SEPARATION AGREEMENT AND
GENERAL RELEASE
This
Separation Agreement and General Release (“Agreement”)
is hereby made and entered into by and between Jeffrey W. Montie
(“Employee”), whose address is c/o One Kellogg Square,
P.O. Box 3599, Battle Creek, MI 49016, and Kellogg Company, a
Delaware corporation (“Kellogg”).
1.
Employee’s Departure Date .
Employee’s
last day of active employment will be September 30, 2008, with
a “Departure Date” of October 1, 2008. Except as
otherwise expressly provided herein, Employee acknowledges that as
of the Departure Date, the Employee’s participation will
cease in all of the benefit plans of Kellogg and any of its
subsidiaries, divisions or affiliates (collectively, the
“Company”). Employee will be entitled to receive
benefits, including any right to exercise any conversion
privileges, that are vested and accrued prior to the Departure Date
pursuant to benefit plans and programs of the Company.
2.
Consideration . In consideration for Employee entering into
this Agreement and fully abiding by its terms, and assuming
Employee has not revoked this Agreement as described in
Paragraph 19 below, Kellogg agrees to provide Employee with
the following consideration:
(a).
Severance Compensation and Benefits . Kellogg agrees to
provide Employee severance compensation and benefits pursuant to
the terms and conditions of the Kellogg Company Severance Benefit
Plan (the “Plan”), a copy of which is attached to this
Agreement as Exhibit A, and the terms of which are
incorporated herein. Employee represents and warrants that Employee
has read the Plan and understands its meaning and application. For
purposes of the Plan, Employee agrees that Employee is, and shall
receive benefits under the Plan as a Senior Executive who is a
Direct Report of the Chief Executive Officer, except as otherwise
provided in this Agreement. According to the Plan, Employee shall
receive severance pay under the Plan equal to two years of base
salary and two years of target bonus. Such amount shall be paid to
Employee in equal installments from the Departure Date until
June 2, 2016 (the “Severance Leave of Absence”) in
accordance with Kellogg’s then-current payroll practices,
provided that any installments that would otherwise be payable
during the period beginning on the Departure Date and ending six
months after such date (the “Six Month Period”) that
exceed $460,000.00 (the dollar limit contained in Treasury
Regulation §1.409A-1(b)(iii)) shall be paid in a lump sum in
the first payroll period ending after the Six Month Period. The
parties acknowledge that the delay in these installments is
intended solely to comply with the requirements of Internal Revenue
Code Section 409A and shall be interpreted to comply with
those requirements .
Employee
will be eligible to retire from the Company under the Kellogg
Company Pension Plan and the Kellogg Company Executive Excess Plan
(the “Pension Plans”) subject to the terms of the
Pension Plans and in accordance with this Paragraph 2(a)
, at the end of the Severance Leave of Absence, and if
Employee elects to retire, Employee shall otherwise be eligible to
receive retirement benefits which are provided at that time to
salaried retirees of Kellogg Company in accordance with the terms
of the benefit plans. The additional pension
Kellogg Company/Corporate
Headquarters
One Kellogg Square/P.O. Box 3599/Battle Creek, Michigan 49016-3599
(269) 961-2000
benefit
attributable to this provision shall be payable from the Kellogg
Company Executive Excess Plan.
(b).
Health and Welfare Benefits . Employee shall receive health
and welfare benefits during the Severance Leave of Absence in
accordance with the Plan; provided, however, that if Employee
becomes eligible for health and welfare benefit coverage by another
employer’s health and welfare plan, coverage of Employee and
his dependents under the Company’s health and welfare benefit
plans shall terminate. Thereafter, if Employee has elected to
retire under the Pension Plans, Employee and his eligible
dependents, if any, shall be provided with retiree health benefits
at a level equal to the health benefits provided, during such time,
to Kellogg Company salaried retirees in accordance with the terms
of the plan in effect at the time. The Company reserves the right
to amend, modify and/or terminate any of its benefit plans, and
Employee shall be subject to any such changes.
(c).
Other Payments . Employee shall also receive (i) a
prorated target bonus under the Kellogg Company Senior Executive
Annual Incentive Plan for performance year 2008 within 30 days
of the Departure Date; and (ii) the actual award payable under
the 2006-2008 Executive Performance Plan at the time other
participants receive such payments.
(d).
Taxes . Employee acknowledges and agrees that:
(i) 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, and (ii) 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.
3.
No Other Compensation or Benefits Owing . Employee
acknowledges and agrees that, except as otherwise expressly
provided for in this Agreement, Employee is not and will not be due
any other compensation or benefits whatsoever from the Company and
the Company shall have no further obligations of any kind or nature
to Employee. For avoidance of doubt, Employee hereby releases,
waives and forfeits any and all right, title and interest in and to
any payment (a) under the 2007-2009 and 2008-2010 Executive
Performance Plans (or any other Executive Performance Plan),
(b) any shares pursuant to any unvested restricted stock
award, and (c) any other payments under the Kellogg Company
Senior Executive Annual Incentive Plan (and any other Annual
Incentive Plan).
4.
No Other Representations . Employee represents and warrants
that no promise or inducement has been offered or made except as
herein set forth and that Employee is entering into and executing
this Agreement without reliance on any statement or representation
not set forth within this Agreement by the Company, or any
person(s) acting on its behalf.
5.
Non-Assignment of Rights . Employee represents and warrants
that Employee has not sold, assigned, transferred, conveyed or
otherwise disposed of to any third party, by operation of law or
otherwise, any action, cause of action, debt, obligation, contract,
agreement, covenant, guarantee, judgment, damage, claim,
counterclaim, liability or demand of any nature whatsoever relating
to any matter covered in this Agreement.
6.
Non-Compete . In further consideration of the foregoing,
Employee agrees that for a period of three years beginning with the
second anniversary of the Departure Date (the “Restricted
Period”), Employee shall not, without the prior written
consent from the Chief Executive Officer of Kellogg:
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(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 herein defined) in the
Geographic Area (as herein defined).
(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.
For purposes of
this Paragraph, the term “Products” shall mean
(i) ready-to-eat cereal products, toaster pastries, cereal
bars, granola bars, crispy marshmallow squares, frozen waffles,
frozen pancakes, fruit snacks, cookies, crackers, ice cream cones,
meat substitutes, (ii) any other grain-based convenience food
or (iii) any other product which the Company manufactures,
distributes, sells or markets at the Departure Date. With respect
to (iii) above, such products shall not include products which
the Company reasonably determines insignificant to the Company. The
term “Geographic Area” shall mean any territory, region
or country where the Company sells any Products at any time during
the applicable Restricted Period.
7.
Non-Solicitation . In further consideration of the
foregoing, Employee agrees that, for a period of two years
beginning with the date of this Agreement, Employee shall not,
without the prior written consent of the General Counsel 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 year an officer, director, representative, agent or
employee of the Company.
8.
Non-Disparagement of the Company . 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, officers, directors, attorneys,
agents and employees.
9.
Employment Status . Employee understands and agrees that
(i) Employee’s active employment with the
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