[LOGO] X.X.Xxxxxx Company
Exhibit 10(a)
To: Xxxxx Xxxxxxx
From: Xxxxxx Xxxxxxxxx
cc: Xxxxx Xxxxx
Effective Date: May 1, 2001
Subject: International Service Agreement
This memo serves to confirm the arrangements regarding your expatriate
assignment to St. Xxxx, MN from May 1, 2001 to May 1, 2004.
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In this memo, "home country" refers to Germany and "host country" refers to your
assignment location in St. Xxxx, MN. X.X. Xxxxxx Company will be referred to as
the "Company".
I. LENGTH AND CONDITIONS OF ASSIGNMENT
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It is expected that the length of this assignment will be 3 years, although the
parties may, by mutual consent agree to lengthen or shorten the assignment. In
any event, however, the assignment will not exceed a maximum length of five
years. At the completion of this assignment, you will be returned to your home
country and city.
II. POSITION AND SALARY
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Job Title : President, Global Adhesives
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Pay Grade : 38
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Base Salary : 583,482 DM
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Bonus : Target 40%
Superior 60%
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Xxxxxx administration will be according to German practice and policy and will
remain on the US/German fiscal year basis. Your salary will be up for review
during the regular merit review period in the US during November/December of
each year. Your next PPA review is November 2001. All salary increases will be
based on German salary increase guidelines. A portion of your salary will be
paid in local currency and a portion paid to you in the US in US dollars. The
exchange rate will be updated on a US fiscal year quarterly basis.
III. INTERNATIONAL SERVICE PREMIUM
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In connection with this assignment, you will receive an international service
premium equal to 15% of your base salary annually (tax protected). This premium
may be paid in an annual lump sum or on a periodic basis, at the election of
X.X. Xxxxxx Company. This premium recognizes your international mobility and
the difficulties associated with living in a foreign country.
Payment of this premium shall cease upon repatriation or in the event you go on
local payroll.
IV. HARDSHIP PREMIUM
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No hardship premium will be paid as St. Xxxx, MN is not a designated hardship
location based on the findings of the US State Department.
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[LOGO] X.X.Xxxxxx Company
V. GOODS AND SERVICES DIFFERENTIAL
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A Goods and Services Differential is the extra spendable income an employee of a
particular income level and family size needs to purchase equivalent goods and
services in the host location. Your goods and services differential has been
determined to be 7,405DM ($3,359) per month (tax protected), subject to
quarterly review. To calculate a goods and services differential a third party
source tracks price differences between Germany and the US throughout the year.
This differential compares the costs in the US with those in Germany calculated
at a specific exchange rate in effect at that time. If the difference between
the current quarter's goods and services differential is more than 5% above or
below the previous quarters differential, the company will protect the
differential from severe fluctuations by adjusting only 25% of the difference
from the previous quarter.
VI. HOUSING
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You will be provided 8,157 DM ($3,700) per month (tax protected) to be used for
a housing allowance and furniture rental.
VII. RELOCATION AND RELATED EXPENSES
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Relocation Allowance: You will receive a relocation allowance equal to one
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month's base salary of up to $10,000. Your allowance is 22,045 DM ($10,000)(tax
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protected). The relocation allowance is intended to help cover some of the
incidental expenses, which may be encountered as a result of the Company
initiated relocation. This allowance will be a one-time payment made
approximately two weeks prior to arrival at the assignment location.
Movement of household goods: Transportation charges of moving your goods from
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your residence in Germany, to your assignment location in St. Xxxx, MN
(including duties) will be paid by the Company subject to the following
limitations:
Air: 500 lb. limit Surface: 1,500 lb. limit
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The Company will pay for moving only personal effects. This does not include
furniture, special items of high value, size or width. Transportation charges
for moving a similar weight of household goods will be paid upon your return to
Germany.
Travel documentation: The Company will reimburse you for obtaining, or provide
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at no cost to you, any passports, visas, or letters of guarantee required for
your assignment.
Vaccinations: You are responsible for ensuring that you have the proper
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vaccinations prior to your departure. The Company will reimburse any expense not
already covered under medical insurance.
Home Maintenance Assistance: If the expatriate chooses to retain the home
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country residence, Xxxxxx will pay up to 551 DM ($250) per month for receipted
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costs used for approved standard maintenance of the residence while on
assignment. This assistance is only available for those who do not rent out
their residence during assignment. This assistance will be provided for up to a
maximum period of 36 months.
Loss on sale of automobile: You will be reimbursed for reasonable losses
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resulting from the forced sale of up to two automobiles. Losses will be based on
the difference between the sale price and the current retail market value to be
determined based on the use of the most current (NADA) publication (Average
Retail Value column). The maximum reimbursement amount is 4,409 DM ($2,000) per
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automobile.
VIII. TAX EQUALIZATION
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The Company follows the personal income tax equalization policy. The intent of
this policy is to ensure that you bear an income tax cost in your host country
which is approximately equivalent to what that tax would have been in your home
country for the same income. The equalization policy relates to your normal
Company derived income. Private income up to $25,000 is covered under the tax
equalization guideline. The tax equalization policy does not cover estate or
real estate taxes.
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[LOGO] X.X.Xxxxxx Company
In order to meet these objectives, each year we will have the Company's Tax
Department determine a "hypothetical income tax" for your home country. This
hypothetical tax will be estimated using the earnings information offered in
this memo. The hypothetical calculation will not include the international
service premium or the hardship differential, as these are "tax protected". In
other words, the Company picks up all tax obligations derived from this type of
earning.
At the end of each year, the actual tax, if any, will be calculated. If the
hypothetical tax was underwithheld during the year, you may owe the Company the
difference when your return is filed and vice versa.
The "hypothetical income tax" will be deducted from your paychecks and will
cover your obligation under the tax equalization policy. You should contact
Xxxxx & Xxxxx as soon as you are settled to ensure your taxes will be properly
filed and withheld as you are responsible for paying your taxes in an
appropriate and timely manner. They will also be able to refer you to the
appropriate Xxxxx & Young office St. Xxxx, MN.
In turn, the Company will pay your income tax filing costs and all its stated
obligations on your behalf at the appropriate time and in accordance with all
applicable tax laws and regulations.
IX. BENEFIT COVERAGE
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You will remain on home country policy for benefits purposes. Your health
insurance coverage will be provided by Aetna.
X. HOLIDAYS, WORK SCHEDULES, VACATION AND SICK LEAVE
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Host country norms will govern the schedule of holidays and related work
schedule issues. You will receive vacation time and sick leave in accordance
with your home country practices.
XI. HOME LEAVE
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After completion of 12 months of the assignment, you will have the opportunity
to take home leave. Home leave is three weeks, exclusive of travel time. Home
leave is taken once per year. Round trip airfare, in accordance with US travel
policy, for you (and your family) via the most direct route will be paid by the
Company. Home leave must be taken in Germany.
XII. COMPANY CAR
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While on assignment you agree to accept the Company car allowance in lieu of use
of a company car in your home country, and you further agree to abide by the
Company's U.S. Key Manager Car Allowance Policy, as it may exist from time to
time.
XIII. TERMINATION
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Your employment with the Company may be terminated in the same manner, and for
the same reasons, that your employment with X. X. Xxxxxx GmbH may be terminated
pursuant to the terms of your Managing Director Agreement dated October 15,
1998, as subsequently amended in writing.
It is understood that termination of employment before completion of the period
covered by this memo will result in the immediate termination of the terms of
this agreement.
In the case of a voluntary resignation by you prior to completion of this
assignment, payment of relocation expenses to Germany will depend on the
circumstances; the Company will pay for your return to Germany, as well as your
household items pursuant to this agreement unless you leave to work for another
company. In that situation it would be the responsibility of your new employer
to bear the cost.
In the event of an involuntary termination of employment with the Company, we
agree to pay the reasonable expenses related to your relocation from Minnesota
to Germany.
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[LOGO] X.X.Xxxxxx Company
XIII. NATURE OF THIS AGREEMENT
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This memo sets out the conditions of your assignment and its expected duration.
It is understood and agreed that the special premiums and allowances paid or
provided to you during this assignment will not be part of your compensation on
your return to your home country.
The Company reserves the right to change or amend any or all of the above-
mentioned conditions of employment and has the sole discretion to introduce new
terms of employment as management sees fit.
Please acknowledge your acceptance of this offer with your signature where
required.
X.X. Xxxxxx Company X.X. Xxxxxx GmbH
/s/ Xxxxx Xxxxx /s/ Xxxxxx X. X. Xxxxxxxxx
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Xxxxx Xxxxx Xxxxxx X. X. Xxxxxxxxx
Vice President, Human Resources Representative of the Shareholder
X. X. Xxxxxx Company
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Employee
*For purposes of establishing a dollar equivalent an exchange rate of 2.2045DM
to the Dollar was used.
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