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EXHIBIT 10.28
SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE ("Agreement") is made and entered
by and between Xxxxxxx X. Xxxxxx ("Xxxxxx") and Pentair, Inc. ("Pentair" or the
"Company").
1. Consideration. In consideration for the mutual promises exchanged
herein and for the payments to Xxxxxx set forth herein, Xxxxxx and the Company
acknowledge the full, complete, and final settlement of any and all claims,
actions, causes of action or costs, including attorneys' fees, against the other
and the other persons and entities released herein.
2. Discharge of Claims. Xxxxxx, on behalf of himself, his agents,
representatives, attorneys, assignees, heirs, executors, and administrators,
hereby releases and forever discharges the Company, and its past and present
employees, agents, insurers, officials, officers, directors, divisions, parents,
subsidiaries and successors, and all affiliated companies and corporations
(including, without limitation, Xxxxxxx Enclosures Inc.) from any and all claims
and causes of action of any type arising, or which may have arisen, out of or in
connection with his employment or termination of employment with the Company and
its affiliated companies, including but not limited to claims, demands or
actions arising under the Federal Fair Labor Standards Act, the Age
Discrimination in Employment Act of 1967, 29 U.S.C. Section 626, as amended by
Public Law 101.433 (1990) (the "Older Workers Benefit Protection Act"), Title
VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e, et seq., the
Americans with Disabilities Act, 29 U.S.C. Section 2101, et seq., the Family
Medical Leave Act, the Minnesota Human Rights Act, Minn. Stat. Section 363.01,
et seq., any other federal, state or local statute, ordinance, regulation or
order regarding employment, compensation for employment, termination of
employment, or discrimination in employment, and the common law of any state.
Xxxxxx further understands that this discharge of claims extends to,
but is not limited to, all claims which he may have as of the date of this
Agreement against the Company and its affiliated companies, based upon statutory
or common law claims for defamation, libel, slander, assault, battery, negligent
or intentional infliction of emotional distress, negligent hiring or retention,
breach of contract, promissory estoppel, fraud, wrongful discharge, or any other
theory, whether legal or equitable, including all claims for items of
compensation and benefits except as prohibited by law.
The Company hereby releases and forever discharges Ingman from any and
all claims and causes of action of any type arising out of or in connection with
Xxxxxx'x employment or termination of employment with the Company.
3. Confidential Information Acquired During Employment. Xxxxxx agrees
that he will continue to treat, as private and privileged, any information,
data, figures, projections, estimates, marketing plans, customer lists, lists of
contract workers, tax records, personnel
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records, accounting procedures, formulas, contracts, business partners,
alliances, ventures and all other confidential information which Xxxxxx acquired
while working for the Company. Further, Xxxxxx agrees that he will not release
any such information to any person, firm, corporation or other entity at any
time, except as may be required by law, or as agreed to in writing by the
Company. Xxxxxx acknowledges that any violation of this non-disclosure provision
shall entitle the Company to appropriate injunctive relief and to any damages
which it may sustain due to the improper disclosure.
4. Confidentiality. Xxxxxx represents and agrees that he will keep the
terms and existence of this Agreement completely confidential, and that he will
not disclose any information concerning this Agreement to anyone, except for his
counsel, tax accountant, spouse or except as may be required by law or agreed to
in writing by the Company.
5. Non-Solicitation/Non-Competition Agreement. Xxxxxx acknowledges that
during his employment at Pentair and with its subsidiaries and affiliates, he
became familiar with trade secrets, know-how, executive personnel, business
strategies, product development and other confidential and proprietary
information concerning the business of Pentair and other members of the Pentair
controlled group of companies (the "Group"). In consideration for the benefits
paid to Xxxxxx under this Agreement (including, but not limited to, those
benefits in Paragraph 10.b. hereof), Xxxxxx agrees that he shall not, either
directly or indirectly, for a period of three (3) years from the Separation Date
as defined in Paragraph 7 of this Agreement, and without the prior written
consent of Pentair:
a. own, manage, control, participate in, consult with or
render services of any kind for any concern which engages in a business
which is competitive with any business being conducted, or contemplated
being conducted, by the Group as of the Separation Date;
b. become an employee or agent of any publicly traded
corporation or other entity, or any division or subsidiary of such a
corporation or entity, where more than five percent (5%) of such
organization's business is in competition with any business being
conducted, or contemplated being conducted, by the Group as of the
Separation Date, unless the annual sales of such organization do not
exceed $40 million;
c. participate in any plan or attempt to acquire the business
or assets of the Group or control of the voting stock of any member
thereof, or in any manner interfere with the control of Pentair,
whether by friendly or unfriendly means;
d. induce or attempt to induce any individual to leave the
employ of Pentair or any other Group member or hire any such individual
who approaches him or her for employment; or
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e. engage in or sponsor the solicitation of customers of
Pentair or any Group member to do business with any competitor of such
organization.
In the event Xxxxxx breaches any obligation under paragraph 5 of this Agreement,
the Company shall have no further obligation to make any payments contemplated
under paragraph 10.b. hereof, and, in such event, Xxxxxx shall forfeit any right
to payments under paragraph 10.b. hereof.
6. No Wrongdoing. Xxxxxx and the Company agree and acknowledge that the
consideration exchanged herein does not constitute, and shall not be construed
as, an admission of liability or wrongdoing on the part of the Company, Xxxxxx
or any person, and shall not be admissible in any proceeding as evidence of
liability or wrongdoing by anyone.
7. Separation from Service. Xxxxxx'x employment with Pentair ends
effective May 31, 2000 (the "Separation Date"). Notwithstanding the Separation
Date, Xxxxxx ceased to be an officer and a director of Pentair and of each
Pentair subsidiary listed on the attached Schedule A and a committee member or
fiduciary with respect to each Pentair benefit plan listed on Schedule B as of
February 14, 2000.
8. Severance Payment. The parties acknowledge that Pentair has paid
Xxxxxx $13,500 each pay period between February 14, 2000 and the present, and
the parties further acknowledge that these payments shall continue through the
Separation Date. In addition to these payments, Pentair shall pay to Xxxxxx as
severance (the "Severance Payment") the sum of Eighty One Thousand Dollars
($81,000) (in increments of $13,500 per pay period from June 1, 2000 through
August 15, 2000). This amount shall be paid in accordance with the usual payroll
practices of Pentair and shall be subject to applicable federal and state
withholding taxes and any other deductions which have been authorized by Xxxxxx
or which Pentair may be required by law to make. Xxxxxx acknowledges that
without this Agreement, he would not be entitled to the benefits set forth in
this paragraph.
9. Stock and Equity Awards. Outstanding awards made to Xxxxxx under the
Pentair Omnibus Stock Incentive Plan (the "Omnibus Plan") and other equity
awards shall be paid as follows:
a. Restricted Stock. All shares of restricted stock awarded
to Xxxxxx through February 14, 2000 under the Ownership Incentive Plan,
together with any shares of restricted stock awarded to Xxxxxx through
the end of 1999 under the Omnibus Plan or any other bonus program
shall, to the extent not currently vested, be vested as of the
Separation Date. Any other outstanding awards of restricted stock (if
any) shall be forfeited. Xxxxxx acknowledges that without this
Agreement, he would not be entitled to the benefits set forth in this
subparagraph.
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b. Incentive Compensation Units ("ICUs") [see annotation 1
attached]. All ICUs awarded to Xxxxxx through 1999 under the Omnibus
Plan shall be deemed to be fully vested as of the Separation Date
without regard to the vesting period stated at the time of grant. The
value of said awards shall be calculated and paid to Xxxxxx as soon as
administratively feasible after the expiration of the rescission period
set forth in Paragraph 19 of this Agreement. Any other outstanding
awards of ICUs shall be forfeited. Xxxxxx acknowledges that without
this Agreement, he would not be entitled to the benefits set forth in
this subparagraph.
c. Stock Options. All outstanding stock options granted to
Xxxxxx through 1999 under the Omnibus Plan shall remain outstanding and
exercisable by him through the earlier of their original maturity date
and five years from the Separation Date. The date any such option is
first exercisable shall not be accelerated. In the event Xxxxxx should
die before all such options have been exercised or otherwise lapse,
then the beneficiary designated by Xxxxxx shall have six (6) months
from Xxxxxx'x death to exercise options then outstanding. Any options
not so exercised shall lapse. [To the extent options designated as
incentive stock options are exercised within thirty (30) days of the
last day of Xxxxxx'x employment, they shall retain their status as
qualified options; options exercised after this thirty (30) day period
shall be treated as nonqualified options.] If within two years after
the Separation Date Xxxxxx shall sell any Pentair common stock acquired
pursuant to the exercise of qualified options, he shall immediately
notify Pentair of such sale and shall supply all information reasonably
requested by Pentair with respect to such sale. Xxxxxx acknowledges
that without this Agreement, he would not be entitled to the benefits
set forth in this subparagraph.
d. Insider Status. Xxxxxx & Efron, P.A. will advise Xxxxxx in
writing of its understanding of his status as an insider with Pentair
for purposes of any stock transactions.
10. Retirement Benefits. Xxxxxx shall receive payment from the
tax-qualified and non qualified retirement plans maintained by Pentair as
follows:
a. Pentair Pension Plan. Xxxxxx shall be entitled to receive
payment of his vested accrued benefit under the Pentair Pension Plan in
accordance with applicable provisions of that plan. From and after the
Separation Date, Ingman shall cease to be eligible to accrue additional
benefits under the Pentair Pension Plan.
b. Supplemental Retirement Payment [see annotation 2
attached]. As a supplemental retirement benefit, Xxxxxx shall be paid
$11,563.58 monthly
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beginning on September 1, 2000, said amounts paid in the form of a
joint and 50% survivor annuity. This benefit is in lieu of benefits
under either the 1988 or 1999 Supplemental Executive Retirement Plans
(to which Xxxxxx is not entitled and for which he is not eligible) and,
except as otherwise provided in the Agreement, any other non-tax
qualified retirement or deferred compensation arrangement sponsored by
Pentair or any of its affiliates. Xxxxxx understands and agrees that
this supplemental retirement benefit is more than Pentair is required
to pay under its normal policies and procedures if he had been
eligible, and Xxxxxx acknowledges that without this Agreement, he would
not be entitled to the benefits set forth in this subparagraph.
c. Retirement Savings and Stock Incentive Plan ("RSIP").
Xxxxxx shall be entitled to receive payment of his vested accrued
benefit under the RSIP in accordance with applicable provisions of that
plan. Xxxxxx shall remain a participant in RSIP until such time as he
requests and receives payment of his vested accrued benefit, but from
and after the Separation Date, Xxxxxx shall not be entitled to make
contributions to or to share in allocations of contributions made by
Pentair after such date, including matching or employer discretionary
contributions payable on account of service completed or deferrals made
during 2000.
d. Non-Qualified Deferred Compensation Plan ("Sidekick").
Xxxxxx shall be entitled to receive payment of all amounts payable to
him under the terms and conditions of the Sidekick in accordance with
the payment election made by him at the time he began participation in
such plan. From and after the Separation Date, Xxxxxx shall not be
entitled to make contributions to or to share in allocations of
contributions made by Pentair after such date, including matching or
employer discretionary contributions payable on account of service
completed or deferrals made during 2000.
e. Other Deferred Compensation Plan. To the extent Xxxxxx may
have amounts payable to him by reason of his participation in the
deferred compensation plan maintained by Pentair prior to
implementation of Sidekick, Xxxxxx shall be entitled to receive payment
of such deferred compensation in accordance with the annual payment
elections made by him during the time he elected to participate in such
plan.
11. Insurance Benefits. Xxxxxx shall be eligible to elect to continue
participation in various medical, dental, life and disability insurance benefits
offered by Pentair as follows:
a. Medical and Dental Insurance. In the event Xxxxxx elects to
continue participating in the Company's medical and dental insurance
programs as are made available to employees of Pentair, the cost of
providing such benefits
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shall be shared by Pentair and Xxxxxx on the same basis as if Xxxxxx
had remained an employee of Pentair until the earlier of such time as
he is eligible for such coverage with a subsequent employer or eighteen
(18) months from the Separation Date. Xxxxxx'x share of the premiums
shall be deducted from the Severance Payment installments each pay
period through August 2000. After August 2000, Xxxxxx shall reimburse
the Company for his share of the premiums. Xxxxxx acknowledges that he
would not be entitled to this benefit without this Agreement. For
purposes of COBRA, the continuation period shall begin on the
Separation Date. At the expiration of the maximum continuation period,
Xxxxxx shall be offered such conversion rights as are then being made
available by the then insurer.
b. Supplemental Disability and Supplemental Life Insurance.
Xxxxxx will be covered under the Company's group life (including
dependent life), short-term disability and long-term disability plans,
as amended from time to time, through the Separation Date. After the
Separation Date, Xxxxxx may elect to arrange for continuation of
coverage and direct premium payment at his sole cost and expense.
c. Flexible Benefit Plan (125C). Xxxxxx shall be offered the
opportunity to continue participation in the Pentair Flexible Benefit
Plan consistent with the terms and provisions of said plan.
d. Retiree Flex Plan. Xxxxxx may elect to begin participation
in the Retiree Flex Plan consistent with the terms and provisions of
said plan at the end of the COBRA continuation period. The Company
established the Retiree Flex Plan to offset a portion of a retiree's
cost for medical coverage through cash credits which reimburse premiums
paid or are applied against the retiree's contributions and make
available a good selection of retiree medical coverage at group rates,
where possible.
12. Other Benefits or Payments. Xxxxxx shall be entitled to receive
other payments and benefits as follows:
a. Flexible Perquisite Account. Pentair will pay to Xxxxxx a
maximum of $20,000 for the year 2000 under the Pentair Flexible
Perquisite Plan, less vehicle lease payments made by Pentair during
2000. Xxxxxx acknowledges that without this Agreement, he would not be
entitled to the benefits set forth in this subparagraph.
b. Company Vehicle. Xxxxxx may elect to turn in the
Company-provided vehicle currently in his possession or purchase the
vehicle for $22,949.70 on the Separation Date. Flexible Perquisite
Account funds ($20,000
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less applicable deductions) may be used toward the vehicle purchase
price or paid in cash. All applicable sales or other taxes and transfer
fees shall be paid by Ingman.
c. Business Expenses. Pentair will reimburse Xxxxxx for all
business expenses incurred by him in the active performance of his
duties on behalf of Pentair through February 14, 2000, provided Ingman
submits proper documentation for such expenses.
13. Future Employment. Xxxxxx will not apply for or seek employment or
re-employment with the Company or its affiliated companies at any time after he
signs this Agreement.
14. Executive Placement. The Company will provide to Xxxxxx $20,000
which may be used toward outplacement or other services.
15. Cooperation. Xxxxxx agrees that at the request of the Company,
Xxxxxx will cooperate with and assist the Company (including cooperation and
assistance in any matters involving claims or lawsuits against the Company) as
requested by the Company where Xxxxxx has knowledge of the facts involved. In
addition, Xxxxxx agrees that he will, at the reasonable request of the Company,
execute, if necessary, nunc pro tunc, any further documents or instruments
necessary or appropriate to evidence his separation from service as an officer
or director of the Company, its subsidiaries, or its affiliates, including but
not necessarily limited to the forms attached hereto as Schedule X. Xxxxxx
further agrees that he will not voluntarily aid, assist, or cooperate with
anyone who has claims against the Company, its affiliates or with their
attorneys or agents in any claims or lawsuits which such person may bring
against the Company or its affiliates. Nothing in this Agreement prevents Xxxxxx
from testifying at an administrative hearing, arbitration, deposition, or in
court, in response to a lawful and properly served subpoena.
16. Minnesota Law Applies. The terms of this Agreement will be governed
by the laws of the State of Minnesota, and shall be construed and enforced
thereunder.
17. Merger. This Agreement, and the employee benefit plans in which
Xxxxxx participates as described herein supersede and replace all prior oral and
written agreements and understandings. Xxxxxx understands and agrees that all
claims which he has or may have against the Company are fully released and
discharged by this Agreement. The only claims which Xxxxxx may hereafter assert
against the Company are limited to an alleged breach of this Agreement.
18. Invalidity. If any one or more of the terms of this Agreement are
deemed to be invalid or unenforceable by a court of law, the validity,
enforceability, and legality of the remaining provisions of this Agreement will
not in any way be affected or impaired thereby.
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19. Xxxxxx Understands the Terms of this Agreement. Xxxxxx warrants
that (a) other than stated herein, no promise or inducement has been offered for
this Agreement; (b) this Agreement is executed without reliance upon any
statement or representation of the Company or its representatives concerning the
nature and extent of any claims or liability therefor, if any; (c) Xxxxxx is
legally competent to execute this Agreement and accepts full responsibility
therefor; (d) the Company, by this Agreement, has advised Xxxxxx to consult with
an attorney, and Xxxxxx has consulted with his attorney, Xxxxxx X. Xxxxxxxx,
Xx., Esq. regarding the purpose and effect of this Agreement; (e) the Company
has allowed Xxxxxx at least twenty-one (21) days within which to consider this
Agreement, specifically Xxxxxx may sign this Agreement any time prior to May 24,
2000, at which time it will be automatically withdrawn without further notice;
(f) Xxxxxx understands that he may nullify and rescind this Agreement as far as
it extends to his release of claims arising under Minn. Stat. Section 363.01 et
seq., the Minnesota Human Rights Act, and under the Age Discrimination in
Employment Act of 1967, 29 U.S.C. Section 626, as amended by Public Law 101.433
(1990) (the "Older Workers Benefit Protection Act") at any time within fifteen
(15) days from the date of his signature below and, in the event of such
election, Xxxxxx shall only be entitled to receive $1,000 which the parties
acknowledge is consideration for Xxxxxx'x release of all claims other than those
arising under Minn. Stat. Section 363.01 et seq., the Minnesota Human Rights
Act, and under the Age Discrimination in Employment Act of 1967, 29 U.S.C.
Section 626, as amended by Public Law 101.433 (1990) (the "Older Workers Benefit
Protection Act"); (g) in the event Xxxxxx elects to nullify and rescind portions
of his release under this Agreement pursuant to (f) of this paragraph, he must
indicate his desire to do so in writing and deliver that writing to Xxx X.
Xxxxxxx, Vice President, Human Resources, Pentair, Inc., Waters Edge Plaza, 0000
Xxxxxx Xxxx X0 Xxxx, Xx. Xxxx, XX 00000-0000, by hand or by certified mail; and
(g) Xxxxxx further understands that if he exercises his rescission rights
hereunder, the Company will not be bound by the terms of this Agreement (except
the obligation to pay Xxxxxx $1,000), and Xxxxxx will have to disgorge in full
any monies and benefits received pursuant to this Agreement other than the
$1,000 sum.
Dated: May 31, 2000
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Xxxxxxx X. Xxxxxx
Subscribed and sworn to before
me this ____ day of ___________, 2000.
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Notary Public
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Dated: PENTAIR, INC.
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By
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Its
-----------------------------
Subscribed and sworn to before
me this ____ day of ________, 2000.
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Notary Public
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ANNOTATIONS TO APRIL 1, 2000 XXXXXX AGREEMENT
1. ICUS. ICU values are calculated after final results for a year are
determined for purposes of applying a performance matrix which takes
into account growth in operating income and return on invested capital
for the prior year. Subject to verification of final numbers to develop
performance factors for the 1998 and 1999 values and any adjustments
for accelerated vesting, ICU values can be paid to Xxxxxx shortly after
his last day of employment.
EXAMPLE: 1998 ICUs = 88,571.00 ($1.00 value at issue)
1998 Factor = 1.857
Payment: 88,571 ICUs X 1.857 = $164,476.34
1999 Factor = 1.851
2. SERP. The supplemental retirement benefit offered to Xxxxxx is based on
the provisions of the 1988 SERP document, although Xxxxxx is not
entitled to a benefit under this or any other supplemental or
nonqualified, noncontributory pension plan maintained by Pentair. The
formula used to determine Xxxxxx'x supplemental benefit will be:
50% of Final Average Compensation(1)
MINUS 100% of monthly primary Social Security,
MINUS retirement benefits under other retirement plans,
regardless of employer, and subject to exceptions for
benefits attributable to his contributions.
Generally, this benefit is payable as a single life annuity, a joint
and 50% survivor annuity or the other alternative payment forms
described in the Pentair Pension Plan are available. A lump sum payment
option is not available. Optional forms of benefit are the actuarial
equivalent of a life annuity. The benefit described in this agreement
is payable September 1, 2000. Other commencement dates are available.
Reductions are made for early commencement of benefits (see Exhibit A
to annotation 2 attached).
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(1) Compensation for the 36 consecutive months out of last 60 consecutive
months ending March 31, 2000 of employment for which compensation is highest.
For this purpose, compensation includes all cash remuneration paid for services
actually rendered, including elective deferrals, but not Omnibus Plan awards.
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Pentair will calculate a specific monthly supplemental benefit as soon
as practicable after Xxxxxx selects an alternate form of benefit and a
benefit commencement date and provides information regarding other
pension benefits to be offset in determining his supplemental benefit.
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SCHEDULE A
POSITIONS HELD BY XXXXXXX X. XXXXXX
AT PENTAIR AND SUBSIDIARIES
COMPANY TITLE
------- -----
Pentair, Inc. EVP, CFO
Pentair, Inc. Employee
Xxxxxxx Engineering SA de CV Director
Xxxxxxx Xxxxxxx PTE Ltd Director
EuroPentair GmbH Geschaftsfuhrer
Pentair Canada, Inc. Director
Pentair Asia PTE Ltd Director
Penwald Insurance Company Chairman, Director
Pentair Foreign Sales Company Chairman, President, Director
Pentair Financial Services Ireland Alternate Director
Pentair Nova Scotia President, Director
Pentair Halifax President, Director
Pentair UK Limited Director
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SCHEDULE B
FIDUCIARY POSITIONS HELD BY XXXXXXX X. XXXXXX
AT PENTAIR AND SUBSIDIARIES
COMMITTEE/PLAN TITLE
-------------- -----
Pentair, Inc. Investment Committee for all Member
Bargaining and non-Bargaining Pension Plans
Pentair, Inc. Retirement Savings and Stock Member
Incentive Plan Committee
Pentair, Inc. International Stock Purchase and Member
Bonus Plan Committee
The Pentair Foundation Director
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EXHIBIT A TO ANNOTATION 2
The following calculation assumes a September 1, 2000 commencement date,
although a later date might be applicable. For the qualified plan, Xx. Xxxxxx
will choose the commencement date and optional benefit form. If he does not wish
to commence qualified benefits on September 1, 2000, he may defer those
decisions to a later date of his choosing. For purposes of the Special
Retirement benefit, because of tax regulations, Pentair's Board (or its
delegate) will choose the commencement date and optional form. One factor in the
Board's decision will be Xx. Xxxxxx'x preference.
The monthly benefits are:
QUALIFIED SPECIAL
FORM MONTHLY AMOUNT MONTHLY AMOUNT
---- -------------- --------------
Life $ 1,069.62 $ 12,469.08
5 year C&L 1,059.13 12,346.76
10 year C&L 1,031.41 12.023.68
50% J&S 991.94 11,563.58
66-2/3% J&S 968.50 11,290.25
100% J&S 924.78 10,780.64
The following data was used to determine Xx. Xxxxxx'x benefit:
Date of Birth August 3, 1944
Date of Hire: August 7, 1989
Spouse's Date of Birth: January 12, 1945
Date of Termination: March 31, 2000
2000 Eligible Earnings: $364,467.93
1999 Eligible Earnings: $518,080.72
1998 Eligible Earnings: $497,126.26
1997 Eligible Earnings: $491,161.66
Other Employer Benefit: $823.00
