EMPLOYEE MATTERS AGREEMENT by and between Kimball International, Inc. and Kimball Electronics, Inc. Dated as of October 31, 2014

Exhibit 10.2

by and between

Xxxxxxx International, Inc.

and

Xxxxxxx Electronics, Inc.

Dated as of October 31, 2014

THIS EMPLOYEE MATTERS AGREEMENT, dated as of October 31, 2014, is entered into by and between Xxxxxxx International, Inc. (“Xxxxxxx International”), and Xxxxxxx Electronics, Inc. (“Xxxxxxx Electronics”). Xxxxxxx International and Xxxxxxx Electronics are also referred to in this Agreement individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, Xxxxxxx International has determined that it would be appropriate, desirable and in the best interests of Xxxxxxx International and the shareholders of Xxxxxxx International to separate the Xxxxxxx Electronics Business from Xxxxxxx International;

WHEREAS, Xxxxxxx International and Xxxxxxx Electronics have entered into the Separation and Distribution Agreement, dated as of October 31, 2014 (the “Distribution Agreement”), in connection with the separation of the Xxxxxxx Electronics Business from Xxxxxxx International (the “Transaction”) and the Distribution of Xxxxxxx Electronics Common Shares to shareholders of Xxxxxxx International;

WHEREAS, the Distribution Agreement also provides for the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the separation of Xxxxxxx Electronics and its subsidiaries from Xxxxxxx International; and

WHEREAS, to ensure an orderly transition under the Distribution Agreement, it will be necessary for the Parties to allocate between them Assets, Liabilities and responsibilities with respect to certain employee compensation and benefit plans and programs, and certain other employment matters.

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Distribution Agreement.

“Affiliate” has the meaning set forth in the Distribution Agreement.

“Agreement” means this Employee Matters Agreement, together with all schedules hereto and all amendments, modifications, and changes hereto entered into pursuant to Section 13.9.

“Assets” has the meaning set forth in the Distribution Agreement.

“Benefit Management Records” has the meaning set forth in Section 3.3(b).

“Benefit Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA, and any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing for benefits, perquisites or compensation of any nature to any Employee, or to any eligible family member, dependent, or beneficiary of any such Employee, including pension plans (qualified and nonqualified), thrift plans, deferred compensation plans (qualified and nonqualified), supplemental pension plans and welfare plans, and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, medical, retiree medical, dental, vision, travel and accident, life, disability and accident insurance, tuition reimbursement, travel reimbursement, vacation, sick, personal or bereavement days, leaves of absences and holidays of Xxxxxxx International or Xxxxxxx Electronics, as applicable.

“Business Days” means any day other than a Saturday or Sunday or a day on which banking institutions in Jasper, Indiana are authorized or requested by Law to close.

“COBRA” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq. of ERISA and at Section 4980B of the Code.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder by the U.S. Department of the Treasury.

“Distribution” has the meaning set forth in the Distribution Agreement.

“Distribution Agreement” has the meaning set forth in the recitals to this Agreement.

“Distribution Date” has the meaning set forth in the Distribution Agreement.

“Distribution Ratio” shall be the ratio of three (3) Xxxxxxx Electronics Common Shares for every four (4) shares of Xxxxxxx International Common Shares.

“Effective Time” has the meaning set forth in the Distribution Agreement.

“Employee” means any Xxxxxxx International Group Employee, Former Xxxxxxx International Group Employee, Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee.

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“FICA” has the meaning set forth in Section 3.1(f).

“FMLA” means the U.S. Family and Medical Leave Act, as amended, and the regulations promulgated thereunder.

“Former Xxxxxxx Electronics Group Employees” means all former employees of the Xxxxxxx International Group who (i) primarily provided services for the benefit of the Xxxxxxx Electronics Business at the time their employment terminated or (ii) at the time of termination of employment, primarily provided services for a business for which any Liability, including Liabilities associated with Employees, is reflected on the Xxxxxxx Electronics Balance Sheet.

“Former Xxxxxxx International Group Employee” means all former employees of the Xxxxxxx International Group who have an employment end date on or before the Effective Time, excluding all Xxxxxxx Electronics Group Employees and Former Xxxxxxx Electronics Group Employees.

“FSA Participation Period” has the meaning set forth in Section 8.3(b)(i).

“FUTA” has the meaning set forth in Section 3.1(f).

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.

“IRS” means the Internal Revenue Service.

“Xxxxxxx Electronics” has the meaning set forth in the preamble to this Agreement.

“Xxxxxxx Electronics APSA” means an Annual Performance Share Award to a Xxxxxxx Electronics Group Employee under the Xxxxxxx Electronics Equity Plan or under the Xxxxxxx International Equity Plan and adjusted as provided in Article IV.

“Xxxxxxx Electronics Benefit Plan” means any Benefit Plan sponsored or maintained by a member of the Xxxxxxx Electronics Group following the Effective Time.

“Xxxxxxx Electronics Bonus Plans” means bonus plans adopted by Xxxxxxx Electronics as of the Effective Time that are comparable to the Xxxxxxx International Bonus Plans.

“Xxxxxxx Electronics Business” has the meaning set forth in the Distribution Agreement.

“Xxxxxxx Electronics Common Share Fund” means an investment fund in the Xxxxxxx Electronics 401(k) Plan or the Xxxxxxx International 401(k) Plan, as applicable, that holds Xxxxxxx Electronics Common Shares and cash.

“Xxxxxxx Electronics Common Shares” means the shares of common stock, having no par value per share, of Xxxxxxx Electronics.

“Xxxxxxx Electronics Entity” means any member of the Xxxxxxx Electronics Group, including any Transferred Group Entity.

“Xxxxxxx Electronics Equity Plan” means the plan adopted by Xxxxxxx Electronics as of the Effective Time under which Xxxxxxx Electronics may provide awards comparable to awards provided by Xxxxxxx International under the Xxxxxxx International, Inc. Amended and Restated 2003 Stock Option and Incentive Plan.

“Xxxxxxx Electronics 401(k) Plan” has the meaning set forth in Section 6.1.

“Xxxxxxx Electronics 401(k) Plan Participants” has the meaning set forth in Section 6.2.

“Xxxxxxx Electronics Group” shall have the same meaning as the term “Xxxxxxx Electronics Group” in the Distribution Agreement.

“Xxxxxxx Electronics Group Employee” means any individual who primarily provides services for the benefit of a member of the Xxxxxxx Electronics Group, including a Transferred Group Entity, immediately prior to the Effective Time.

“Xxxxxxx Electronics Incentive Bonus Plan” means an incentive bonus plan adopted by Xxxxxxx Electronics as of the Effective Time that is comparable to the Xxxxxxx International Incentive Bonus Plan.

“Xxxxxxx Electronics LTPSA” means a Long Term Performance Share Award to a Xxxxxxx Electronics Group Employee under the Xxxxxxx Electronics Equity Plan or under the Xxxxxxx International Equity Plan and adjusted as provided in Article IV.

“Xxxxxxx Electronics Post-Distribution Share Value” means the weighted average closing price per share of Xxxxxxx Electronics Common Shares trading on the NASDAQ during Regular Trading Hours on the first five (5) Trading Days following the Distribution Date.

“Xxxxxxx Electronics PSAs” means performance share awards to Xxxxxxx Electronics Group Employees, including Xxxxxxx Electronics APSAs and Xxxxxxx Electronics LTPSAs issued under the Xxxxxxx Electronics Equity Plan or the Xxxxxxx International Equity Plan and adjusted as provided in Article IV.

“Xxxxxxx Electronics Ratio” means the quotient obtained by dividing the Xxxxxxx Electronics Post-Distribution Share Value by the Xxxxxxx International Pre-Distribution Share Value.

“Xxxxxxx Electronics SERP” means a nonqualified supplemental employee retirement plan adopted by Xxxxxxx Electronics as of the Effective Time that is comparable to the Xxxxxxx International SERP.

“Xxxxxxx Electronics SERP Participant” shall have the meaning set forth in Section 7.1(a).

“Xxxxxxx Electronics Severance Arrangements” shall have the meaning set forth in Section 11.1.

“Xxxxxxx Electronics Welfare Plan” means any Welfare Plan sponsored or maintained by any one or more members of the Xxxxxxx Electronics Group immediately after the Effective Time.

“Xxxxxxx Electronics Welfare Plan Implementation Date” has the meaning set forth in Section 8.1.

“Xxxxxxx Electronics Welfare Plan Participants” has the meaning set forth in Section 8.1.

“Xxxxxxx International” has the meaning set forth in the preamble to this Agreement.

“Xxxxxxx International APSA” means an Annual Performance Share Award under the Xxxxxxx International Equity Plan.

“Xxxxxxx International Benefit Plan” means any Benefit Plan sponsored or maintained by a member of the Xxxxxxx International Group immediately prior to the Effective Time, excluding any such Benefit Plan that becomes a Xxxxxxx Electronics Benefit Plan.

“Xxxxxxx International Bonus Plans” shall have the meaning set forth in Section 5.1.

“Xxxxxxx International Common Share Fund” means an investment fund in the Xxxxxxx International 401(k) Plan or the Xxxxxxx Electronics 401(k) Plan, as applicable, that holds Xxxxxxx International Common Shares and cash.

“Xxxxxxx International Common Shares” means the Xxxxxxx International Class A common stock, par value $0.05 per share, and Class B common stock, par value $0.05 per share.

“Xxxxxxx International Director” means any individual who is or was previously a non-employee member of the board of directors of Xxxxxxx International.

“Xxxxxxx International Entity” means any member of the Xxxxxxx International Group.

“Xxxxxxx International Equity Plan” means the Xxxxxxx International, Inc. Amended and Restated 2003 Stock Option and Incentive Plan.

“Xxxxxxx International Group” has the meaning set forth in the Distribution Agreement.

“Xxxxxxx International Group Employee” means any individual who is employed by a member of the Xxxxxxx International Group immediately prior to the Effective Time, excluding any Xxxxxxx Electronics Group Employee.

“Xxxxxxx International Incentive Bonus Plan” means the Xxxxxxx International, Inc. 2010 Profit Sharing Incentive Bonus Plan.

“Xxxxxxx International LTPSA” means a Long Term Performance Share Award under the Xxxxxxx International Equity Plan.

“Xxxxxxx International Post-Distribution Share Value” means the weighted average closing price per share of Xxxxxxx International Common Shares trading on the NASDAQ during Regular Trading Hours on the first five (5) Trading Days following the Distribution Date.

“Xxxxxxx International Pre-Distribution Share Value” means the weighted average closing price per share of Xxxxxxx International Common Shares trading on the NASDAQ during Regular Trading Hours on the last five (5) Trading Days immediately preceding the Distribution Date.

“Xxxxxxx International PSAs” means performance share awards, including Xxxxxxx International APSAs and Xxxxxxx International LTPSAs issued under the Xxxxxxx International Equity Plan.

“Xxxxxxx International Ratio” means the quotient obtained by dividing the Xxxxxxx International Post-Distribution Share Value by the Xxxxxxx International Pre-Distribution Share Value.

“Xxxxxxx International SERP” means the Xxxxxxx International, Inc. Supplemental Employee Retirement Plan.

“Xxxxxxx International 401(k) Plan” means the Xxxxxxx International, Inc. Retirement Plan (Plan No. 001).

“Xxxxxxx International 401(k) Plan Participants” has the meaning set forth in Section 6.3(a).

“Xxxxxxx International U.S. Welfare Plan” means the Xxxxxxx International, Inc. Master Welfare Benefits Plan (Plan No. 520).

“Law” has the meaning set forth in the Distribution Agreement.

“Liabilities” has the meaning set forth in the Distribution Agreement.

“NASDAQ” means The NASDAQ Stock Market LLC.

“Non-U.S. Xxxxxxx Electronics Welfare Plans” has the meaning set forth in Section 9.2(b).

“Non-U.S. Xxxxxxx International Welfare Plans” has the meaning set forth in Section 9.2(a).

“Party” or “Parties” has the meaning set forth in the preamble to this Agreement.

“Person” has the meaning set forth in the Distribution Agreement.

“Privacy Contract” means any contract entered into in connection with applicable privacy protection Laws or regulations.

“Regular Trading Hours” means the period beginning at 9:30 A.M. New York City time and ending at 4:00 P.M. New York City time.

“Securities Act” means the Securities Act of 1933, as amended.

“Subsidiary” has the meaning set forth in the Distribution Agreement.

“Tax” has the meaning set forth in the Tax Matters Agreement.

“Tax Matters Agreement” means the Tax Matters Agreement, dated as of October 31, 2014 by and among Xxxxxxx International and Xxxxxxx Electronics.

“Trading Day” means the period of time during any given calendar day, commencing with the determination of the opening price on the NASDAQ and ending with the determination of the closing price on the NASDAQ, in which trading and settlement in Xxxxxxx International Common Shares or Xxxxxxx Electronics Common Shares are permitted on the NASDAQ.

“Transaction” has the meaning set forth in the recitals to this Agreement.

“Transferred Group Adoption Date” means the applicable date prior to the Effective Time on which Xxxxxxx International and/or Xxxxxxx Electronics determine to have any or all of the Xxxxxxx Electronics Benefit Plans adopted by a Transferred Group Entity.

“Transferred Group Entity” means each Xxxxxxx International Entity that will become a Xxxxxxx Electronics Entity as of the Effective Time.

“Transition Services Agreement” has the meaning set forth in the Distribution Agreement.

“U.S.” means the United States of America.

“WARN” means the U.S. Worker Adjustment and Retraining Notification Act, as amended, and the regulations promulgated thereunder, and any applicable state or local Law equivalent.

“Welfare Plan” means, where applicable, a “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any

other plan offering health benefits (including medical, wellness, prescription drug, dental, vision, and mental health and substance abuse), disability benefits, or life, accidental death and disability, and business travel insurance, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs, paid time off programs, contribution funding toward a health savings account, flexible spending accounts, or cashable credits of Xxxxxxx International or Xxxxxxx Electronics, as applicable.

Section 1.2 Interpretation. In this Agreement, unless the context clearly indicates otherwise:

(a)words used in the singular include the plural and words used in the plural include the singular;

(b)if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c)reference to any gender includes the other gender and the neuter;

(d)the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e)the words “shall” and “will” are used interchangeably and have the same meaning;

(f)the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g)relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h)all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Saving Time, as applicable, on the date in question;

(i)whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j)accounting terms used herein shall have the meanings historically ascribed to them by Xxxxxxx International and its Subsidiaries, including Xxxxxxx Electronics for this purpose, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;

(k)reference to any Article, Section or schedule means such Article or Section of, or such schedule to this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(l)the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(m)the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to, or otherwise assist in, the consummation of a desired result and which do not require the performing Party to expend funds or assume Liabilities other than expenditures and Liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the Distribution;

(n)reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by this Agreement;

(o)reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(p)references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(q)if there is any conflict between the provisions of the main body of this Agreement and the schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such schedule;

(r)unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the U.S.;

(s)the titles to Articles and headings of Sections contained in this Agreement, in any schedule and Exhibit and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(t)any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.

ARTICLE II

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

Section 2.1General Principles. It is the intention of Xxxxxxx International and Xxxxxxx Electronics that all employment-related Liabilities associated with Xxxxxxx Electronics Group Employees and Former Xxxxxxx Electronics Group Employees, whether prior to, on or after the Effective Time, are to be assumed by Xxxxxxx Electronics, except as otherwise specifically set forth in this Agreement. Each member of the Xxxxxxx International Group and each member of the Xxxxxxx Electronics Group shall take any and all reasonable action as shall be necessary or appropriate so that active participation in the Xxxxxxx International Benefit Plans by all Xxxxxxx Electronics Group Employees and Former Xxxxxxx Electronics Group Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of the Effective Time).

(a)Except as otherwise provided in this Agreement, effective as of the Effective Time, one or more members of the Xxxxxxx Electronics Group (as determined by Xxxxxxx Electronics) shall assume, or continue the sponsorship of, and no member of the Xxxxxxx International Group shall have any further Liability with respect to, or under, and Xxxxxxx Electronics shall indemnify each member of the Xxxxxxx International Group, and the officers, directors, and employees of each member of the Xxxxxxx International Group, and hold them harmless with respect to any and all:

(i)individual agreements entered into between any member of the Xxxxxxx International Group and any Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee;

(ii)agreements entered into between any member of the Xxxxxxx International Group and any individual who is an independent contractor, or leasing organization, providing services primarily for the business activities of the Xxxxxxx Electronics Group;

(iii)Collective Bargaining Agreements, collective agreements, trade union or works council agreements entered into between any member of the Xxxxxxx International Group and any union, works council or other body representing only Xxxxxxx Electronics Group Employees;

(iv)wages, salaries, incentive compensation (as the same may be modified by this Agreement), commissions, bonuses, and any other employee compensation or benefits payable to or on behalf of any Xxxxxxx Electronics Group Employees or Former Xxxxxxx Electronics Group

Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, commissions, bonuses, or other employee compensation or benefits are or may have been earned;

(v)moving expenses and obligations related to relocation, repatriation, transfers or similar items incurred by or owed to any Xxxxxxx Electronics Group Employees or Former Xxxxxxx Electronics Group Employees that have not been paid prior to the Effective Time;

(vi)immigration-related, visa, work application or similar rights, obligations and Liabilities related to any Xxxxxxx Electronics Group Employees or Former Xxxxxxx Electronics Group Employees;

(vii)Liabilities under any Xxxxxxx Electronics Benefit Plan; and

(viii)Liabilities and obligations whatsoever with respect to claims made by, or with respect to any Xxxxxxx Electronics Group Employees or Former Xxxxxxx Electronics Group Employees, in connection with any Xxxxxxx International Benefit Plan, including but not limited to, such Liabilities relating to actions or omissions of or by any member of the Xxxxxxx Electronics Group or any officer, director, employee or agent thereof on or prior to the Effective Time.

(b)Except as otherwise provided in this Agreement, effective as of the Effective Time, no member of the Xxxxxxx Electronics Group shall have any further Liability for, and Xxxxxxx International shall indemnify each member of the Xxxxxxx Electronics Group, and the officers, directors, and employees of each member of the Xxxxxxx Electronics Group, and hold them harmless with respect to any and all Liabilities and obligations whatsoever with respect to, claims made by or with respect to any Xxxxxxx International Group Employees or Former Xxxxxxx International Group Employees in connection with any Xxxxxxx International Benefit Plan (other than with respect to Liabilities relating to Xxxxxxx Electronics Group Employees or Former Xxxxxxx Electronics Group Employees), including such Liabilities relating to actions or omissions of or by any member of the Xxxxxxx International Group or any officer, director, employee or agent thereof prior to, on or after the Effective Time.

Section 2.2 Service Credit.

(a) Service for Eligibility, Vesting, and Benefit Purposes. Except as otherwise provided in any other provision of this Agreement, the Xxxxxxx Electronics Benefit Plans shall, and Xxxxxxx Electronics shall cause each member of the Xxxxxxx Electronics Group to, recognize each Xxxxxxx Electronics Group Employee’s full service history with the Xxxxxxx International Group for purposes of eligibility, vesting, determination of level of benefits and, to the extent applicable and subject to Section 2.4, benefit accruals under any Xxxxxxx Electronics Benefit Plan for such Xxxxxxx Electronics Group Employee’s service with any member of the Xxxxxxx International Group on or prior to the Effective Time to the same extent such service would be credited under the Xxxxxxx International Benefit Plans, as applicable. Notwithstanding anything to the contrary, in connection with any Employee’s break in service, any determination as to service credit shall be made under and in accordance with the applicable Xxxxxxx Electronics Benefit Plan document, the terms of which shall control in the case of any conflict with this Section 2.2.

(b) Evidence of Prior Service. Notwithstanding anything to the contrary, but subject to applicable Law, upon reasonable request by one Party to the other Party, the first Party will provide to the other Party copies of any records reasonably available to the first Party to document such service, plan participation and membership of such Employees and reasonably cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any Employee.

Section 2.3 Plan Administration.

(a) Transition Services. The Parties acknowledge that the Xxxxxxx International Group or the Xxxxxxx Electronics Group may provide administrative services for certain of the other Party’s benefit programs for a transitional period under the terms of the Transition Services Agreement. The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement.

(b) Participant Elections and Beneficiary Designations. Prior to the Effective Time, each participant in a Xxxxxxx Electronics Benefit Plan shall execute such elections and beneficiary designations as are promulgated by the administrator of each Xxxxxxx Electronics Benefit Plan. Notwithstanding the foregoing, if and to the extent a Xxxxxxx Electronics Benefit Plan participant has failed to execute and file an updated election and/or designation, the participant elections and beneficiary designations made under any corresponding Xxxxxxx International Benefit Plan prior to the Effective Time with respect to which Assets or Liabilities are transferred or allocated to Xxxxxxx Electronics Benefit Plans in accordance with this Agreement shall continue in effect under the applicable Xxxxxxx Electronics Benefit Plan, including, without limitation, deferral, investment and payment form elections, coverage options and levels, beneficiary designations and the rights of alternate payees under qualified domestic relations orders, in each case, to the extent allowed by applicable Law.

Section 2.4 No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement or the Distribution Agreement, no participant in the Xxxxxxx Electronics Benefit Plans shall receive benefits that duplicate benefits provided by the corresponding Xxxxxxx International Benefit Plan. Furthermore, unless expressly provided for in this Agreement or the Distribution Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerate vesting, distribution of benefits or entitlements to any compensation or under any Benefit Plan on the part of any Xxxxxxx International Group Employee, Former Xxxxxxx International Group Employee, Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee.

Section 2.5 No Expansion of Participation. Unless otherwise expressly provided in this Agreement, as otherwise determined or agreed to by Xxxxxxx International and Xxxxxxx Electronics, as required by applicable Law, or as explicitly set forth in a Xxxxxxx Electronics Benefit Plan, a Xxxxxxx Electronics Group Employee shall be entitled to participate in the Xxxxxxx Electronics Benefit Plans only to the extent that such Employee was entitled to participate in the corresponding Xxxxxxx International Benefit Plan as in effect immediately prior to the Effective Time, with it being the intent of the Parties that this Agreement does not result in any expansion of the number of Xxxxxxx Electronics Group Employees participating or the participation rights therein that they had prior to the Effective Time.

Section 2.6 Special Provisions. Notwithstanding any other provision in this Agreement to the contrary, Xxxx Xxxxxxxxxxx, Vice President of Organizational Effectiveness of Xxxxxxx International and Xxxxx Xxxxxxxx, Vice President of Human Resources of Xxxxxxx Electronics shall have the discretion, power and authority to adopt and implement special provisions, rules or procedures applicable to the employment, compensation and benefit arrangements of one or more individuals as are deemed equitable, necessary or advisable to give effect to the intentions of this Agreement, including without limitation, special provisions relating to (i) different equitable adjustments than as set forth in Article IV, in the case of a grantee who has outstanding awards granted under the Xxxxxxx International Equity Plan or any incentive plan, where such grantee’s circumstances warrant a different treatment (including, but not limited to, grantees in jurisdictions outside of the U.S.) to the extent that such Vice President of Organizational Effectiveness of Xxxxxxx International and the Vice President of Human Resources of Xxxxxxx Electronics deem such different treatment to be equitable, necessary or advisable, based on the advice of counsel; (ii) the good faith determination of the employer or former employer, as applicable, of each Employee; (iii) errors in the timing of employment transfers; (iv) issues pertaining to immigration Law requirements; and (v) any other decisions

regarding the employment, compensation and benefit arrangements of one or more individuals as are deemed equitable, necessary or advisable that are not otherwise contemplated by this Agreement.

ARTICLE III

TRANSFER/ASSIGNMENT OF EMPLOYEES

Section 3.1Active Employees.

(a)Xxxxxxx Electronics Group Employees. Except as otherwise set forth in this Agreement, effective not later than immediately preceding the Effective Time, the employment of each Xxxxxxx Electronics Group Employee shall be continued by a member of the Xxxxxxx Electronics Group or shall be assigned and transferred to a member of the Xxxxxxx Electronics Group (in each case, with such member as determined by Xxxxxxx Electronics). Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation, if any, as may be necessary to reflect such assignments and transfers of employment and comply with Section 5.1 of the Distribution Agreement (No Solicit; No Hire).

(b)Xxxxxxx International Group Employees. Except as otherwise set forth in this Agreement, effective not later than immediately preceding the Effective Time, the employment of each Xxxxxxx International Group Employee shall be continued by a member of the Xxxxxxx International Group or shall be assigned and transferred to a member of the Xxxxxxx International Group (in each case as determined by Xxxxxxx International). Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation, if any, as may be necessary to reflect such assignments and transfers of employment and comply with Section 5.1 of the Distribution Agreement (No Solicit; No Hire).

(c)At-Will Status. Notwithstanding the above or any other provision of this Agreement, nothing in this Agreement shall create any obligation on the part of any member of the Xxxxxxx International Group or any member of the Xxxxxxx Electronics Group to (i) continue the employment of any Employee or permit the return from a leave of absence for any period following the date of this Agreement or the Effective Time (except as required by applicable Law) or (ii) change the employment status of any Employee from “at will,” to the extent such Employee is an “at will” employee under applicable Law.

(d)Severance. The Parties acknowledge and agree that the Distribution and the assignment, transfer or continuation of the employment of Employees as contemplated by this Section 3.1 shall not be deemed a severance of employment of any Employee for purposes of this Agreement or any Benefit Plan or policy of any member of the Xxxxxxx International Group or any member of the Xxxxxxx Electronics Group.

(e)Not a Change of Control/Change in Control. The Parties acknowledge and agree that neither the consummation of the Distribution nor any transaction in connection with the Distribution shall be deemed a “change of control,” “change in control,” or term of similar import for purposes of any Xxxxxxx International Benefit Plan, Xxxxxxx Electronics Benefit Plan, Xxxxxxx International Equity Plan or Xxxxxxx Electronics Equity Plan, or any Xxxxxxx International or Xxxxxxx Electronics policy or agreement.

(f)Payroll and Related Taxes. With respect to the portion of the tax year occurring prior to the day immediately following the Effective Time, Xxxxxxx International will (i) be responsible for all payroll obligations, tax withholding and reporting obligations and (ii) furnish a Form W-2 or similar earnings statement to all Xxxxxxx Electronics Group Employees for such period. With respect to the remaining portion of such tax year, Xxxxxxx Electronics will (i) be responsible for all payroll obligations, tax withholding, and reporting obligations regarding Xxxxxxx Electronics Group Employees and (ii) furnish a Form W-2 or similar earnings statement to all Xxxxxxx Electronics Group Employees. Following the Effective Time, Xxxxxxx International will, to the extent provided in the Transition Services Agreement, provide payroll obligations, tax withholding and reporting obligations in accordance with the terms of the Transition Services Agreement. With respect to each Xxxxxxx Electronics Group Employee, Xxxxxxx International and Xxxxxxx Electronics shall, and shall cause their respective Affiliates to (to the extent permitted by applicable Law and practicable)

(a) treat Xxxxxxx Electronics (or the applicable Xxxxxxx Electronics Entity) as a “successor employer” and Xxxxxxx International (or the applicable Xxxxxxx International Entity) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, to the extent appropriate, for purposes of Taxes imposed under the United States Federal Insurance Contributions Act, as amended (“FICA”), or the United States Federal Unemployment Tax Act, as amended (“FUTA”) and (b) file tax returns, exchange wage payment information, and report wage payments made by the respective predecessor and successor employer on separate IRS Forms W-2 or similar earnings statements to each such Xxxxxxx Electronics Group Employee for the tax year in which the Effective Time occurs, in a manner provided in Section 4.02(l) of Revenue Procedure 2004-53. Except to the extent otherwise administratively practicable, the collection of payroll taxes under FICA and FUTA will restart upon or following the Effective Time with respect to each Xxxxxxx Electronics Group Employee for the tax year during which the Effective Time occurs.

(g)Employment Agreements; Expatriate Obligations. Xxxxxxx shall assign, and Xxxxxxx Electronics will assume and honor, or will cause a Xxxxxxx Electronics Entity to assume and honor, and as otherwise required by applicable Law, any agreements to which any Xxxxxxx Electronics Group Employee is party with either any Xxxxxxx International Entity or any joint venture with a Xxxxxxx International Entity, including any (i) executive employment contract, (ii) retention, severance, or change in control agreement or (iii) expatriate (including any international assignee) contract or arrangement (including agreements and obligations regarding repatriation, relocation, equalization of Taxes and living standards in the host country). The Xxxxxxx Electronics Group Employees with such agreements under this Section 3.1(g) are set forth on Schedule 3.1(g). To the extent that assignment of such agreements is not permitted, effective as of the Effective Time, each member of the Xxxxxxx Electronics Group shall be considered to be a successor to each member of the Xxxxxxx International Group for purposes of, and a third-party beneficiary with respect to, all such agreements.

Section 3.2 Employment Law Obligations.

(a) WARN. After the Effective Time, (i) Xxxxxxx International shall be responsible for providing any necessary WARN notice (and meeting any similar state Law notice requirements) with respect to any termination of employment of any Xxxxxxx International Group Employee and (ii) Xxxxxxx Electronics shall be responsible for providing any necessary WARN notice (and meeting any similar state Law notice requirements) with respect to any termination of employment of any Xxxxxxx Electronics Group Employee. The parties acknowledge that the contemplated transactions will not result or trigger any WARN notice.

(b) Compliance with Employment Laws. On and after the Effective Time, (i) each member of the Xxxxxxx International Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related Laws and requirements relating to the employment of Xxxxxxx International Group Employees and the treatment of any applicable Former Xxxxxxx International Group Employees in respect of their former employment, and (ii) each member of the Xxxxxxx Electronics Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related Laws and requirements relating to the employment of Xxxxxxx Electronics Group Employees and the treatment of any Former Xxxxxxx Electronics Group Employees in respect of their former employment.

Section 3.3 Employee Records.

(a) Sharing of Information. Subject to any limitations imposed by applicable Law, Xxxxxxx International and Xxxxxxx Electronics (acting directly or through members of the Xxxxxxx International Group or the Xxxxxxx Electronics Group, respectively) shall provide to the other and their respective agents and vendors all information necessary for the Parties to perform their respective duties under this Agreement. The Parties also hereby agree to enter into any business associate arrangements that may be required for the sharing of any information pursuant to this Agreement to comply with the requirements of HIPAA.

(b) Transfer of Personnel Records and Authorization. Subject to any limitation imposed by applicable Law, as of the Effective Time or as soon as administratively practicable thereafter, Xxxxxxx International shall transfer and assign to Xxxxxxx Electronics all personnel records, all immigration documents, including I-9 forms and work authorizations, all payroll deduction authorizations and elections, whether voluntary or mandated by Law, including but not limited to W-4 forms and deductions for benefits under the applicable Xxxxxxx Electronics Benefit Plan and all absence management records, Family and Medical Leave Act records, insurance beneficiary designations, flexible spending account enrollment confirmations, attendance, and return to work information relating to or maintained for Xxxxxxx Electronics Group Employees, and for any Former Xxxxxxx Electronics Group Employees who participate in Xxxxxxx Electronics Benefit Plans (“Benefit Management Records”). Subject to any limitations imposed by applicable Law, Xxxxxxx International, however, may retain originals of, copies of, or access to personnel records, immigration records, payroll forms and Benefit Management Records as long as necessary to provide services to Xxxxxxx Electronics (acting on its behalf pursuant to the Transition Services Agreement between the Parties entered into as of the date of this Agreement) or otherwise as required by applicable Law. Xxxxxxx Electronics will use personnel records, payroll forms and Benefit Management Records for lawful purposes only. It is understood that following the Effective Time, Xxxxxxx International records so transferred and assigned may be maintained by Xxxxxxx Electronics (acting directly or through one of its Subsidiaries) pursuant to Xxxxxxx Electronics’ applicable records retention policy.

(c) Access to Records. To the extent not inconsistent with this Agreement and any applicable privacy protection Laws or regulations or Privacy Contracts, reasonable access to Employee-related records after the Effective Time will be provided to members of the Xxxxxxx International Group and members of the Xxxxxxx Electronics Group pursuant to the terms and conditions of Section 7.3 of the Distribution Agreement. In addition, notwithstanding anything to the contrary, Xxxxxxx Electronics shall provide Xxxxxxx International with reasonable access to those records necessary for its administration of any Benefit Plans or programs, or employment and compensation matters, on behalf of Xxxxxxx International Group Employees and Former Xxxxxxx International Group Employees after the Effective Time as permitted by any applicable privacy protection Laws or regulations or Privacy Contracts. Xxxxxxx International shall also be permitted to retain copies of all restrictive covenant agreements with any Xxxxxxx Electronics Group Employee in which any member of the Xxxxxxx International Group has a valid business interest. In addition, Xxxxxxx International shall provide Xxxxxxx Electronics with reasonable access to those records necessary for its administration of any Benefit Plans or programs, or employment and compensation matters, on behalf of Xxxxxxx Electronics Group Employees or Former Xxxxxxx Electronics Group Employees after the Effective Time as permitted by any applicable privacy protection Laws or regulations or Privacy Contracts. Xxxxxxx Electronics shall also be permitted to retain copies of all restrictive covenant agreements with any Xxxxxxx International Group Employee or Former Xxxxxxx International Group Employee in which any member of the Xxxxxxx Electronics Group has a valid business interest.

(d) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, Xxxxxxx International and Xxxxxxx Electronics shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, claims, actions, and damages that arise from

a failure (by the indemnifying party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations, Privacy Contracts and internal policies applicable to such information.

(e) Confidentiality. Except as otherwise set forth in this Agreement, all records and data relating to Employees shall, in each case, be subject to the confidentiality provisions of the Distribution Agreement and any other applicable agreement and applicable Law, and the provisions of this Section 3.3 shall be in addition to, and not in derogation of, the provisions of the Distribution Agreement governing confidential information, including Section 7.6 of the Distribution Agreement.

(f) Cooperation. Each Party shall use commercially reasonable efforts to cooperate to share, retain, and maintain data and records that are necessary or appropriate to further the purposes of this Section 3.3 and for each Party to administer its respective Benefit Plans to the extent consistent with this Agreement and applicable Law, and each Party agrees to cooperate as long as is reasonably necessary to further the purposes of this Section 3.3. No Party shall charge another Party a fee for such cooperation.

(g) Labor Relations. To the extent required by applicable Law or any agreement with a labor union, works council or similar employee organization, Xxxxxxx Electronics shall provide notice, engage in consultation and take any similar action which may be required on its part in connection with the Distribution and shall fully indemnify Xxxxxxx International against any Liabilities arising from its failure to comply with such requirements.

ARTICLE IV

EQUITY AND EQUITY-BASED COMPENSATION

Section 4.1General Principles.

(a)Xxxxxxx International and Xxxxxxx Electronics shall take any and all reasonable actions as shall be necessary and appropriate to further the provisions of this Article IV, including, to the extent practicable, providing written notice or similar communication to each Employee who holds one or more awards granted under the Xxxxxxx International Equity Plan informing such Employee of (i) the actions contemplated by this Article IV with respect to such awards and (ii) whether (and during what time period) any “blackout” period shall be imposed upon holders of awards granted under the Xxxxxxx International Equity Plan during which time awards may not be exercised or settled, as the case may be.

(b)Following the Effective Time, a grantee who has outstanding equity-based awards under the Xxxxxxx International Equity Plan and/or replacement equity-based awards under the Xxxxxxx Electronics Equity Plan shall be considered to have been employed by the applicable plan sponsor before and after the Effective Time for purposes of (i) vesting and (ii) determining the date of termination of employment as it applies to any such award; provided, that this Section 4.1(b) shall not govern adjustments made to the Xxxxxxx International PSAs under Section 4.2 hereof.

(c)No award described in this Article IV, whether outstanding or to be issued, adjusted, substituted or cancelled by reason of or in connection with the Distribution, shall be adjusted, settled, cancelled, or exercisable, until in the judgment of the administrator of the applicable plan or program such action is consistent with all applicable Laws, including federal securities Laws. Any period of exercisability will not be extended on account of a period during which such an award is not exercisable pursuant to the preceding sentence.

(d)The adjustment or conversion of Xxxxxxx International PSAs shall be effected in a manner that is intended to avoid the imposition of any accelerated, additional, penalty or other Taxes on the holders thereof pursuant to Section 409A of the Code.

Section 4.2 Performance Share Awards. The number of Xxxxxxx International Common Shares underlying each Xxxxxxx International PSA held by a Xxxxxxx International Group Employee or Former

Xxxxxxx International Group Employee immediately prior to the Effective Time shall remain a Xxxxxxx International PSA and be adjusted as of the Distribution Date by dividing such shares by the Xxxxxxx International Ratio, with the result rounded up to the extent it includes a fractional share; and the number of Xxxxxxx International Common Shares underlying each Xxxxxxx International PSA held by a Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee immediately prior to the Effective Time shall be converted as of the Distribution Date into a Xxxxxxx Electronics PSA and adjusted by dividing such shares by the Xxxxxxx Electronics Ratio, with the result rounded up to the extent it includes a fractional share. . The terms and conditions to which the (i) Xxxxxxx International PSAs are subject shall be substantially the same terms and conditions before and after the Effective Time; and (ii) Xxxxxxx Electronics PSAs are subject shall be substantially similar to the terms and conditions applicable to the corresponding Xxxxxxx International PSA immediately prior to the Effective Time; provided, however, that the calculations of performance will be adjusted to appropriately reflect the Transaction. Exhibit A attached hereto contains the methodology applicable to such calculations and adjustments.

Section 4.3 Section 16(b) of the Exchange Act. By approving the adoption of this Agreement, the respective Boards of Directors of each of Xxxxxxx International and Xxxxxxx Electronics intend to exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b-3 thereunder, all acquisitions and dispositions of equity awards by directors and officers of each of Xxxxxxx International and Xxxxxxx Electronics.

Section 4.4 Liabilities for Settlement of Awards.

(a) Settlement of Outstanding Xxxxxxx International PSAs. Xxxxxxx International shall be responsible for all Liabilities associated with Xxxxxxx International PSAs, including any share delivery, registration or other obligations related to the settlement of the Xxxxxxx International PSAs.

(b) Settlement of Outstanding Xxxxxxx Electronics PSAs. Xxxxxxx Electronics shall be responsible for all Liabilities associated with Xxxxxxx Electronics PSAs including any share delivery, registration or other obligations related to the settlement of the Xxxxxxx Electronics PSAs.

Section 4.5 Form S-8. As soon as reasonably practicable and subject to applicable Law, Xxxxxxx Electronics shall prepare and file with the Securities Exchange Commission a registration statement on Form S-8 (or another appropriate form) registering under the Securities Act the offering of a number of Xxxxxxx Electronics Common Shares at a minimum equal to the number of shares subject to the Xxxxxxx Electronics 401(k) Plan, Xxxxxxx Electronics PSAs and the Xxxxxxx International 401(k) Plan.Xxxxxxx Electronics shall use commercially reasonable efforts to cause any such registration statement to be kept effective (and the current status of the prospectus or prospectuses required thereby to be maintained).

Section 4.6 Tax Reporting and Withholding for Equity-Based Awards. Unless otherwise required by applicable Law, Xxxxxxx International (or one of its Subsidiaries) will be responsible for all income, payroll, fringe benefit, payment on account or other tax reporting related to income of or otherwise owed by Xxxxxxx International Group Employees or Former Xxxxxxx International Group Employees from equity-based awards, and Xxxxxxx Electronics (or one of its Subsidiaries) will be responsible for all income, payroll, fringe benefit, payment on account or other tax reporting related to or otherwise owed on income of Xxxxxxx Electronics Group Employees from equity-based awards. Similarly, Xxxxxxx International will be responsible for all income, payroll, fringe benefit, payment on account or other tax reporting related to or otherwise owed on income of its non-employee directors from equity-based awards, and Xxxxxxx Electronics will be responsible for any income, payroll, fringe benefit, payment on account or other tax reporting related to income of or otherwise owed by its non-employee directors from equity-based awards. Further, Xxxxxxx International (or one of its Subsidiaries) shall be responsible for remitting applicable tax withholdings and related payments for Xxxxxxx International Group Employees to each applicable taxing authority, and Xxxxxxx Electronics (or one of its Subsidiaries) shall be responsible for remitting applicable tax withholdings and

related payments for Xxxxxxx Electronics Group Employees to each applicable taxing authority; provided, however, that to the extent necessary (and permissible) to effectuate the foregoing, either Xxxxxxx International or Xxxxxxx Electronics may act as agent for the other company by remitting amounts withheld in the form of shares or in conjunction with an exercise transaction and related payments to an appropriate taxing authority.

Section 4.7 Cooperation. Each Party acknowledges and agrees to use commercially reasonable efforts to cooperate with each other and with third-party providers to effect withholding and remittance of Taxes, as well as required tax reporting, in a timely, efficient and appropriate manner to further the purposes of this Article IV and to administer all employee equity awards that are outstanding immediately following the Effective Time (including all such equity awards that are adjusted in accordance with this Article IV) to the extent consistent with this Agreement and applicable Law, for as long as is reasonably necessary to further the purposes of this Article IV. No Party shall charge another Party a fee for such cooperation.

ARTICLE V

BONUSES FOR XXXXXXX ELECTRONICS GROUP EMPLOYEES

Section 5.1Xxxxxxx International Bonus Plan Participation. As of the Effective Time, each Xxxxxxx Electronics Group Employee shall cease to participate in any Xxxxxxx International Benefit Plan (including, without limitation, the Xxxxxxx International Incentive Bonus Plan) that provides cash bonus or similar cash incentive opportunities (the “Xxxxxxx International Bonus Plans”), and from and after the Effective Time, the Xxxxxxx Electronics Group shall be solely responsible for providing cash bonus or similar cash incentive opportunities to Xxxxxxx Electronics Group Employees, in accordance with this Article V.

Section 5.2 Bonus Determination.

(a)With respect to any performance period under Xxxxxxx International Bonus Plans that has not been completed on or prior to the Effective Time, the Xxxxxxx Electronics Group shall provide each Xxxxxxx Electronics Group Employee with a cash bonus or similar cash incentive opportunity that is equivalent to the cash bonus or similar cash incentive opportunity which could have been earned under the applicable Xxxxxxx International Bonus Plan for such incomplete performance period. As soon as practicable following the Effective Time, Xxxxxxx International shall transfer to Xxxxxxx Electronics and Xxxxxxx Electronics shall assume, the accrued Liability related to the Xxxxxxx International Bonus Plans for each Xxxxxxx Electronics Group Employee for the portion of the applicable performance period beginning on the first day of the applicable performance period and ending on the Effective Time. For purposes of determining the amount of the accrued Liability to be transferred to and assumed by Xxxxxxx Electronics, the applicable performance criteria shall be measured by Xxxxxxx International in accordance with the terms of the applicable Xxxxxxx International Bonus Plans for the portion of the applicable performance period up to the Effective Time and based on the fiscal year 2015 year-to-date Xxxxxxx International financial results as of the Effective Time.

(b)The Xxxxxxx Electronics Group shall determine individual Xxxxxxx Electronics Group Employee bonus or similar cash incentive amounts, by allocating any applicable aggregate bonus pool as if such bonus pool were being paid under the terms of the applicable Xxxxxxx International Bonus Plan, taking into account individual performance criteria as determined by the Xxxxxxx Electronics Group in its reasonable discretion. Following such determination, the Xxxxxxx Electronics Group shall pay each Xxxxxxx Electronics Group Employee the applicable bonus amounts in the same form and on the same timing that each Xxxxxxx Electronics Group Employee would have received such bonus or similar short-term cash incentive amount under the terms of the Xxxxxxx International Bonus Plans had the Distribution not occurred.

ARTICLE VI

U.S. TAX-QUALIFIED DEFINED CONTRIBUTION PLAN

Section 6.1Establishment of the Xxxxxxx Electronics 401(k) Plan. No later than the Effective Time, Xxxxxxx Electronics shall have established a defined contribution plan that is intended to meet the requirements of Sections 401(a) and 401(k) of the Code and a related trust that is intended to meet the requirements of Section 501(a) of the Code for the benefit of Xxxxxxx Electronics Group Employees (but not Former Xxxxxxx Electronics Group Employees, who will continue to be participants in the Xxxxxxx International 401(k) Plan) who prior to the Effective Time participated in the Xxxxxxx International 401(k) Plan (“Xxxxxxx Electronics 401(k) Plan”). Xxxxxxx Electronics shall be responsible for taking all necessary, reasonable, and appropriate action to establish, maintain, and administer the Xxxxxxx Electronics 401(k) Plan so that it is qualified under Sections 401(a) and 401(k) of the Code and that the related trust thereunder is exempt under Section 501(a) of the Code. Xxxxxxx Electronics (acting directly or through its Affiliates) shall be responsible for any and all Liabilities and other obligations with respect to the Xxxxxxx Electronics 401(k) Plan.

Section 6.2 Transfer of Xxxxxxx International 401(k) Plan Assets. Not later than sixty (60) days following the Effective Time (or such later time as mutually agreed by the Parties), Xxxxxxx International shall cause the accounts (including any outstanding loan balances) in the Xxxxxxx International 401(k) Plan attributable only to Xxxxxxx Electronics Group Employees (the “Xxxxxxx Electronics 401(k) Plan Participants”) and all of the assets in the Xxxxxxx International 401(k) Plan related thereto to be transferred to the Xxxxxxx Electronics 401(k) Plan, and Xxxxxxx Electronics shall cause the Xxxxxxx Electronics 401(k) Plan to accept such transfer of accounts and underlying assets and, commencing as of the date of such transfer, to assume and to fully perform, pay, and discharge, all obligations of the Xxxxxxx International 401(k) Plan relating to the accounts of the Xxxxxxx Electronics 401(k) Plan Participants (to the extent the assets related to those accounts are actually transferred from the Xxxxxxx International 401(k) Plan to the Xxxxxxx Electronics 401(k) Plan). Assets invested in the Xxxxxxx International 401(k) Plan in investment funds that will be replicated in the Xxxxxxx Electronics 401(k) Plan shall, unless otherwise agreed by the Parties, be transferred in kind, and assets invested in investment funds that will not be replicated in the Xxxxxxx Electronics 401(k) Plan shall be mapped into new investment funds that will be established for such purpose. The foregoing transfer of assets and liabilities from the Xxxxxxx International 401(k) Plan to the Xxxxxxx Electronics 401(k) Plan shall be conducted in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA.

Section 6.3 Treatment of Xxxxxxx Electronics Common Shares and Xxxxxxx International Common Shares.

(a)Xxxxxxx Electronics Common Share Fund; Xxxxxxx Electronics Common Shares Held in Xxxxxxx International 401(k) Plan Accounts. The Xxxxxxx Electronics 401(k) Plan will provide, effective as of the Effective Time: (i) for the establishment of a Xxxxxxx Electronics Common Share Fund; (ii) that such Xxxxxxx Electronics Stock Fund shall receive a transfer of and hold all Xxxxxxx Electronics Common Shares distributed in connection with the Distribution in respect of Xxxxxxx International Common Shares held in Xxxxxxx International 401(k) Plan accounts of Xxxxxxx Electronics 401(k) Plan Participants; and (iii) that, following the Effective Time, contributions made by or on behalf of such Xxxxxxx Electronics 401(k) Plan Participants may be allocated to the Xxxxxxx Electronics Common Share Fund. Xxxxxxx Electronics Common Shares distributed in connection with the Distribution in respect of Xxxxxxx International Common Shares held in Xxxxxxx International 401(k) Plan accounts of Xxxxxxx International Group Employees, Former Xxxxxxx International Group Employees, or Former Xxxxxxx Electronics Group Employees who participate in the Xxxxxxx International 401(k) Plan (the “Xxxxxxx International 401(k) Plan Participants”) shall be deposited in a Xxxxxxx Electronics Common Share Fund under the Xxxxxxx International 401(k) Plan, and Xxxxxxx International 401(k) Plan Participants will be prohibited from

increasing their holdings in such Xxxxxxx Electronics Common Share Fund under the Xxxxxxx International 401(k) Plan and may elect to liquidate their holdings in such Xxxxxxx Electronics Common Share Fund and invest those monies in any other investment fund offered under the Xxxxxxx International 401(k) Plan. Any Xxxxxxx Electronics Common Shares held in Xxxxxxx International 401(k) Plan accounts of Xxxxxxx Electronics Group Employees shall be transferred in kind to the trust underlying the Xxxxxxx Electronics 401(k) Plan pursuant to Section 6.2 of this Agreement.

(b)Xxxxxxx International Common Shares in Xxxxxxx International 401(k) Plan Accounts. Without limiting the generality of the provisions of Section 6.2, Xxxxxxx International Common Shares held in Xxxxxxx International 401(k) Plan accounts of Xxxxxxx International 401(k) Plan Participants prior to the Effective Time shall be transferred in kind to a Xxxxxxx International Common Share Fund under the Xxxxxxx Electronics 401(k) Plan pursuant to Section 6.2 of this Agreement. Xxxxxxx Electronics 401(k) Plan Participants will be prohibited from increasing their holdings in Xxxxxxx International Common Shares under such Xxxxxxx International Common Share Fund and may elect to liquidate their holdings in such Xxxxxxx International Common Share Fund and invest those monies in any other investment fund offered under the Xxxxxxx Electronics 401(k) Plan.

Section 6.4 Tax Qualified Status. Xxxxxxx Electronics will take all steps and make any necessary filings with the IRS to establish and maintain the Xxxxxxx Electronics 401(k) Plan so that such plan is qualified under Sections 401(a) and 401(k) of the Code and the related trust is tax-exempt under Section 501(a) of the Code, including applying for and obtaining a favorable determination letter from the IRS as to such qualification. Furthermore, prior to the Section 6.2 transfer of Xxxxxxx International 401(k) Plan assets, Xxxxxxx International and Xxxxxxx Electronics (each acting directly or through their respective Affiliates) shall, as and to the extent required, file IRS Form 5310‑A regarding the transfer of assets and liabilities from the Xxxxxxx International 401(k) Plan to the Xxxxxxx Electronics 401(k) Plan as contemplated by this Article VI.

ARTICLE VII

U.S. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN

Section 7.1Xxxxxxx Electronics SERP.

(a)Establishing Xxxxxxx Electronics SERP. As of the Transferred Group Adoption Date, Xxxxxxx Electronics shall have established and adopted a supplemental employee retirement plan for its key employees (collectively, the “Xxxxxxx Electronics SERP”) to provide each Xxxxxxx Electronics Group Employee who was a participant in the Xxxxxxx International SERP as of immediately prior to the Effective Time (each, an “Xxxxxxx Electronics SERP Participant”) benefits following the Effective Time substantially similar to those provided with respect to such person under the Xxxxxxx International SERP as of immediately prior to the Effective Time. As of the Effective Time, the Xxxxxxx Electronics Group Employees shall no longer participate in the Xxxxxxx International SERP; however, Former Xxxxxxx Electronics Group Employees will continue to participate in the Xxxxxxx International SERP. The Parties agree that for purposes of the Xxxxxxx International SERP, a Xxxxxxx Electronics SERP Participant shall not be considered to have incurred a separation of service as determined under the general rules of Section 409A of the Code as a result of the Distribution or the transfer of employment or service from Xxxxxxx International (or a Xxxxxxx International Entity) to Xxxxxxx Electronics (or a Xxxxxxx Electronics Entity), and such employment or service shall only be considered to terminate for purposes of the Xxxxxxx Electronics SERP when the employment or service of such Xxxxxxx Electronics SERP Participant with the Xxxxxxx Electronics Group terminates in accordance with the terms of the Xxxxxxx Electronics SERP and applicable Laws (including, without limitation Section 409A of the Code).

(b)Liability and Responsibility. The Liabilities in respect of Xxxxxxx Electronics SERP Participants under the Xxxxxxx International SERP shall be assumed by Xxxxxxx Electronics as sponsor of

the Xxxxxxx Electronics SERP, effective as of the Effective Time. Xxxxxxx Electronics shall have sole responsibility for the administration of the Xxxxxxx Electronics SERP and the payment of benefits thereunder to or on behalf of Xxxxxxx Electronics Group Employees, and no member of the Xxxxxxx International Group shall have any liability or responsibility therefor. Xxxxxxx International shall have sole responsibility for the administration of the Xxxxxxx International SERP and the payment of benefits thereunder to or on behalf of Xxxxxxx International Group Employees, Former Xxxxxxx International Group Employees, and Former Xxxxxxx Electronics Group Employees, and no member of the Xxxxxxx Electronics Group shall have any liability or responsibility therefor.

ARTICLE VIII

U.S. WELFARE PLAN

Section 8.1Establishment of Xxxxxxx Electronics Welfare Plan. Following the Effective Time and prior to the Xxxxxxx Electronics Welfare Plan Implementation Date, Xxxxxxx Electronics shall establish and adopt the Xxxxxxx Electronics Welfare Plan that will provide welfare benefits, effective as of January 1, 2015, (the “Xxxxxxx Electronics Welfare Plan Implementation Date”), to each Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee who is a participant in the Xxxxxxx International Welfare Plan (and their eligible spouses and dependents, as the case may be) (collectively, the “Xxxxxxx Electronics Welfare Plan Participants”) under terms and conditions that are similar to the Xxxxxxx International U.S. Welfare Plan. The Parties may accelerate the Xxxxxxx Electronics Welfare Plan Implementation Date. Coverage and benefits under the Xxxxxxx Electronics Welfare Plan shall then be provided to the Xxxxxxx Electronics Welfare Plan Participants on an uninterrupted basis under the newly established Xxxxxxx Electronics Welfare Plan which shall contain similar benefit provisions as in effect under the corresponding Xxxxxxx International Welfare Plan immediately prior to the Effective Time. Xxxxxxx Electronics Welfare Plan Participants shall cease to be eligible for coverage under the Xxxxxxx International Welfare Plan on the Xxxxxxx Electronics Welfare Plan Implementation Date with respect to the Xxxxxxx International Welfare Plan affected on such date. For the avoidance of doubt, Xxxxxxx Electronics Welfare Plan Participants shall not participate in any Xxxxxxx International Welfare Plan after the time set forth in the immediately preceding sentence, and Xxxxxxx International Group Employees and Former Xxxxxxx International Group Employees shall not participate in the Xxxxxxx Electronics Welfare Plan at any time.

Section 8.2 Transitional Matters Under Xxxxxxx Electronics Welfare Plans; Treatment of Claims Incurred.

(a)Liability for Claims. With respect to unpaid covered claims that are either incurred but not processed or that are incurred but unreported prior to the Effective Time by any Xxxxxxx Electronics Welfare Plan Participant under the Xxxxxxx International Welfare Plan, including claims that are self-insured and claims that are fully insured through third-party insurance, Xxxxxxx Electronics shall assume and be responsible for the payment for such claims or shall cause such Xxxxxxx Electronics Welfare Plan to fully perform, pay and discharge all such claims, as the case may be. No Xxxxxxx International Entity shall be responsible for any Liability with respect to any such claims.

(i)Claims Incurred. For purposes of this Section 8.2(a), a claim or expense is deemed to be incurred (A) with respect to medical (including continuous hospitalization), dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or expense; (B) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or expense; and (C) with respect to long-term disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or expense.

(b)Credit for Deductibles and Other Limits. With respect to each Xxxxxxx Electronics Welfare Plan Participant, Xxxxxxx Electronics and Xxxxxxx International shall use reasonable efforts to agree that the

Xxxxxxx Electronics Welfare Plans will give credit for the plan year in which the Effective Time occurs for any amount paid, number of services obtained or provider visits by such Xxxxxxx Electronics Welfare Plan Participant toward deductibles, out-of-pocket maximums, limits on number of services or visits, or other similar limitations to the extent such amounts are taken into account under the comparable Xxxxxxx International Welfare Plan. For purposes of any life-time maximum benefit limit payable to a Xxxxxxx Electronics Welfare Plan Participant under any Xxxxxxx Electronics Welfare Plan, the Xxxxxxx Electronics Welfare Plan will recognize any expenses paid or reimbursed by the Xxxxxxx International Welfare Plan with respect to such participant prior to the Effective Time to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under the Xxxxxxx International Welfare Plan.

(c)COBRA. Xxxxxxx International shall be responsible for administering compliance with the group health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA and the corresponding provisions of the Xxxxxxx International Welfare Plan with respect to Xxxxxxx Electronics Group Employees and Former Xxxxxxx Electronics Group Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the Xxxxxxx International Welfare Plan prior to the Xxxxxxx Electronics Welfare Plan Implementation Date, subject to Xxxxxxx Electronics’ obligation to reimburse Xxxxxxx International for the cost of such administration under the Transition Services Agreement and coverage under the Xxxxxxx International Welfare Plan. At and after the Xxxxxxx Electronics Welfare Plan Implementation Date, Xxxxxxx Electronics shall assume all requirements with respect to COBRA and the certificate of creditable coverage requirements under HIPAA with respect to all Xxxxxxx Electronics Group Employees and Former Xxxxxxx Electronics Group Employees.

(d)Employees on Leave. As of the Effective Time, Xxxxxxx Electronics shall assume and satisfy all Liabilities with respect to any Xxxxxxx Electronics Group Employee who is, as of the Effective Time, on vacation or other approved leave of absence, whether paid or unpaid (including leave under FMLA or corresponding state Law, disability, workers’ compensation leave, military leave and other approved leave, including Liabilities for salary continuation, paid leave or continuing Benefit Plans). Notwithstanding the foregoing, any individual residing in California who would have become a Xxxxxxx Electronics Group Employee as of the Effective Time but was on an approved leave of absence at the Effective Time shall become a Xxxxxxx Electronics Group Employee following the conclusion of his or her approved leave.

Section 8.3 Continuity of Benefits, Benefit Elections and Beneficiary Designations.

(a) Benefit Elections and Designations. As of the first day of the month after the month in which the Distribution occurs, or if later, the Xxxxxxx Electronics Welfare Plan Implementation Date (or such other date provided for under Section 8.3(b)), Xxxxxxx Electronics shall cause the Xxxxxxx Electronics Welfare Plan to recognize and give effect to all elections and designations (including all coverage and contribution elections and beneficiary designations) made by each Xxxxxxx Electronics Welfare Plan Participant under, or with respect to, the annual enrollment conducted on behalf of the Xxxxxxx Electronics Welfare Plan by Xxxxxxx International. Notwithstanding the foregoing, nothing in this Section 8.3(a) will prohibit Xxxxxxx Electronics from soliciting or causing the solicitation of new election forms or beneficiary designations from Xxxxxxx Electronics Welfare Plan Participants to be effective under the Xxxxxxx Electronics Welfare Plan as of January 1, 2015.

(b) Employer Non-elective Contributions. As of immediately after the relevant Xxxxxxx Electronics Welfare Plan Implementation Date, Xxxxxxx Electronics shall cause any Xxxxxxx Electronics Welfare Plan that constitutes a “cafeteria plan” under Section 125 of the Code to recognize and give effect to all non-elective employer contributions credited toward coverage of a Xxxxxxx Electronics Welfare Plan Participant under the corresponding Xxxxxxx International Welfare Plan that is a cafeteria plan under Section 125 of the Code for the applicable plan year.

(c) Waiver of Conditions or Restrictions. Unless prohibited by applicable Law, the Xxxxxxx Electronics Welfare Plan will waive all limitations, exclusions, service conditions, waiting period limitations or evidence of insurability requirements that would otherwise be applicable to the Xxxxxxx Electronics Welfare Plan Participant following the Effective Time to the extent that such Employee had previously satisfied such limitation under the corresponding Xxxxxxx International Welfare Plan.

(d) Health Savings Accounts. Pursuant to Section 8.1, on or prior to the relevant Xxxxxxx Electronics Welfare Plan Implementation Date, Xxxxxxx Electronics shall, or shall cause another Xxxxxxx Electronics Entity to, establish and adopt the Xxxxxxx Electronics Welfare Plan and will coordinate with a health savings account custodian to make available a health savings account option for eligible Xxxxxxx Electronics Welfare Plan Participants which will provide health savings account benefits to eligible Xxxxxxx Electronics Welfare Plan Participants similar to the benefits provided to eligible participants in the health savings plan option of the Xxxxxxx International Welfare Plan. The health savings account made available in connection with the Xxxxxxx Electronics Welfare Plan shall, to the extent permissible under applicable IRS regulations, be effective as of the relevant Xxxxxxx Electronics Welfare Plan Implementation Date.

Section 8.4 Insurance Contracts. To the extent any Xxxxxxx International Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, Xxxxxxx International and Xxxxxxx Electronics will cooperate and use their commercially reasonable efforts to replicate such insurance contracts for Xxxxxxx Electronics (except to the extent changes are required under applicable state insurance Laws or filings by the respective insurers) and to maintain any pricing discounts or other preferential terms for both Xxxxxxx International and Xxxxxxx Electronics for a reasonable term. Neither Party shall be liable for failure to obtain such insurance contracts, pricing discounts, or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 8.4.

ARTICLE IX

NON-U.S. BENEFIT PLANS

Section 9.1Non-U.S. Retirement Plans.

(a)With respect to any Xxxxxxx International Benefit Plan covering non-U.S. Xxxxxxx Electronics Group Employees or Former Xxxxxxx Electronics Group Employees and which is a defined benefit or defined contribution retirement or pension plan, Xxxxxxx Electronics shall cause each such Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee, as applicable, to become covered by a corresponding Xxxxxxx Electronics Benefit Plan which is a defined benefit or defined contribution retirement or pension plan, effective as of the Effective Time or as soon as practicable thereafter. To the extent such coverage does not commence until following the Effective Time, Xxxxxxx Electronics shall indemnify Xxxxxxx International for any continued participation by such employee in the corresponding Xxxxxxx International Benefit Plan. Xxxxxxx International will reasonably cooperate with Xxxxxxx Electronics in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.1(a) a listing of those non-U.S. Xxxxxxx International retirement or pension plans in which Xxxxxxx Electronics Group Employees and Former Xxxxxxx Electronics Group Employees are known to participate. Schedule 9.1(a) may be updated by mutual written consent of Xxxxxxx International and Xxxxxxx Electronics at any time up to 60 days after the Effective Time.

(b)With respect to any Xxxxxxx Electronics Benefit Plan covering non-U.S. Xxxxxxx International Group Employees or Former Xxxxxxx International Group Employees and which is a defined benefit or defined contribution retirement or pension plan, Xxxxxxx International shall cause each such Xxxxxxx International Group Employee or Former Xxxxxxx International Group Employee, as applicable, to become covered by a corresponding Xxxxxxx International benefit plan which is a defined benefit or defined contribution retirement or pension plan, effective as of the Effective Time or as soon as practicable thereafter.

To the extent such coverage does not commence until following the Effective Time, Xxxxxxx International shall indemnify Xxxxxxx Electronics for any continued participation by such employee in the corresponding Xxxxxxx Electronics Benefit Plan. Xxxxxxx Electronics will reasonably cooperate with Xxxxxxx International in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.1(b) a listing of those non-U.S. Xxxxxxx Electronics retirement or pension plans in which Xxxxxxx International Group Employees and Former Xxxxxxx International Group Employees are known to participate. Schedule 9.1(b) may be updated by mutual written consent of Xxxxxxx International and Xxxxxxx Electronics at any time up to 60 days after the Effective Time.

Section 9.2 Non-U.S. Welfare Plans.

(a) Effective as of the Effective Time (or as soon as practicable thereafter), Xxxxxxx Electronics shall, or shall cause another Xxxxxxx Electronics Entity to, establish and adopt Xxxxxxx Electronics Welfare Plans for the benefit of each Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee who resides or works outside the United States that are substantially identical (to the extent practicable) to the welfare benefits that such Xxxxxxx Electronics Group Employee or Former Xxxxxxx Electronics Group Employee participated in immediately prior to the Effective Time. To the extent such coverage does not commence until following the Effective Time, Xxxxxxx Electronics shall indemnify Xxxxxxx International for any continued participation by such employee in the corresponding Xxxxxxx International Welfare Plan. Xxxxxxx International will reasonably cooperate with Xxxxxxx Electronics in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.2(a) a listing of non-U.S. Xxxxxxx International welfare plans in which Xxxxxxx Electronics Group Employees are known to participate (“Non-U.S. Xxxxxxx International Welfare Plans”). Schedule 9.2(a) may be updated by mutual written consent of Xxxxxxx International and Xxxxxxx Electronics at any time up to 60 days after the Effective Time.

(b) Effective as of the Effective Time (or as soon as practicable thereafter), Xxxxxxx International shall, or shall cause another Xxxxxxx International Entity to, establish and adopt Xxxxxxx International welfare plans for the benefit of each Xxxxxxx International Group Employee or Former Xxxxxxx International Group Employee who resides or works outside the United States that are substantially identical (to the extent practicable) to the welfare benefits that such Xxxxxxx International Group Employee or Former Xxxxxxx International Group Employee participated in immediately prior to the Effective Time. To the extent such coverage does not commence until following the Effective Time, Xxxxxxx International shall indemnify Xxxxxxx Electronics for any continued participation by such employee in the corresponding Xxxxxxx Electronics Welfare Plan. Xxxxxxx Electronics will reasonably cooperate with Xxxxxxx International in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.2(b) a listing of non-U.S. Xxxxxxx Electronics Welfare Plans in which Xxxxxxx International Group Employees are known to participate (“Non-U.S. Xxxxxxx Electronics Welfare Plans”). Schedule 9.2(b) may be updated by mutual written consent of Xxxxxxx International and Xxxxxxx Electronics at any time up to 60 days after the Effective Time.

ARTICLE X

WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION

Section 10.1Xxxxxxx Electronics Workers’ and Unemployment Compensation. Effective as of the Effective Time, the Xxxxxxx Electronics Entity employing each Xxxxxxx Electronics Group Employee shall have (and, to the extent it has not previously had such obligations, such Xxxxxxx Electronics Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation and unemployment compensation benefits for all Xxxxxxx Electronics Group Employees employed by that Xxxxxxx Electronics Entity and for Former Xxxxxxx Electronics Group Employees relating to that Xxxxxxx Electronics Entity. Effective as of the Effective Time, Xxxxxxx Electronics, acting through the Xxxxxxx Electronics Group Entity employing each Xxxxxxx Electronics Group Employee, will be responsible for (a) obtaining and maintaining

workers’ compensation insurance, including providing all collateral required by the insurance carriers or state workers’ compensation bodies and (b) if not already in place establishing new or transferred unemployment insurance employer accounts, policies and claims handling contracts with the applicable government agencies.

Section 10.2 Xxxxxxx International Workers’ and Unemployment Compensation. Effective as of the Effective Time, the Xxxxxxx International Entity employing each Xxxxxxx International Group Employee shall have (and, to the extent it has not previously had such obligations, such Xxxxxxx International Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation and unemployment compensation benefits for all Xxxxxxx International Group Employees and Former Xxxxxxx International Group Employees. Effective as of the Effective Time, the Xxxxxxx International Entity formerly employing each Xxxxxxx International Group Employee shall have (and, to the extent it has not previously had such obligations, such Xxxxxxx International Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation and unemployment compensation benefits for all Former Xxxxxxx International Group Employees.

Section 10.3 Assignment of Contribution Rights. Xxxxxxx International will transfer and assign (or cause another member of the Xxxxxxx International Group to transfer and assign) to a member of the Xxxxxxx Electronics Group all rights to seek contribution or damages from any applicable third party (such as a third party who aggravates an injury to a worker who makes a workers’ compensation claim) with respect to any workers’ compensation claim for which Xxxxxxx Electronics is responsible pursuant to this Article X. Xxxxxxx Electronics will transfer and assign (or cause another member of the Xxxxxxx Electronics Group to transfer and assign) to a member of the Xxxxxxx International Group all rights to seek contribution or damages from any applicable third party (such as a third party who aggravates an injury to a worker who makes a workers’ compensation claim) with respect to any workers’ compensation claim for which Xxxxxxx International is responsible pursuant to this Article X.

Section 10.4 Collateral. On and after the Effective Time, Xxxxxxx Electronics (acting directly or through a member of the Xxxxxxx Electronics Group) shall be responsible for providing all collateral required by insurance carriers or state workers’ compensation bodies in connection with workers’ compensation insurance or claims for which Liability is allocated to the Xxxxxxx Electronics Group under this Article X. Xxxxxxx International (acting directly or through a member of the Xxxxxxx International Group) shall be responsible for providing all collateral required by insurance carriers or state workers’ compensation bodies in connection with workers’ compensation insurance or claims for which Liability is allocated to the Xxxxxxx International Group under this Article X.

Section 10.5 Cooperation. Xxxxxxx Electronics and Xxxxxxx International shall use commercially reasonable efforts to provide that workers’ compensation and unemployment insurance costs are not adversely affected for either of them by reason of the Distribution.

ARTICLE XI

SEVERANCE

Section 11.1Severance Arrangements, Plans, Policies and Guidelines. Effective as of the Transferred Group Adoption Date, a Transferred Group Entity shall establish severance arrangements, plans, policies or guidelines to be effective as of the Effective Time (“Xxxxxxx Electronics Severance Arrangements”) under which Xxxxxxx Electronics Group Employees who, immediately prior to the Effective Time, are participants in any Xxxxxxx International severance arrangement, plan, policy or guideline, shall be eligible to participate immediately following the Effective Time. Effective as of the Effective Time, either the Transferred Group Entity shall remain the plan sponsor of Xxxxxxx Electronics Severance Arrangements or Xxxxxxx Electronics shall or shall cause another Xxxxxxx Electronics Entity to assume the Xxxxxxx Electronics Severance Arrangements. Such Xxxxxxx Electronics Severance Arrangements will provide terms and conditions

(including severance benefits) for Xxxxxxx Electronics Group Employees who are severed from the Xxxxxxx Electronics Group following the Effective Time or Transfer Date, as the case may be, that are substantially similar to the terms and conditions (including severance benefits) provided under the applicable Xxxxxxx International severance arrangements, plans, policies and guidelines (excluding any change in control severance plans or contained in employment agreements) in which such Xxxxxxx Electronics Group Employees participated immediately prior to the Effective Time or such Transfer Date for a period not less than one year. For the avoidance of doubt, the Distribution and the assignment, transfer or continuation of the employment of Xxxxxxx Electronics Group Employees contemplated by Section 3.1 shall not be deemed a severance of employment for purposes of this Agreement and any Xxxxxxx International severance arrangements, plans, policies or guidelines, and effective as of the Effective Time, Xxxxxxx Electronics Group Employees shall not be eligible to receive any severance or other benefits under any Xxxxxxx International severance plans or policies.

ARTICLE XII

BENEFIT ARRANGEMENTS AND OTHER MATTERS

Section 12.1Termination of Participation. Except as otherwise provided under this Agreement, effective as of immediately after the Effective Time, Xxxxxxx Electronics Group Employees shall not be eligible to participate in any Xxxxxxx International Benefit Plan.

Section 12.2 Accrued Time Off. Xxxxxxx Electronics shall recognize and assume all Liability for all unused vacation, holiday, sick leave, flex days, personal days and paid-time off and other time-off benefits with respect to Xxxxxxx Electronics Group Employees which accrued prior to the Effective Time and Xxxxxxx Electronics shall credit each Xxxxxxx Electronics Group Employee with such accrual; provided, however, all Liabilities shall be reduced, dollar for dollar, to the extent that Xxxxxxx International has made any payment related to any such unused vacation, holiday, sick leave, flex days, personal days and paid-time off and other time-off benefits with respect to Xxxxxxx Electronics Group Employees in accordance with applicable Law.

Section 12.3 Leaves of Absence. Xxxxxxx Electronics will continue to apply the same leave of absence policies applicable to inactive Xxxxxxx Electronics Group Employees who are on an approved leave of absence as of the Effective Time. Leaves of absence taken by Xxxxxxx Electronics Group Employees prior to the Effective Time shall be deemed to have been taken as employees of a member of the Xxxxxxx Electronics Group.

Section 12.4 Employee Restrictive Covenants. To the fullest extent permitted by the agreements described in this Section 12.4 and applicable Law, Xxxxxxx International shall assign, or cause an applicable member of the Xxxxxxx International Group to assign, to Xxxxxxx Electronics or a member of the Xxxxxxx Electronics Group, as designated by Xxxxxxx Electronics, all restrictive covenants (including confidentiality, inventions, non-competition and non-solicitation provisions) between a member of the Xxxxxxx International Group and a Xxxxxxx Electronics Group Employee, with such assignment to be effective as of the Effective Time. To the extent that assignment of such agreements is not permitted, effective as of the Effective Time, each member of the Xxxxxxx Electronics Group shall be considered to be a successor to each member of the Xxxxxxx International Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality, inventions, non-competition and non-solicitation provisions) between a member of the Xxxxxxx International Group and a Xxxxxxx Electronics Group Employee, such that each member of the Xxxxxxx Electronics Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the Xxxxxxx Electronics Group; provided, however, that in no event shall Xxxxxxx International be permitted to enforce such restrictive covenant agreements against Xxxxxxx Electronics Group Employees for action taken in their capacity as employees of a member of the Xxxxxxx Electronics Group.

ARTICLE XIII

GENERAL PROVISIONS

Section 13.1Preservation of Rights to Amend. The rights of each member of the Xxxxxxx International Group and each member of the Xxxxxxx Electronics Group to amend, waive, or terminate any Benefit Plan shall not be limited in any way by this Agreement.

Section 13.2 Confidentiality. Each Party agrees that any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith that is not otherwise public through no fault of such Party is confidential and is subject to the terms of the confidentiality provisions set forth herein and in the Distribution Agreement, including Section 3.3(e) of this Agreement and Section 7.6 of the Distribution Agreement.

Section 13.3 Administrative Complaints/Litigation. Except as otherwise provided in this Agreement, on and after the Effective Time, Xxxxxxx Electronics shall assume, and be solely liable for, the handling, administration, investigation, and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights, and unemployment compensation claims asserted at any time against Xxxxxxx International or any member of the Xxxxxxx International Group by any Xxxxxxx Electronics Group Employee (including any dependent or beneficiary of any such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant, or otherwise) to or with respect to the business activities of any member of the Xxxxxxx Electronics Group after the Effective Time. To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both Xxxxxxx International Group Employees (or Former Xxxxxxx International Group Employees) and Xxxxxxx Electronics Group Employees (or Former Xxxxxxx Electronics Group Employees) and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Employees included in or represented by the putative or certified plaintiff class. The procedures contained in the indemnification and related litigation cooperation provisions of the Distribution Agreement shall apply with respect to each Party’s indemnification obligations under this Section 13.3.

Section 13.4 Reimbursement and Indemnification. Each Party agrees to reimburse the other Party, within 30 days of receipt from the other Party of reasonable verification or except as otherwise provided in the Transition Services Agreement, for all costs and expenses which the other Party may incur on its behalf as a result of any of the respective Xxxxxxx International Benefit Plans and Xxxxxxx Electronics Benefit Plans as contemplated by this Agreement. All Liabilities retained, assumed, or indemnified against by Xxxxxxx Electronics pursuant to this Agreement, and all Liabilities retained, assumed, or indemnified against by Xxxxxxx International pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the Distribution Agreement. Notwithstanding anything to the contrary, (i) no provision of this Agreement shall require any member of the Xxxxxxx Electronics Group to pay or reimburse to any member of the Xxxxxxx International Group any benefit-related cost item that a member of the Xxxxxxx Electronics Group has paid or reimbursed to any member of the Xxxxxxx International Group prior to the Effective Time; and (ii) no provision of this Agreement shall require any member of the Xxxxxxx International Group to pay or reimburse to any member of the Xxxxxxx Electronics Group any benefit-related cost item that a member of the Xxxxxxx International Group has paid or reimbursed to any member of the Xxxxxxx Electronics Group prior to the Effective Time.

Section 13.5 Costs of Compliance with Agreement. Except as otherwise provided in this Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement.

Section 13.6 Fiduciary Matters. Xxxxxxx International and Xxxxxxx Electronics each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

Section 13.7 Entire Agreement. This Agreement, together with the documents referenced herein (including the Distribution Agreement and the Benefit Plans), constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Distribution Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof.

Section 13.8 Binding Effect; No Third-Party Beneficiaries; Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as otherwise expressly provided in this Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon any third parties any remedy, claim, Liability, reimbursement, cause of action, or other right in excess of those existing without reference to this Agreement. Except as otherwise specified herein, nothing in this Agreement is intended to amend any Benefit Plan or affect the applicable plan sponsor’s right to amend or terminate any Benefit Plan pursuant to the terms of such plan. The provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director, or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned by any Party, except with the prior written consent of the other Parties.

Section 13.9 Amendment; Waivers. No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of each of the Parties. Any Party may, at any time, (i) extend the time for the performance of any of the obligations or other acts of another Party, (ii) waive any inaccuracies in the representations and warranties of another Party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance by another Party with any of the agreements, covenants, or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by an authorized person of the Party to be bound thereby. No failure or delay on the part of any Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant, or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercises thereof or of any other right.

Section 13.10 Remedies Cumulative. All rights and remedies existing under this Agreement or the schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 13.11 Notices. All notices and other communications hereunder will be in writing and will be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or electronic transmission, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder will be

delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:

To Xxxxxxx International:

Xxxxxxx International, Inc.

0000 Xxxxx Xxxxxx

Xxxxxx, Xxxxxxx 00000

Attn: Xxxxx X. Xxxxx Xxxxxxx, General Counsel

Email: xxxxx.xxxxx@xxxxxxx.xxx

To Xxxxxxx Electronics:

Xxxxxxx Electronics, Inc.

0000 Xxxxxxx Xxxxxxxxx

Xxxxxx, Xxxxxxx 00000

Attn: Xxxx X. Xxxxx, General Counsel

Email: xxxx.xxxxx@xxxxxxxxxxxxxxxxxx.xxx

Section 13.12 Counterparts. This Agreement, including the schedules hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 13.13 Severability. If any term or other provision of this Agreement or the schedules attached hereto is determined by a non-appealable decision by a court, administrative agency, or arbitrator to be invalid, illegal, or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the court, administrative agency, or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 13.14 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to any conflicts of law provision or rule thereof that would result in the application of the Laws of any other jurisdiction.

Section 13.15 Dispute Resolution. The procedures for negotiation and binding arbitration set forth in Article VIII of the Distribution Agreement shall apply to any dispute, controversy or claim (whether sounding in contract, tort or otherwise) that arises out of or relates to this Agreement, any breach or alleged breach hereof, the transactions contemplated hereby (including all actions taken in furtherance of the transactions contemplated hereby on or prior to the date hereof), or the construction, interpretation, enforceability, or validity hereof.

Section 13.16 Performance. Each of Xxxxxxx International and Xxxxxxx Electronics shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth

herein to be performed by any member of the Xxxxxxx International Group and any member of the Xxxxxxx Electronics Group, respectively. The Parties each agree to take such further actions and to execute, acknowledge, and deliver, or to cause to be executed, acknowledged, and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement.

Section 13.17 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against any Party.

Section 13.18 Effect if Distribution Does Not Occur. Notwithstanding anything in this Agreement to the contrary, if the Distribution Agreement is terminated prior to the Effective Time, this Agreement shall be of no further force and effect and shall be void ab initio.

Section 13.19 Code Sections 162(m) and 409A. Notwithstanding anything in this Agreement to the contrary, Xxxxxxx International and Xxxxxxx Electronics agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure that (i) a federal income tax deduction for the payment of any award or other compensation is, to the extent prescribed under the terms of the applicable plan and award agreement, not limited by reason of Section 162(m) of the Code, and (ii) the treatment of any award or other compensation does not cause the imposition of a penalty tax under Section 409A of the Code.

Section 13.20 Settlor Prerogatives Regarding Plan Dispositions. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to require Xxxxxxx Electronics to maintain a Xxxxxxx Electronics Benefit Plan for a specific period of time, or into perpetuity, and further, nothing herein shall be construed to inhibit or otherwise interfere with Xxxxxxx Electronics’ ability to terminate a Xxxxxxx Electronics Benefit Plan, so long as the termination of a Xxxxxxx Electronics Benefit Plan that is intended to be qualified under Section 401(a) of the Code does not jeopardize the tax-qualified status of the Xxxxxxx Electronics Benefit Plan.

[Signature Page to follow]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a duly authorized officer as of the date first written above.



	XXXXXXX INTERNATIONAL, INC.


By:	/s/ Xxxxx X. Xxxxx
Name:	XXXXX X. XXXXX
Title:	Chief Executive Officer and President

	XXXXXXX ELECTRONICS, INC.


By:	/s/ Xxxxxx X. Xxxxxxx
Name:	XXXXXX X. XXXXXXX
Title:	Chairman and Chief Executive Officer

EXHIBIT A

EMPLOYEE MATTERS AGREEMENT

Calculations and Adjustments Relating to Performance Share Awards

Effective as of the Distribution Date (upon which date the Xxxxxxx Electronics shares will be electronically distributed by Computershare to all Xxxxxxx International shareholders of record (both Class A and B) shareholders of Xxxxxxx International) the following adjustments shall be made:


•	All Xxxxxxx International Group Employees and Xxxxxxx Electronics Group Employees with outstanding Xxxxxxx International APSAs and Xxxxxxx International LTPSAs will have such outstanding awards “equitably” adjusted going forward, based upon the following formula and examples (assuming an October 31, 2014 Distribution Date):


○	Per share value of Xxxxxxx International Common Shares prior to the Distribution Date: the weighted average closing price per share of the Xxxxxxx International Common Shares on the last five (5) Trading Days prior to the Distribution Date- for example:



Date	Volume	Closing Price	% of Total Trading Volume over 5 days	Weighted Average Price
Oct. 27	2,000	$15	20%	$3.00
Oct. 28	1,500	$16	15%	$2.40
Oct. 29	2,500	$17	25%	$4.25
Oct. 30	1,000	$18.50	10%	$1.85
Oct. 31	3,000	$20	30%	$6.00
Total	10,000			$17.50


○	Per share value of Xxxxxxx International Common Shares after the Distribution Date: the weighted average closing price per share of the Xxxxxxx International Common Shares on the first five (5) Trading Days after the Distribution Date- for example:



Date	Volume	Closing Price	% of Total Trading Volume over 5 days	Weighted Average Price
Nov. 3	2,000	$15	20%	$3.00
Nov. 4	1,500	$14	15%	$2.10
Nov. 5	2,500	$16	25%	$4.00
Nov. 6	1,000	$17	10%	$1.70
Nov. 7	3,000	$15	30%	$4.50
Total	10,000			$15.30


○	Per share value of Xxxxxxx Electronics Common Shares after the Distribution Date: the weighted average closing price per share of the Xxxxxxx Electronics Common Shares on the first five (5) days of Trading Days after the Distribution Date - for example:



Date	Volume	Closing Price	% of Total Trading Volume over 5 days	Weighted Average Price
Nov. 3	2,000	$10	20%	$2.00
Nov. 4	1,500	$9	15%	$1.35
Nov. 5	2,500	$11	25%	$2.75
Nov. 6	1,000	$12	10%	$1.20
Nov. 7	3,000	$10	30%	$3.00
Total	10,000			$10.30


•	Xxxxxxx Electronics employees would receive their remaining awards adjusted by approximately 1.70X ($17.50/$10.30)


•	Xxxxxxx International employees would receive their remaining awards adjusted by 1.14X ($17.50/$15.30)

Xxxxxxx International PSA agreements and Xxxxxxx Electronics PSA agreements will be modified so that future Xxxxxxx Electronics PSA and Xxxxxxx International PSA payouts (after the awards are adjusted as described above) will be based upon Xxxxxxx Electronics (in the case of Xxxxxxx Electronics Group Employees) and Xxxxxxx International (in the case of Xxxxxxx International Group Employees)

respective profit sharing % attainment and be granted with their respective publicly-traded shares, such that any grants in August 2015 under the carried-over agreements would be based upon Xxxxxxx Electronics (in the case of Xxxxxxx Electronics Group Employees) and Xxxxxxx International (in the case of Xxxxxxx International Group Employees) profits solely.

SCHEDULE 3.1(g)

EMPLOYEE MATTERS AGREEMENT

Employment Agreements; Expatriate Obligations

Employment Agreement for Xxxxxx X. Xxxxxxx

Employment Agreement for Xxxx X. Xxxxx

SCHEDULE 9.1(a)

EMPLOYEE MATTERS AGREEMENT

Non-U.S. Retirement Plans of Xxxxxxx International

In Which Non-U.S. Xxxxxxx Electronics Group Employees and

Former Xxxxxxx Electronics Group Employees Participate

None.

SCHEDULE 9.1(b)

EMPLOYEE MATTERS AGREEMENT

Non-U.S. Retirement Plans of Xxxxxxx Electronics

In Which Non-U.S. Xxxxxxx International Group Employees and

Former Xxxxxxx International Group Employees Participate

None.

SCHEDULE 9.2(a)

EMPLOYEE MATTERS AGREEMENT

Non-U.S. Xxxxxxx International Welfare Plans

In Which Xxxxxxx Electronics Group Employees and

Former Xxxxxxx Electronics Group Employees Participate

None.

SCHEDULE 9.2(b)

EMPLOYEE MATTERS AGREEMENT

Non-U.S. Xxxxxxx Electronics Welfare Plans

In Which Xxxxxxx International Group Employees and

Former Xxxxxxx International Group Employees Participate

None.

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Table of Contents

EMPLOYEE MATTERS AGREEMENT by and between Kimball International, Inc. and Kimball Electronics, Inc. Dated as of October 31, 2014

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