Exhibit 10.2
Employment Agreement
This Employment Agreement (the "Agreement"), is made and entered into
as of September 22, 2003 by and between Xxxxxxx Company, a Delaware corporation
(the "Company"), and Xxxx Xxxxxx ("Employee").
WHEREAS, the Company has entered into a previous agreement with
Employee by letter dated July 26, 2000 (the "Letter Agreement") setting out
terms and benefits in the event of the termination of Employee's employment;
WHEREAS, the Company and Employee desire by this Agreement to terminate
the Letter Agreement and set forth the terms of certain benefit arrangements
with Employee;
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. Title and Employment Duties. Employee shall be an Executive Vice President
of the Company. Employee also shall serve in one or both of the following
positions at the discretion of the Company's Chief Operating Officer
("COO"): (i) the President of Kellogg International, and (ii) Chief
Marketing and Customer Officer - as such duties and responsibilities have
been discussed by the Employee and the COO.
2. Compensation. Employee shall be paid a base salary at the rate of
$560,500.00 per year during the term of this Agreement, payable in
accordance with the Company's customary policies. Such salary shall be
subject to periodic review and increase in accordance with standard salary
review procedures of the Company. Employee shall also be entitled to
participate in such employee health, welfare and other benefit plans
including, but not limited to, the Annual Incentive Plan and the Executive
Performance Plan ("EPP"), as are made available generally to executives of
Employee's level, subject to the Company's right to amend, modify or
terminate any such plan in accordance with its terms.
3. Pension Credit. Employee will be granted a total of six years of pension
service credit (i.e., approximately 2.5 years of actual service plus 3.5
years of additional service) if he works through December 31, 2005. For
avoidance of doubt, for each additional full year of service performed
after December 31, 2005, Employee will be entitled to one year of pension
service credit. Accordingly, if (i) Employee is employed hereunder through
December 31, 2005, and (ii) Employee's employment is terminated before he
reaches the age of 55, upon reaching the age of 55, Employee shall be
entitled to a pension calculated using 25 years (plus any additional years
earned pursuant to the preceding sentence) of service credit and deeming
Employee to have achieved the age of 55 at the time he left the Company's
employment.
4. Termination.
a. If Employee's employment is terminated by reason of Employee's death
or disability, Employee or Employee's estate shall be entitled to
receive benefits provided for under the Company's general policy for
such events and, if such termination occurs after December 31, 2005,
the benefits specified in paragraph 3 hereof.
b. The Company may terminate Employee's employment under this Agreement
for "Cause." Termination for "Cause" means termination by the Company
because of (i) theft, embezzlement, or fraud by Employee pursuant to
which the Company has suffered a loss, or conspiracy by Employee to
commit any of the foregoing, (ii) incapacity on the job by reason of
Employee's abuse of alcohol or drugs, (iii) commission by Employee of
a crime involving moral turpitude, or an act of dishonesty by Employee
in connection with the performance of Employee's duties hereunder,
(iv) a willful and knowing violation by Employee of any law or
regulation respecting the business of the Company, (v) a breach of any
fiduciary duty owed by Employee to the Company in any material
respect, (vi) breach by Employee of any of the provisions of this
Agreement in any material respect, or (vii) failure of Employee to
perform his duties in any material respect as required under this
Agreement; provided, however, that in the case of clauses (vi) and
(vii) hereof, if such breach or failure is capable of being cured
within thirty (30) days, the Company must provide written notice of
such breach or failure within thirty (30) days of its discovery
thereof, and Employee must have thirty (30) days from such written
notice to cure such breach or failure. Upon termination of this
Agreement pursuant to this paragraph 4.b., Employee shall be entitled
to receive any salary earned and not paid up to the date of
termination, which shall be subject to set-off to the maximum extent
permitted by law if the Company has encountered a loss by reason of
the action permitting the Company to terminate Employee for Cause,
and, notwithstanding any other paragraph herein, Employee shall not be
entitled to any further compensation. For avoidance of doubt, if
Employee's employment is terminated pursuant to this paragraph 4.b.,
Employee shall forfeit any benefits described in paragraph 3 of this
Agreement.
c. The Company may at any time terminate Employee's employment without
Cause, provided that the Company shall provide Employee with (i)
severance benefits as provided by the Xxxxxxx Company Severance
Benefit Plan, as amended from time to time (the "Severance Plan"),
provided that Employee is eligible for receipt of such benefits as
provided for by the Severance Plan (e.g., Employee has delivered a
full release of the Company), and (ii) pension credit as provided in
paragraph 3 hereof as though Employee had worked through December 31,
2005.
d. Employee may at any time terminate Employee's employment for "Good
Reason." Termination for "Good Reason" means termination by Employee
because of (i) a reduction in Employee's base salary or target bonus
percentage (i.e., 75%) under the Annual Incentive Plan, as in effect
from time to time or failure to be included as a participant in the
2004 or 2005 EPP, provided such plan(s) exist, (ii) the Company's
failure to provide any fringe benefit plan or substantially similar
benefit or compensation plan which has been made generally available
to other management employees of the Company; provided, however, that
nothing in this clause shall be construed to constrain the Company
from amending or eliminating any benefit or compensation plan; (iii) a
breach by the Company of its obligations to Employee under this
Agreement in any material respect, or (iv) a material reduction in
Employee's responsibilities or duties as in effect immediately prior
to such change, provided however, that in the case of each of clauses
(i) through (iv) hereof, Employee must provide written notice of any
such alleged action of the Company within thirty (30) days of the date
Employee knew of such action and the Company shall have thirty (30)
days from such written notice to cure such action. If Employee
terminates his employment for Good Reason prior to January 1, 2005, he
shall be entitled to (i) severance benefits as provided by the
Severance Plan, provided that Employee is eligible for receipt of such
benefits as provided for by the Severance Plan (e.g., Employee has
delivered a full release of the Company), and (ii) pension credit as
provided in paragraph 3 hereof as though Employee had worked through
December 31, 2005.
e. If Employee terminates his employment for Good Reason after January 1,
2005, he (i) shall be entitled to pension credit as provided in
paragraph 3 hereof as though he had worked through December 31, 2005,
but (ii) shall not be entitled to any benefits under the Severance
Plan under this Agreement and shall be treated for all purposes (other
than as provided by the immediately preceding clause (i)) as though he
had terminated his employment voluntarily without Good Reason.
f. Employee may at any time terminate his employment without Good Reason,
in which case he shall be entitled to receive (i) such benefits as the
Company makes generally available to employees who have voluntarily
terminated their employment and (ii) if such termination occurs after
December 31, 2005, the benefits specified in paragraph 3 hereof.
Notwithstanding the foregoing, if during the period commencing
December 1, 2003 and ending April 30, 2004, the Chief Operating
Officer receives written notice from Employee of his desire to
terminate his employment without Good Reason, (i) Employee shall
continue to fulfill his duties through, and Employee's employment
shall terminate on, the earlier of (x) September 30, 2004 or (y) the
date Employee obtains alternative employment (for purposes of this
paragraph 4(f), the "Termination Date"); (ii) Employee shall not have
the right to terminate Employee's employment for "Good Reason"; and
(iii) provided Employee is not terminated by the Company for Cause
prior to the Termination Date, Employee shall be entitled to receive
the following: (i) salary and continued participation in employee
health, welfare and other benefit plans through September 30, 2004;
(ii) a target bonus under the 2004 Annual Incentive Plan prorated
through September 30, 2004, payable at the time executives of the
Company receive 2004 bonus payments; and (iii) commencing October 1,
2004, severance benefits as provided by the Severance Plan, provided
that Employee is eligible for receipt of such benefits provided for by
the Severance Plan (e.g., Employee has delivered a full release of the
Company); provided, however, Employee shall not be entitled to the
pension credit described in paragraph 3 hereof.
g. Notwithstanding any other provision in this Agreement, if (i)
Employee's employment is terminated prior to December 31, 2005, and
(ii) at the time of such termination, Employee qualifies for benefits
under Section 5 of the Employment Agreement between Employee and the
Company dated July 26, 2000 (the "Change of Control Agreement"), then
(i) Employee shall vest in the benefits described in paragraph 3 on
December 31, 2005, (ii) this Agreement shall otherwise be deemed null,
void and of no further force or effect, and (iii) Employee shall be
entitled to receive the benefits set forth under the Change of Control
Agreement; provided, however, the lump sum payment in Section 5(1)(C)
of the Change of Control Agreement shall be reduced as set forth
below. The time period used to calculate the lump sum payment shall be
changed from (i) "three years after the Date of Termination," to (ii)
"three years after the Date of Termination minus the time period
between the Date of Termination and December 31, 2005." For example,
if Employee's employment is terminated on December 31, 2004, and
Employee is entitled to benefits under Section 5 of the Change of
Control Agreement, (i) Employee would be credited with 6 years of
service on December 31, 2005, and (ii) under Section 5(1)(C) of the
Change of Control Agreement, Employee would receive a lump sum amount
equal to the actuarial equivalent of the benefit that he would have
received for 2 years (as opposed to three years) of additional
participation under the Company's relevant retirement plans.
5. Covenants and Release.
a. Non-compete. (i) For a period of two years beginning with the date
Employee's employment with the Company ends (the "Restricted Period"),
Employee shall not:
A. 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
hereinafter defined) in the Geographic Area (as hereinafter
defined), including, but not limited to, General Xxxxx
(including, but not limited to, Pillsbury), Kraft (including, but
not limited to, Post and Nabisco), PepsiCo (including, but not
limited to, Quaker and Frito Lay), Malto Meal, Ralcorp, Nestle,
Parmalat, Xxxxxxxx'x, Danone and/or any other company that
operates a cereal, cookie or cracker business.
B. directly or indirectly, permit any business, entity or
organization which Employee, individually or jointly with others,
owns, manages, operates, or controls, to engage in the
manufacture, production, distribution, sale or marketing of any
of the Products in the Geographic Area.
(ii) For purposes of this Paragraph 5(a).
A. the term "Products" shall mean ready-to-eat cereal
products, toaster pastries, cereal bars, granola bars,
frozen waffles, crispy marshmallow squares, cookies,
crackers, ice cream cones, any other grain-based
convenience food, fruit snacks, or meat substitutes;
B. the term "Geographic Area" shall mean any country in
the world where the Company manufactures, produces,
distributes, sells or markets any of the Products at
any time during the applicable Restricted Period; and
b. Non-solicitation. Employee agrees that during his employment and
thereafter for a period of two years beginning with the date his
employment with the Company ends, Employee shall not, without the
prior written consent of the General Counsel of the Company, 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
year an officer, director, representative, agent or employee of the
Company.
c. Non-Disparagement. Employee agrees not to engage in any form of
conduct or make any statements or representations that disparage,
portray in a negative light, or otherwise impair the reputation,
goodwill or commercial interests of the Company, or its past, present
and future subsidiaries, divisions, affiliates, successors, or their
officers, directors, attorneys, agents and employees. Certain Company
Executives (as defined herein) agree not to engage in any form of
conduct or make any statements or representations that disparage,
portray in a negative light, or otherwise impair the reputation of
Employee. For purposes of this Paragraph, "Certain Company Executives"
means Xxxxxx Xxxxxxxxx, Xxxxx XxxXxx, Xxxx Xxxxxxx, Xxxx Xxxxxx,
Xxxxxxx Xxxxx, King Pouw, and Xxxxx Xxxxx for that period of time such
individuals are employees of the Company.
d. Preservation of Company Confidential Information. Employee agrees that
he shall not (without first obtaining the prior written consent in
each instance from the Company) during the term of this Agreement or
thereafter, disclose, make commercial or other use of, give or sell to
any person, firm or corporation, any information received directly or
indirectly from the Company or acquired or developed in the course of
Employee's employment, including, by way of example only, ideas,
inventions, methods, designs, formulas, systems, improvements, prices,
discounts, business affairs, products, product specifications,
manufacturing processes, data and know-how and technical information
of any kind whatsoever unless such information has been publicly
disclosed by authorized officials of the Company.
e. Release. In consideration of the compensation and benefits provided
pursuant to this Agreement, the sufficiency of which is hereby
acknowledged, Employee, for Employee and for any person who may claim
by or through Employee, irrevocably and unconditionally releases,
waives and forever discharges the Company and its past, present and
future subsidiaries, divisions, affiliates, successors, and their
respective officers, directors, attorneys, agents and employees, from
any and all claims or causes of action that Employee had, has or may
have, known or unknown, relating to Employee's employment with the
Company up until the date of this Agreement, including but not limited
to, any claims arising under Title VII of the Civil Rights Act of
1964, as amended, Section 1981 of the Civil Rights Act of 1866, as
amended, the Civil Rights Act of 1991, as amended, the Family and
Medical Leave Act, the Age Discrimination in Employment Act, as
amended by the Older Workers Benefit Protection Act of 1990, the
Americans with Disabilities Act, the Employee Retirement Income
Security Act; claims under any other federal, state or local statute,
regulation or ordinance; claims for discrimination or harassment of
any kind, breach of contract or public policy, wrongful or retaliatory
discharge, defamation or other personal or business injury of any
kind; and any and all other claims to any form of legal or equitable
relief, damages, compensation or benefits (except rights Employee may
have under the Employee Retirement Income Security Act of 1974 to
recover any vested benefits), or for attorneys fees or costs. Employee
additionally waives and releases any right Employee may have to
recover in any lawsuit or proceeding against the Company brought by
Employee, an administrative agency, or any other person on Employee's
behalf or which includes Employee in any class.
6. Miscellaneous.
a. Severability. If any provision of this Agreement is found by a court
of competent jurisdiction to be unenforceable, in whole or in part,
then that provision will be eliminated, modified or restricted in
whatever manner is necessary to make the remaining provisions
enforceable to the maximum extent allowable by law.
b. Controlling Law and Venue. Employee agrees that the laws of the State
of Michigan shall govern this Agreement. Employee also agrees that any
controversy, claim or dispute between the parties, directly or
indirectly, concerning this Agreement or the breach of thereof shall
only be resolved in the Circuit Court of Xxxxxxx County, or the United
States District Court for the Western District of Michigan, whichever
court has jurisdiction over the subject matter thereof, and the
parties hereby submit to the jurisdiction of said courts.
c. Entire Agreement; Amendment. Employee agrees that this Agreement and
the Change of Control Agreement constitute the entire agreement
between Employee and the Company, and that this Agreement, and the
Change of Control Agreement supersede any and all prior and/or
contemporaneous written and/or oral agreements relating to Employee's
employment with the Company and termination therefrom. Employee
acknowledges that this Agreement may not be modified except by written
document, signed by Employee and the General Counsel the Company.
d. Employment Relationship. Employee acknowledges and agrees that his
employment with the Company described in this letter is an at-will
employment relationship, and that only the General Counsel of the
Company may modify this provision, and any modification must be in
writing signed by both parties.
e. Taxes. Usual and customary withholding for tax purposes will be
withheld from any payments made to Employee pursuant to this
Agreement, 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.
f. Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed and agreed to this Employment
Agreement on the dates provided below.
EMPLOYEE XXXXXXX COMPANY
/s/ Xxxx Xxxxxx /s/ Xxxxxx X. Xxxxxxxxx
__________________________ By: ___________________________
Date: 9/22/03 Date: 9/22/03
