt SERP benefits
(including the SPB described in paragraph 1(B) of this Agreement) pursuant to
the present terms of the SERP; provided, however, that once this Agreement
becomes effective, any subsequent amendment of the Compensation Committee's
right to terminate or interrupt SERP benefits shall not adversely affect
Xxxxxxxxx'x rights under this Agreement.
8. Choice Of Law, Forum, and Attorney Fees
A. This Agreement shall be governed by and construed in accordance with
the laws of the State Of Illinois, without giving effect to choice of law
principles. In the event of any litigation over this Agreement or an alleged
breach thereof, Xxxxxxxxx consents to submit to the personal jurisdiction of
any court, state or federal, in the State of Illinois. The parties agree that
the Illinois courts, state or federal, shall be the exclusive jurisdiction(s)
for any litigation over this Agreement or an alleged breach thereof.
B. In the event of any litigation between Xxxxxxxxx and Quaker regarding
any provision of this Agreement, the party which prevails in such contest shall
be entitled to receive from the other party, in addition to any damages,
injunction, or other relief awarded by a court, reimbursement of all litigation
costs and expenses (including reasonable attorney fees) which the prevailing
party reasonably incurred as a result of such litigation, plus interest at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended. If, in a particular contest, each party
prevails on one or more issues, the court shall exercise its equitable judgment
to determine which, if either, should be considered the prevailing party and
the percentage of that party's expenses which should be reimbursed, taking into
account inter alia the significance of the issue(s) on which each party
prevailed and the reasonableness of each party's position(s).
9. Full Agreement and Severability
A. This written document contains the entire understanding and agreement
of the parties on the subject matter set forth herein, and supersedes any prior
agreement relating to these matters. No promises or inducements have been made
other than those reflected herein, and no party is relying on any statement or
representation by any person except those set forth herein, including without
limitation oral or written summaries of this Agreement.
B. This Agreement cannot be modified or altered except by a subsequent
written agreement signed by the parties; and only Quaker's highest ranking
Human Resources officer or his direct superior (other than Xxxxxxxxx) shall
have authority to sign such an amendment on behalf of Quaker.
C. Nothing in this document shall eliminate or reduce Xxxxxxxxx'x
obligation to comply with the Quaker Code Of Ethics or Quaker's obligation to
indemnify Xxxxxxxxx in certain situations, pursuant to Quaker's by-laws or
applicable law.
D. Each term of this Agreement is deemed severable, in whole or in part,
and if any provision of this Agreement or its application in any circumstance
is found to be illegal, unlawful or unenforceable, the remaining terms and
provisions shall not be affected thereby and shall remain in full force and
effect.
The Quaker Oats Company
/s/ Xxxxx X. Xxxxxxxx
By Xxxxx X. Xxxxxxxx,
Chairman of the Compensation Committee
of Quaker's Board of Directors
XXXXXXXXX HAS BEEN ADVISED IN WRITING, VIA THIS NOTICE, TO CONSULT WITH AN
ATTORNEY BEFORE SIGNING THIS AGREEMENT. HE ACKNOWLEDGES THAT HE RECEIVED IT ON
September 25, 1997, AND THAT SINCE THAT TIME HE HAS REVIEWED IT, CONSULTED WITH
AN ATTORNEY, AND NEGOTIATED SEVERAL CHANGES WITH QUAKER.
XXXXXXXXX UNDERSTANDS THAT HE HAS TWENTY ONE (21) DAYS AFTER RECEIVING THIS
DOCUMENT TO CONSIDER AND DECIDE WHETHER TO SIGN THE AGREEMENT. XXXXXXXXX
FURTHER UNDERSTANDS THAT HE MAY RESCIND THE AGREEMENT WITHIN SEVEN (7) DAYS
AFTER SIGNING IT. XXXXXXXXX AFFIRMS THAT HE HAS CAREFULLY READ AND FULLY
UNDERSTANDS ALL PROVISIONS OF THIS AGREEMENT, THAT THE CONSIDERATION HE IS
RECEIVING IS FAIR AND ADEQUATE, AND THAT HE HAS NOT BEEN THREATENED OR COERCED
INTO SIGNING IT.
Oct 22, 1997 /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
