Exhibit 10-35
[BAXTER LETTERHEAD]
September 18, 1995
Xx. Xxxx X. Xxxxx
000 Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Dear Xxxx:
This letter confirms our agreement concerning your termination of employment
with Xxxxxx International Inc. and its affiliates ("Company"). You and the
Company acknowledge that your employment termination is by mutual agreement, and
that it is completely independent of the reduction in force the Company
announced in the fourth quarter of 1993.
You will cease to be a director and officer of the Company effective September
18, 1995 ("Transition Date"). You will continue to be an employee of the
Company through December 31, 1995 ("Termination Date"). Between your Transition
Date and your Termination Date, you will assist the Company in the smooth
transition of your responsibilities to your successors.
If you satisfy your obligation to assist the Company in the smooth transition of
your responsibilities to your successors, you will receive a cash bonus ("Cash
Bonus") of up to $300,000. The Cash Bonus is payable to you within thirty days
after your Termination Date. I will determine both whether you are eligible to
receive the Cash Bonus and the final amount at year end. If the Cash Bonus is
paid to you, it will be deemed eligible 1995 compensation for purposes of
calculating the Pension Supplement described on page 2 of the Agreement.
You will continue to receive your monthly car allowance, flexible spending
allowance, home security system and club reimbursements until your Termination
Date.
You will not receive any bonus under the 1995 Officer Incentive Compensation
Plan. You are not eligible to participate in any Company bonus plans which are
adopted after the date of this Agreement. You will not earn any restricted
shares for 1995 performance under the Company's 1989 Long-Term Incentive Plan
(LTI-3).
Before your Termination Date, you will receive a total of $35,288, in a single
sum, for all of your accrued but unused vacation time, in accordance with the
Company's policy. You will not accrue any vacation time after your Termination
Date.
You are eligible to receive medical coverage through the Company's retiree
medical plan, in accordance with the plan's provisions. You may postpone
retiree medical coverage and elect, in accordance with a federal statute
(COBRA), to continue your medical and dental benefits under the Company's
Flexible Benefits Program for up to 18 months after your Termination Date. You
may not obtain medical coverage through the retiree medical plan and COBRA
simultaneously.
You are eligible to continue your active participation in the Company's
Incentive Investment Plan until your Termination Date, in accordance with the
Plan's provisions. Your vested accrued benefits in the Incentive Investment
Plan will be distributed in accordance with its provisions.
Your active participation in the Xxxxxx International Inc. and Subsidiaries
Pension Plan ("Pension Plan") will continue until your Termination Date, in
accordance with the Plan's provisions. Your vested accrued benefit in the
Pension Plan will be distributed in accordance with its provisions.
In addition, the Company will provide you with a non-qualified and unfunded
supplemental pension benefit ("Pension Supplement") equal to the difference
between a) your accrued benefit calculated under the provisions of the Pension
Plan and b) the accrued benefit which you would have under the Pension Plan if
you had ten additional years of participation in the Pension Plan. Your Pension
Supplement is payable at the same time and in the same form as your benefit
under the Pension Plan. In consideration of your receipt of the Pension
Supplement, you have agreed to postpone payment of the Pension Supplement and
your benefit under the Pension Plan until September 1, 1996 or later. The ten
additional years of Pension Plan participation provided in this paragraph will
not be counted when determining the amount you must pay for coverage through the
Company's retiree medical plan.
Your participation, if any, in the Company's Employee Stock Purchase Plan will
cease on your Termination Date. You will receive a cash refund of the balance,
if any, in your subscription account, in accordance with the Plan's provisions.
Your participation in the Company's split-dollar life insurance plan will cease
on your Termination Date. You may elect to continue your split-dollar life
insurance coverage in accordance with the Plan's provisions.
2
Your options and restricted shares will be vested or forfeited as listed below:
OPTIONS
# OF OPTIONS EXPIRATION
DATE GRANTED TYPE GRANTED OPTION PRICE DATE(2) VESTING
--------------------------------------------------------------------------------------------------
11/21/88 NQ 10,470(1) $15.89(1) 3/29/96 All are vested; may exercise
before expiration date
--------------------------------------------------------------------------------------------------
11/19/89 NQ 10,993(1) $22.21(1) 3/29/96 all are vested; may exercise
before expiration date
--------------------------------------------------------------------------------------------------
7/30/90 NQ 11,517(1) $24.36(1) 3/29/96 all are vested; may exercise
before expiration date
--------------------------------------------------------------------------------------------------
8/9/91 NQ 4,397(1) $34.15(1) 3/29/96 all are vested; may exercise
before expiration date
--------------------------------------------------------------------------------------------------
8/3/92 NQ 13,296(1) $36.66(1) 3/29/96 all are vested; may exercise
before expiration date
--------------------------------------------------------------------------------------------------
8/2/93 NQ 27,000 $26.00 3/29/96 18,000 are vested; may
exercise before expiration date;
remainder will be forfeited on
your Termination Date
--------------------------------------------------------------------------------------------------
7/31/95 NQ 44,800 $37.25 3/29/96 None are vested; all will be
forfeited on your Termination
Date unless accelerated
vesting occurs, in accordance
with the option grant terms
and conditions, before the expiration
date
--------------------------------------------------------------------------------------------------
(1) As equitably adjusted in connection with the Caremark spin-off
(2) Option expiration dates consistent with option grant terms and conditions
relating to employment termination
3
RESTRICTED SHARES
# of Options
Date Granted Granted Vesting Date Disposition
11/21/88 25,100 1 year after earned 24,262 shares have been
earned, vested and
distributed; 838 were
earned in 1994 and will be
allowed to vest on 12/31/95
8/9/91 10,040 1 year after earned All were earned in 1994;
6,787 will be allowed to
vest on 12/31/95; remaining
3,253 will be forfeited on
your Termination Date
12/7/92 19,400 1 year after earned 4,247 were earned in 1994;
all 19,400 will be
forfeited on your
Termination Date
11/14/94 8,580 1 year after earned none have ben earned or
vested; all will be
forfeited on your
Termination Date
You will not receive any additional grants of options or restricted shares.
Your participation in the Shared Investment Plan will continue in accordance
with the Plan's provisions.
To preserve your rights to make various elections under the Company's Flexible
Benefits Program, Pension Plan and Incentive Investment Plan, you must contact
the Human Resources Department before your Termination Date.
You acknowledge that the compensation and benefits provided in this Agreement
exceed the compensation and benefits which you would normally receive in
connection with your employment termination. In exchange for the compensation
and benefits under this Agreement, you waive your right to file or participate
as a class member in any claims or lawsuits (whether or not you now know of the
basis for the claims or lawsuits) with federal or state agencies or courts
against the Company and its employee benefit plans, including their present and
former directors, officers, employees, agents and fiduciaries. This general
waiver and release includes, but is not limited to, all claims of unlawful
discrimination in regard to age, race, sex, color, religion, national origin and
handicap under Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act or any other federal or state statutes, all claims for wrongful
employment termination or breach of contact and any other claims relating to
your employment or termination of
4
employment with the Company. This waiver and release also apply to your heirs,
assigns, executors and administrators. This waiver and release do not waive
rights or claims which may arise after the date this Agreement is signed except
as stated in the next sentence. To be eligible to receive the Pension
Supplement described above, you agree that this waiver and general release will
be deemed to be signed by you again when your Pension Supplement begins to be
paid.
You agree: (a) not to intentionally disparage the Company, its employees or
products; (b) not to intentionally engage in actions contrary to the interest of
the Company; provided, however, that this subsection (b) shall not apply to
conduct otherwise permissible under your employment agreement with the Company;
(c) not to disclose or allow disclosure of any provisions of this Agreement,
except to your attorney or pursuant to subpoena or court order (although the
Company may be required to disclose this Agreement in its 1996 proxy statement
and as an exhibit to its Form 10-K for 1995); (d) to conduct the transition
period in a constructive and positive manner; (e) to remain bound by the non-
compete and confidentiality provisions of your employment agreement with the
Company (the Company acknowledges that your employment with The Xxxxxx-Xxxxx
Corporation does not violate the non-compete provisions of your employment
agreement); (f) to refrain from soliciting any Company employees for employment
at The Xxxxxx-Xxxxx Corporation, or any other future employer of you, until
January 1, 1997 and (g) to return to the Company, by September 30, 1995, all
Company property, including proprietary information.
All amounts payable to you or on your behalf under this Agreement will be
reported to appropriate governmental agencies as taxable income to the extent
required, and appropriate withholding will be made where necessary. In
addition, all amounts payable to you under this Agreement are expressed as
amounts prior to payment or withholding of any taxes, and the Company will not
gross-up the amounts or otherwise reimburse you for the taxes you pay relating
to such amounts.
The amounts payable to you under this Agreement are in lieu of all severance
compensation and other severance benefits from the Company to which you might
otherwise be entitled. The Company may terminate the Pension Supplement if you
fail to comply with any of your obligations under the Agreement.
You acknowledge that the Company has made no promises to you which are not
included in this Agreement, and that this Agreement contains the entire
understanding between you and the Company relating to your employment
termination. You acknowledge that the terms of this Agreement are contractually
binding. If any portion of this Agreement is declared invalid or unenforceable,
the remaining portions of this Agreement will continue in force.
5
You acknowledge that you carefully read the terms of this Agreement, you know
and understand its content and meaning, you were given 21-day period to review
it, you were encouraged to consult with an attorney before accepting it, and you
accept it voluntarily.
If this letter accurately reflects our agreement, please sign two copies, and
return one of them to me by October 6, 1995.
The terms of this Agreement are subject to the approval of the Compensation
Committee of the Xxxxxx International Inc. Board of Directors.
Sincerely.
/S/ Xxxxxx X. Xxxxxx Xx.
----------------------------
Xxxxxx X. Xxxxxx Xx.
ACCEPTED AND AGREED:
/S/ Xxxx X. Xxxxx
----------------------------
(Signature)
9/23/95
----------------------------
(Date)
