AGREEMENT, dated as of April 22, 1999 between Xxxxxxx & Xxxxxx
Corporation, a Delaware corporation (the "Company"), Xxxxxxx & Xxxxxx Products
Co., a Delaware corporation ("Products"), and Xxxxxx X. Xxxxx (the "Executive").
WHEREAS the Company desires to cause its subsidiary, Products, to employ
the Executive and to enter into an agreement embodying the terms of such
employment; and
WHEREAS the Executive has accepted such employment and desires to enter
into such agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. TERM OF EMPLOYMENT. Subject to the terms and conditions of this
Agreement, the Company hereby agrees to cause Products to employ, and Products
agrees to employ, the Executive, and the Executive hereby accepts such
employment, for a period commencing April 22, 1999 (the "Commencement Date"),
and ending April 22, 2002; provided, however, that this Agreement will be
automatically renewed and the term extended for additional one-year periods
commencing on April 22, 2002 and on each anniversary date thereafter, unless
Products or the Executive provides 90 days' prior written notice before the end
of the initial term or any renewal term.
2. DUTIES. During the term of this Agreement, the Executive shall be
employed as Chief Executive Officer of the Company and shall perform such
services for the Company and its subsidiaries as may be assigned to him from
time to time by the Board of Directors of the Company. The Executive shall be a
director of the Company and shall serve as Chairman of the Board of Directors of
the Company, subject to the corporate actions required by the Restated
Certificate of Incorporation and By-laws of the Company. The Executive shall
devote his full time and attention to the affairs of the Company and his duties
as Chief Executive Officer and Chairman of the Board.
When his employment hereunder terminates, the Executive shall resign from all
positions he holds as a director of the Company and any subsidiary of the
Company and as a member of any committee established by the Board of Directors
of the Company or any such subsidiary.
3. SALARY, BONUSES, OPTIONS
3.1 SALARY. Products shall pay the Executive a base salary at an annual
rate of $700,000 during the term of his employment pursuant to this Agreement.
The base salary may be increased in the sole discretion of the Compensation
Board. As used herein, the term "Compensation Board" means the Board of
Directors of the Company or one or more appropriate committees thereof, which to
the extent of the matters within its jurisdiction may include a committee
intended to preserve the deductibility of compensation under Section 162(m) of
the Internal Revenue Code of 1986, as amended ("Section 162(m)").
3.2 ANNUAL BONUSES. The Executive shall be entitled to a bonus in the
amount of $575,000 in respect of fiscal 1999 in lieu of participation in any
bonus plan of the Company or any of its subsidiaries; provided, however, that
the Compensation Board may, in its complete discretion, provide a greater bonus
based upon performance. With respect to each fiscal year of the Company
thereafter that the Executive is employed hereunder, the Executive shall
participate in the bonus plan of the Company or Products established for that
year generally for the Company's executive officers or a parallel plan
established for purposes of preserving the deductibility of the Executive's
compensation under Section 162(m). The Executive's target bonus with respect to
each such fiscal year shall be 100% of his annual base salary and his maximum
bonus with respect to each such fiscal year shall be 200% of his annual base
salary. The Compensation Board shall have complete authority to determine goals
and performance. The bonus plan in which the Executive participates subsequent
to the 1999 fiscal year is intended to comply in all respects with the exemption
for performance-based compensation under Section 162(m) including, without
limitation, being subject to the approval of a majority of the Company's
shareholders. Bonuses shall be paid in March following the fiscal year to which
they relate.
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3.3 SIGNING BONUS. The Executive shall receive an $850,000 signing bonus
(the "Signing Bonus"), payable as follows: $325,000 shall be payable promptly
after the Commencement Date and $175,000 shall be payable, subject to Sections
3.5, 6.2(a) and 6.2(b), on each of the first three annual anniversaries of the
Commencement Date; provided, however, that if the Executive's employment is
terminated by the Company for Cause (as defined in Section 6.2(d)) or the
Executive breaches this Agreement, the Executive's right to any unpaid portion
of the Signing Bonus shall be forfeited.
3.4 OPTIONS.
(a) Effective on the Commencement Date, the Executive shall be
granted options under the Company's 1994 Employee Stock Option Plan for
1,200,000 shares (subject to the last sentence of this paragraph (a)) which
shall vest, subject to Sections 3.5, 6.2(a) and 6.2(b), to the extent of 1/3 on
each of the first three annual anniversaries of the Commencement Date so long as
with respect to each such vesting date, the employment of the Executive has not
been terminated by the Executive without Good Reason (as defined in Section 6.1)
or been terminated by Products for Cause prior to such date; provided, however,
that such grant of options is conditional upon approval of the 1994 Employee
Stock Option Plan by a majority of the Company's shareholders (the Company
hereby agreeing to request such approval at the year 2000 annual meeting or at a
special meeting called for such purpose in the event of a Change of Control
prior to such year 2000 annual meeting). The options shall have an exercise
price per share equal to the greater of (x) the closing price for the Company's
Common Stock on the New York Stock Exchange on the date of grant and (y) the
average closing price for the Company's Common Stock on the New York Stock
Exchange over the last 30 trading days ending March 31, 1999. Any vested options
shall be exercisable until the earlier of (i) 180 days after the termination of
the Executive's employment with Products hereunder and (ii) the expiration of
the options. Except as expressly modified hereby, all the terms of the 1994
Employee Stock Option Plan shall apply. If clause (x) applies, then the number
of options shall be equal to 1,200,000, multiplied by the ratio of clause (x) to
clause (y), rounded up to the nearest whole number.
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(b) Notwithstanding Section 3.4(a), Executive will be eligible
to participate in any option grants generally made available to executives of
the Company.
3.5 CHANGE OF CONTROL. Upon a Change of Control (as defined herein), (i)
any options granted to the Executive pursuant to Section 3.4 shall become 100%
vested and immediately exercisable, subject to the shareholder approval referred
to in Section 3.4, (ii) Section 3.6 shall become inapplicable, (iii) the
Executive shall be immediately and fully vested in all benefits under the SRIP
(as defined herein) and (iv) any unpaid portion of the Signing Bonus shall be
paid immediately. For this purpose, a "Change of Control" shall have the same
meaning as in the 1994 Employee Stock Option Plan except substituting "50%" for
"80%" in each place it appears.
3.6 LOCK-UP. Subject to Sections 3.5, 6.2(a) and 6.2(b), the Executive
shall not in any three month period sell more than 60,000 shares of the
Company's Common Stock or in any one-year period sell more than 180,000 shares
of the Company's Common Stock, in each case whether acquired through the
exercise of stock options or otherwise, without the prior approval of the Board
of Directors of the Company.
3.7 NO FIDUCIARY DUTY. The Company and its subsidiaries and affiliates and
directors, officers and stockholders thereof shall not have any fiduciary duty
to the Executive or incur any liability to the Executive on account of any
action taken or omitted to be taken with respect to the business and operations
of the Company and its subsidiaries and affiliates, notwithstanding the fact
that such action or omission may adversely affect the amounts that the Executive
may receive in respect of his compensation or otherwise.
3.8 WITHHOLDING. The Executive agrees that Products may deduct and
withhold from compensation payments the amounts Products in good faith believes
are required to be deducted and withheld under the provisions of any statute,
law, regulation or ordinance heretofore or hereafter enacted.
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3.9 COMPENSATION FOR SERVICES. The Executive's compensation under this
Agreement shall be compensation for the Executive's services to the Company and
its subsidiaries in all capacities and, except as expressly provided in this
Agreement, the Executive shall not be entitled to any salary, bonus, severance,
benefits, equity, perquisites or other compensation of any kind as a result of
his services to the Company and its subsidiaries.
4. BENEFITS.
4.1 SRIP. The Executive will participate in the Products Supplemental
Retirement Income Plan (the "SRIP") and will receive additional credited service
thereunder in accordance with Annex A hereto. The Executive will provide
Products with a copy of the supplemental employee retirement plan from his
former employer (the "Forfeited SRIP"). If the annual income target expressed as
a percentage of total annual compensation under the SRIP is less than the
comparable percentage under the Forfeited SRIP for any given years of service,
the percentage of total annual compensation applicable to the Executive under
the SRIP will be adjusted upwards to match that under the Forfeited SRIP;
provided, however, that such upward adjustment shall not exceed five percentage
points. Except as expressly modified in this Agreement and in Annex A hereto,
the terms of the SRIP shall apply to the Executive.
4.2 OTHER BENEFITS AND PERQUISITES. The Executive shall be entitled during
his period of employment hereunder to participate in such pension and benefit
plans and to such perquisites as are generally made available to executives of
the Company, subject to the terms of such plans and this Agreement, including
the benefits and perquisites described on Annex A hereto. No payments made or
awards granted to the Executive under this Agreement, other than the base salary
provided for in Section 3.1, shall be treated as "compensation" for any purpose
under any benefit plan of the Company or any of its subsidiaries in which the
Executive participates, except as otherwise expressly provided in such plan.
5. EXPENSES. Products shall reimburse the Executive for all reasonable
business expenses reasonably incurred by the Executive in connection with the
performance of his duties
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hereunder and for temporary living expenses for up to three months, provided
that the Executive furnishes to Products adequate records or other evidence
respecting such expenditures in accordance with Products' policy.
6. TERMINATION OF EMPLOYMENT
6.1 GOOD REASON; VOLUNTARY TERMINATION. The Executive may terminate his
employment with Products at any time upon one month's prior notice for Good
Reason. As used herein, the term "Good Reason" means a demotion in the
Executive's position or a significant reduction in his responsibilities (other
than as a result of a sale or other disposition of assets of the Company). In
the event the Executive terminates his employment with Products for Good Reason,
such termination shall be deemed a termination of Executive's employment by
Products without Cause for purposes of Section 6.2(b). In the event the
Executive terminates his employment with Products without Good Reason, such
termination (unless it occurs within six months following a Change of Control)
shall be considered a breach of this Agreement and (i) as liquidated damages,
the Executive shall forfeit his rights to any unpaid portion of the Signing
Bonus and (ii) Products shall pay the Executive his unpaid base salary under
Section 3.1 accrued to the date on which his employment terminates (the
"Termination Date") and the amount of any earned but unpaid bonus under Section
3.2.
6.2 INVOLUNTARY TERMINATION.
(a) The Executive's employment with Products shall automatically
terminate upon the Executive's death or, unless the Board of Directors of the
Company in its sole discretion shall otherwise elect, at the end of any
consecutive three-month period during which the Executive is physically or
mentally disabled (measured from the first date on which the Executive is absent
from work due to such disability to the same date in the third succeeding
calendar month, or, if there is no such date or such date is not a business day,
the next succeeding business day) or at the end of such shorter periods
aggregating three months in any twelve month period during which the Executive
is physically or mentally disabled. In the event the Executive's employment with
Products is terminated due to the Executive's death or physical or mental
disability, (i) Products shall pay to
6
the Executive or, if applicable, his estate or legal representative (or other
beneficiary designated in writing by the Executive) (A) any unpaid portion of
the Signing Bonus, (B) any earned but unpaid bonus under Section 3.2, (C) any
unpaid base salary under Section 3.1 accrued to the Termination Date, (D) an
amount equal to one times his base salary in effect on the Termination Date, and
(E) a ratable portion of the annual bonus that the Executive would have earned,
based on actual performance results, for the current fiscal year; (ii) one year
after the Termination Date, Section 3.6 shall become inapplicable; and (iii)
with regard to any portion of the options granted to the Executive pursuant to
Section 3.4 that, but for such termination of employment, would have become
vested and immediately exercisable (subject to the shareholder approval referred
to in Section 3.4) on the next anniversary of the Commencement Date, a ratable
part of such option portion shall become vested and immediately exercisable
based upon the period of service that has elapsed since the immediately
preceding anniversary of the Commencement Date, or, in the absence of such
anniversary, the Commencement Date.
(b) Products may at any time without advance notice terminate the
Executive's employment with Products without Cause (as hereinafter defined). In
the event Products terminates the Executive's employment hereunder without Cause
prior to the expiration of the term of employment under Section 1, (i) Products
shall be obligated to pay the Executive his base salary in effect on the
Termination Date for a two-year period following the Termination Date plus (A)
if such termination occurs during fiscal 1999, two times $575,000, (B) if such
termination occurs during fiscal 2000, two times the average of (1) the Target
Bonus for fiscal year 2000, and (2) the greater of $575,000 and the actual bonus
for fiscal 1999, and (C) for fiscal 2001 and thereafter, two times the average
of the Target Bonus for the current fiscal year and the Executive's actual bonus
for the most recently completed fiscal year; (ii) any unpaid portion of the
Signing Bonus shall be paid immediately; (iii) any options granted to the
Executive pursuant to Section 3.4 shall become 100% vested and immediately
exercisable, subject to the shareholder approval referred to in Section 3.4;
(iv) the Company shall be obligated to pay a pro rata portion of $575,000 or the
Target Bonus for the current fiscal year; (v) the Executive shall be immediately
and fully vested in all benefits under the SRIP; and (vi) one year after the
Termination Date, Section 3.6 shall become inapplicable. The amount due to the
Executive pursuant to paragraph (b)(i) shall be paid, at the sole discretion of
the
7
Compensation Board at the Termination Date, either in a lump sum or on a
periodic basis in accordance with normal pay practice, but in no event over a
period in excess of one year. If the Executive terminates his employment within
six months following a Change of Control, such termination shall be deemed a
termination without Cause for the purposes of this Section 6.2(b).
(c) Products may at any time without notice terminate the
Executive's employment with Products for Cause. In the event the Executive's
employment with Products is terminated for Cause, the Executive shall receive
the same amount that would be payable under Section 6.1 if the Executive had
terminated without Good Reason
(d) As used herein, the term "Cause" means (i) fraud or
misappropriation with respect to the business of the Company or any of its
subsidiaries or intentional damage to the property or business of the Company or
any of its subsidiaries, (ii) failure by the Executive to work in his capacity
as Chief Executive Officer and Chairman of the Board of the Company on a
full-time basis at the headquarters of the Company (or such other locations as
may from time to time be appropriate), (iii) malfeasance or misfeasance or
breach of fiduciary duty or representation to the Company, its subsidiaries or
its stockholders, (iv) willful failure to act in accordance with any specific
lawful instructions of a majority of the Board of Directors of the Company, (v)
conviction of the Executive of a felony or a crime involving moral turpitude or
(vi) inaccuracy or breach of the Executive's representations and covenants set
forth in Section 7 hereof.
7. REPRESENTATIONS AND COVENANTS OF THE EXECUTIVE.
7.1 NO VIOLATION. The Executive represents and warrants that he has not
disclosed and will not disclose any confidential information or trade secrets
concerning his former employer to the Company or its subsidiaries or any
directors or officers thereof, and that he can perform his duties for the
Company and Products without disclosing or using any such confidential
information or trade secrets. Executive covenants and agrees that he will not
use any confidential information or trade secrets concerning any former employer
or its subsidiary in violation of any obligations to such former employer during
the term of his employment with Products.
8
7.2 NO CONFLICTS. The Executive represents and warrants that the terms of
this Agreement do not conflict with any other agreement, written or oral, to
which the Executive is a party or by which the Executive is bound, including,
without limitation, any noncompetition agreement for the benefit of any former
employer.
7.3 CONDUCT. The Executive will at all times refrain from taking any
action or making any statements, written or oral, which are intended to or do
disparage the goodwill or reputation of the Company or any of its subsidiaries
or affiliates or any directors or officers thereof or which could adversely
affect the morale of employees of the Company and its affiliates.
7.4 PERFORMANCE OF DUTIES. The Executive agrees that during the term of
his employment under this Agreement and the Additional Term (as defined below),
the Executive shall not compete with the Company or its subsidiaries in any way
whatsoever. Without limiting the generality of the foregoing, the Executive
shall not, during the term of his employment under this Agreement and during the
Additional Term, directly or indirectly (whether for compensation or otherwise),
alone or as an agent, principal, partner, officer, employee, trustee, director,
shareholder or in any other capacity, own, manage, operate, join, control or
participate in the ownership, management, operation or control of, or furnish
any capital to, or be connected in any manner with or provide any services as a
consultant for any business which competes with the business of the Company or
its subsidiaries as such business may be conducted from time to time; provided,
however, that notwithstanding the foregoing, nothing contained in this Agreement
shall be deemed to preclude the Executive from owning not more than 2% of the
publicly traded securities of any entity which is in competition with the
business of the Company or its subsidiaries. The "Additional Term" shall mean a
period of one year after the Termination Date.
7.5 COMPANY INFORMATION. The Executive agrees that so long as he is
employed by Products and following any termination of this employment the
Executive will keep confidential all confidential information and trade secrets
of the Company or any of its subsidiaries or affiliates and will not disclose
such information to any person without the prior approval of the Board of
Directors of the Company or use such information for any purpose other than in
the course
9
of fulfilling his duties of employment with Products pursuant to this Agreement.
It is understood that for purposes of this Agreement the term "confidential
information" is to be construed broadly to include all material nonpublic or
proprietary information. Upon the termination of this Agreement, or the earlier
request of Products, the Executive shall return any documents, records, data,
books or materials of the Company or its subsidiaries or affiliates in his
possession or control and any of his workpapers containing confidential
information or trade secrets of the Company or its subsidiaries or affiliates.
7.6 COOPERATION. The Executive shall promptly notify Products of any
threatened, pending or completed investigation, claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative
("Proceeding"), in which he may be involved, whether as an actual or potential
party or witness or otherwise, or with respect to which he may receive requests
for information, by reason of his future, present or past association with the
Company or any of its subsidiaries or affiliates. The Executive shall cooperate
fully with the Company and its subsidiaries and affiliates in connection with
any Proceeding at no expense to the Company or any of its subsidiaries or
affiliates other than the reimbursement of the Executive's reasonable
out-of-pocket expenses. The Executive shall not disclose any confidential or
privileged information in connection with any Proceeding without the consent of
Products and shall give prompt notice to Products of any request therefor,
except as required by law, or by the order of any court of competent
jurisdiction or any governmental agency or instrumentality.
7.7 COMPLIANCE WITH POLICIES. During his employment hereunder, the
Executive shall comply with all xxxxxxx xxxxxxx and other policies of the
Company and its subsidiaries and all applicable laws. The Executive may hold
positions with or serve on the boards of directors of unaffiliated corporations
only if the Board of Directors of the Company consents.
8. RELEASE. Notwithstanding anything to the contrary contained herein,
Products shall not be obligated to pay the Executive any amount pursuant to
Section 6.1 in the event Executive terminates his employment for Good Reason or
any amount pursuant to Section 6.2(b) hereof and any options held by Executive
shall not be exercisable after the termination of the
10
Executive's employment hereunder unless the Executive executes and delivers to
Products a release, dated the date of his termination of employment, to the
effect that: for good and valuable consideration, the Executive unconditionally
releases and covenants not to xxx the Company and its subsidiaries and
affiliates and directors, officers, employees and stockholders thereof, from any
and all claims, liabilities and obligation of any nature pertaining to
termination of employment other than those explicitly provided for by this
Agreement including, without limitation, any claims arising out of alleged legal
restrictions on Products' rights to terminate its employees, such as any implied
contract of employment or termination contrary to public policy or to laws
prohibiting discrimination (including, without limitation, the Age
Discrimination in Employment Act); and containing such other provisions as the
Company may request to effect the purposes of the foregoing release.
9. GOVERNING LAW. The validity, interpretation and performance of this
Agreement shall be governed by the laws of the State of New York, regardless of
the laws that might be applied under applicable principles of conflicts of laws.
Each of the parties hereby waives any right such party may have to a trial by
jury. The parties hereto agree that the language of this Agreement shall be
construed neutrally and not strictly for or against either of the parties.
10. ENTIRE AGREEMENT AND SURVIVORSHIP. This Agreement constitutes the
entire agreement and understanding between the parties hereto with respect to
the matters referred to herein and supersedes all prior agreements and
understandings between the parties hereto or their affiliates with respect to
the matters referred to herein. The representations, warranties and covenants of
the Executive contained in all parts of Section 7, and the release provided for
in Section 8, shall survive expiration or termination of this Agreement by
either party.
11. NOTICE. Any written notice required to be given by one party to the
other party hereunder shall be deemed effective if mailed by certified or
registered mail:
To the Company: c/o Blackstone Capital Partners L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
11
Xxxxxxxxxxx Xxxxxxx & Company., Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxx
To the Executive: Xxxxxx X. Xxxxx
0000 Xxxxx Xxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
or such other address as may be stated in notice given under this Section 11.
12. SEVERABILITY. The invalidity, illegality or enforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement or
such provision in any other jurisdiction, it being the intent of the parties
hereto that all rights and obligations of the parties hereto under this
Agreement shall be enforceable to the fullest extent permitted by law. Without
limiting the foregoing, the covenants of the Executive set forth in Sections 7.4
and 7.5, respectively, constitute agreements independent of any other provisions
of this Agreement and the Executive acknowledges that his failure to comply with
the provisions of Sections 7.4 and 7.5 will result in irreparable and continuing
damage for which there will be no adequate remedy at law and that, in the event
of a failure of the Executive so to comply, Products shall be entitled, without
the necessity of proving actual damages or securing or posting any bond, to
injunctive relief in addition to all other remedies which may otherwise be
available to Products and to such other and further relief as may be proper and
necessary to ensure compliance with the provisions of Sections 7.4 and 7.5. If
any covenants contained in Section 7.4 shall be deemed to be invalid, illegal or
unenforceable as written by reason of the extent, duration or geographical scope
thereof, or otherwise, the determining body or authority making such
determination shall be empowered to reduce such covenants so as to be
enforceable to the greatest extent possible and, as so reduced, such covenants
shall then be deemed to be rewritten and enforced as reduced.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their personal representatives, and, in
the case of the Company and Products, their successors and assigns, and Sections
3.7 and 8 shall also inure to the benefit of
12
the other persons and entities identified therein. Except as otherwise expressly
provided herein, the Executive shall not, without the prior written consent of
Products, transfer, assign, convey, pledge or encumber this Agreement or any
interest under this Agreement. The Executive understands that pursuant to loan
agreements to which the Company is a party, the business of the Company is
restricted to ownership of stock and certain other limited activities and
accordingly the obligations of the Company under this Agreement will be carried
out by Products. The Executive understands that the assignment of this Agreement
or any benefits hereof or obligations hereunder by the Company to any
significant subsidiary, or to any purchaser of all or a substantial portion of
the assets of the Company, and the employment of the Executive by such
subsidiary or by any such purchaser or by any successor of the Company in a
merger or consolidation, shall not be deemed a termination of the Executive's
employment for purposes of Section 6.2 or otherwise.
14. AMENDMENT. This Agreement may be amended or canceled only by an
instrument in writing duly executed and delivered by each party to this
Agreement.
15. HEADINGS. Headings contained in this Agreement are for convenience
only and shall not limit this Agreement or affect the interpretation thereof.
16. MISCELLANEOUS. In executing this Agreement, the Executive has not
relied upon any statement, representation or promise, whether written or oral,
of the Company or any of its subsidiaries or affiliates, or of any
representative or attorney for the Company or any of its subsidiaries or
affiliates, except for statements expressly set forth in this Agreement.
17. EFFECTIVE DATE OF AGREEMENT. This Agreement shall be effective as of
the date hereof.
18. REIMBURSEMENT OF LEGAL FEES. Products shall reimburse the Executive
for half of the reasonable legal fees incurred by him in connection with his
review and negotiation of this Agreement, provided that such reimbursement does
not exceed $5,000.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
/s/ Xxxxxx X. Xxxxx
-----------------------------
Xxxxxx X. Xxxxx
XXXXXXX & XXXXXX CORPORATION
By: /s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxx
XXXXXXX & XXXXXX PRODUCTS
CO.
By: /s/ Xxxxx Xxxxxx
-----------------------------
Xxxxx Xxxxxx
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxx
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Annex A
Executive Benefits
Supplemental Retirement Income Plan (SRIP) - The Executive is eligible for a
supplemental retirement income benefit which provides 25.7 to 60% of Total
Annual Compensation (Base Salary and average of final three years bonus). The
supplemental retirement benefit is offset by any payments from profit sharing,
social security, Pension Account Plan or any of the Excess Pension Benefit
Plans.
The Executive will be credited with past service accrued under the Tenneco
Executive Retirement Plan which will provide a Benefit Accrual amount of 31.2%
on the first day of employment under the SRIP. All benefits accrued after the
Commencement Date will be according to the Plan Schedule shown in Attachment A.
Additionally, subject to Sections 3.5 and 6.2(b) of the Agreement, the Executive
will be immediately and fully vested in all SRIP benefits on the third
anniversary of the Commencement Date.
Executive Medical Reimbursement Plan - The Executive is provided up to $3,500
per year to pay for any expenses not normally covered under the Company
Medical/Dental Plans. For example, any deductibles or co-insurance not covered
under the Plan.
Executive Life Insurance Plan - The Executive is provided a group-term life
insurance benefit equal to 3 1/2 times the annual salary.
Executive Retiree Medical Plan - The Executive and their spouse are provided a
lifetime benefit of up to $1,000,000 under the Company Medical Plan. Executive
must be vested under the terms of Supplemental Retirement Income Plan for
eligibility under the Retiree Medical Plan.
Executive Retiree Life Insurance Plan - The Executive is provided a retiree life
insurance benefit equal to one times the annual salary in effect at retirement.
Executive must be vested under the terms of the Supplemental Retirement Income
Plan for eligibility under the Retiree Life Insurance Plan.
Executive Perquisites
Club Membership - Executive is provided a membership to a country club including
reasonable reimbursement of the initiation fee, and monthly dues and ongoing
assessments.
Luncheon Club - Executive is provided a membership to a luncheon club including
reimbursement of the initiation fee, and monthly dues and ongoing assessments.
Company Automobile - Executive is provided a company automobile with a value of
$38,000 to $42,000. Some discretion is allowed regarding the value and model of
the automobile for the
Executive within the current Policy. The annualized imputed value for personal
use of the Executive's Company automobile will be grossed-up in accordance with
C&A Policy.
Company Plane - Executive will be entitled to personal use of the Company plane.
The annualized imputed value for such personal use will be grossed-up in
accordance with C&A Policy, but such gross-up allowance will not exceed $25,000
per year.
Benefits
Group Medical -
Blue Cross/Blue Shield Traditional Medical Plan - Provides up to 80%
reimbursement after satisfaction of a $200 individual or $400 family
deductible. The Plan has an annual out-of-pocket maximum of $1,000 per
individual or $2,000 per family. Employees are required to make a
contribution for coverage.
Blue Cross/Blue Shield Managed Care Plan - Provides access to a Preferred
Provider Organization (PPO) and up to 100% reimbursement for office visits
with a $15 co-payment. Other services are reimbursed at 80% after
satisfaction of a $200 individual or $400 family deductible. The Plan has
an annual out-of-pocket maximum of $1,000 per individual or $2,000 per
family. Employees are required to make a contribution for coverage.
Blue Cross/Blue Shield Health Maintenance Organization (HMO) - Provides
access to the Blue Cross/Blue Shield HMO which generally provides 100%
reimbursement along with a $10 co-payment for office visits. Employees are
required to make a contribution for coverage.
Group Dental -
Basic Dental Plan - Provides 50% or 100% reimbursement based upon the
class of service up to $750 per year. There is no deductible required for
any class of service and orthodontia benefits are not available. Employees
are required to make a contribution for coverage.
Optional Dental Plan - Provides 50%, 80% or 100% reimbursement based upon
the class of service up to $1,000 per year. There is a $50 annual
deductible per covered individual for Basic and Major Services.
Orthodontia coverage is provided after a $50 deductible up to a $1,000
maximum benefit. Employees are required to make a contribution for
coverage.
Group Vision - Provides a maximum calendar year benefit of $50 to $250 based
upon the type of expense incurred. Employees are required to make a contribution
for coverage.
Basic Accidental Death & Dismemberment Insurance - Employees are provided 1 1/2
times the annual salary in the event of an accident that results in a loss of
life.
Optional Term Life Insurance - Employees are eligible to purchase from one to
five times their annual salary and the cost is based upon their age and amount
of insurance elected.
Optional Family Term Life Insurance - Employees are eligible to purchase family
term life insurance in the amount of $5,000 for the spouse and $1,500 for each
covered child.
Optional Family Accidental Death & Dismemberment Insurance - Employees are
eligible to purchase 50% of the employees optional AD&D coverage for the spouse
and 10% of the employee's optional AD&D coverage for each covered child.
Optional Accidental Death & Dismemberment Insurance - Employees are eligible to
purchase from one to three times their annual salary up to $500,000 and the cost
is based upon the amount of insurance elected.
Business Travel Accident Insurance - Employees are provided a benefit of three
times the annual salary up to $1,250,000 in the event of accidental death while
traveling on Company business.
Short-term Disability Insurance - Employees are eligible for up to 90 days of
full pay in a 12 month period in the event of illness or injury. This coverage
is provided at no cost to the employee.
Long-term Disability Insurance - Employees are eligible to purchase coverage
that will provide a benefit of 66_% of their monthly salary up to $11,111 in the
event of disability.
Employee is required to pay $.25 per $100 of coverage per month.
Retirement Income Security Plan
Pension Account Plan - The Company provides a Cash Balance Pension Plan which
provides monthly pay credits of 2.5% to 10% of pay based upon age and/or service
subject to certain social security offsets. Additionally, employee will earn
interest credits from 5% to 12% of the account balance and all Company
contributions are subject to five-year cliff vesting.
Shadow Retirement Income Plan - The Company provides a Shadow Pension Account
Plan that will provide eligible participants subject to various Internal Revenue
Service earnings limitations an opportunity to continue accrual of Pension Plan
benefits. Company contributions are subject to five-year cliff vesting.
Savings Account Plan - Effective July 1, 1999 Xxxxxxx & Xxxxxx will introduce a
new Company Match of $.70/$1 for the first 3% of compensation and $.50/$1 for
the next 3% of compensation. Employees will have access to eight Mutual Funds
provided by X.X. Xxxxxx/American Century, Xxxxxxx & Xxxxxx stock and an
individual brokerage account window.
All Company contributions are subject to five-year cliff vesting.
Shadow Savings Account Plan - Employees can elect to contribute to the Shadow
Savings Account Plan in the event the Internal Revenue Service $10,000 limit or
any other taxing/testing limits are reached. Employees will continue to receive
the Company Match on contributions to the Shadow Savings Account Plan. For
vesting purposes only, Executive will receive service credit for the period
commencing June 1, 1995, and ending on the Commencement Date.
Additional Benefits such as Tuition Reimbursement, Matching Grants, Scholarships
and Employee Assistance Plan are provided.
Attachment A
Supplemental Retirement Income Plan
Benefit Accrual
==================== ============================================
Years of Service % of Participating Employee's
Total Annual Compensation
==================== ============================================
1 25.7%
2 27.6
3 29.4
4 31.2
5 33
6 34.8
7 36.6
8 38.4
9 40.2
10 42
11 43.8
12 45.6
13 47.4
14 49.2
15 51
16 52.8
17 54.6
18 56.4
19 58.2
20 or more 60
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