EXHIBIT 10.3
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EMPLOYEE MATTERS AGREEMENT
by and between
XXXXXXXX CORPORATION
and
ENPRO INDUSTRIES, INC.
dated as of
_______________, 2002
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TABLE OF CONTENTS
Page
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ARTICLE 1 CONTINUATION OF EMPLOYMENT........................................................2
Section 1.01 Continuation of Employment...............................................2
ARTICLE 2 COLLECTIVE BARGAINING.............................................................2
Section 2.01 Collective Bargaining Agreements and Compliance
with Local Customs and Law...............................................2
ARTICLE 3 BENEFIT PLANS.....................................................................2
Section 3.01 Defined Benefit Pension Plans............................................2
Section 3.02 Defined Contribution Plans...............................................3
Section 3.03 Health and Welfare Plans.................................................4
Section 3.04 Retiree Medical and Life Insurance Coverage..............................4
Section 3.05 Certain Non-qualified Benefit Plans......................................5
ARTICLE 4 EXECUTIVE COMPENSATION............................................................5
Section 4.01 Executive Compensation...................................................5
ARTICLE 5 EMPLOYEE CLAIMS...................................................................6
Section 5.01 Claims of Employees......................................................6
ARTICLE 6 GENERAL...........................................................................7
Section 6.01 Notices..................................................................7
Section 6.02 Interpretation...........................................................8
Section 6.03 Amendments; No Waivers...................................................8
Section 6.04 Nonexclusive Remedies....................................................8
Section 6.05 Successors and Assigns...................................................9
Section 6.06 Third-Party Beneficiaries................................................9
Section 6.07 Governing Law............................................................9
Section 6.08 Counterparts; Effectiveness..............................................9
Section 6.09 Entire Agreement.........................................................9
Section 6.10 Severability.............................................................9
Section 6.11 Termination..............................................................9
Section 6.12 Survival................................................................10
EMPLOYEE MATTERS AGREEMENT
Employee Matters Agreement, dated as of _________________, 2002 (this
"AGREEMENT") by and between Xxxxxxxx Corporation, a New York corporation, with
its principal corporate offices located in Charlotte, North Carolina
("XXXXXXXX"), and EnPro Industries, Inc., a North Carolina corporation, with its
principal corporate offices located in Charlotte, North Carolina. For purposes
of this Agreement, the term "ENPRO" shall refer to EnPro Industries, Inc. and
all the subsidiaries of EnPro Industries, Inc. on or after the Distribution Date
(as defined below) including Coltec Industries Inc ("COLTEC") and its direct and
indirect subsidiaries.
RECITALS
A. The Board of Directors of Xxxxxxxx has determined that it is in the
best interests of Xxxxxxxx and its shareholders to separate Xxxxxxxx'x
engineered industrial products business from its other existing businesses.
B. The Board of Directors of Xxxxxxxx, after consultation with
Xxxxxxxx'x management and financial and legal advisors, has determined that it
is appropriate and in the best interests of Xxxxxxxx and the Xxxxxxxx
Shareholders to divest Xxxxxxxx'x indirect ownership interest in the EnPro
Business, through a pro rata distribution of all of the EnPro Common Stock to
the Xxxxxxxx Shareholders pursuant to the terms and subject to the conditions of
this Agreement (the "DISTRIBUTION"). The date of such distribution, for purposes
of this Agreement, shall be referred to as the "DISTRIBUTION DATE".
X. Xxxxxxxx and EnPro are entering into a Distribution Agreement (the
"DISTRIBUTION AGREEMENT") and other Ancillary Agreements (as defined in the
Distribution Agreement), including this Agreement, that set forth the matters
relating to the relationship and the respective rights and obligations of
Xxxxxxxx and EnPro to one another following the Distribution.
D. In connection with the Distribution, Xxxxxxxx and EnPro have agreed
to enter into this Agreement for the purpose of allocating responsibilities,
liabilities and assets associated with employee compensation, employee benefits
and other employment-related matters.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and undertakings contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Xxxxxxxx and EnPro hereby agree as follows:
ARTICLE 1
CONTINUATION OF EMPLOYMENT
Section 1.01 Continuation of Employment. For purposes of this Agreement,
the term "EIP EMPLOYEES" refers to employees within the Engineered Industrial
Products Segment of Xxxxxxxx who will become or continue to be employees of
EnPro or subsidiaries of EnPro following the Distribution Date as well as those
Xxxxxxxx corporate employees who have been designated as EnPro employees. EnPro
shall not be obligated under this Agreement to continue the employment of any
EIP Employee after the Distribution Date. EIP Employees on long-term disability
("LTD") on the Distribution Date shall not become employees of EnPro unless such
employee is covered under the plan known as the "Long Term Disability Benefit
Plan for Eligible Employees of Xxxxxxx Inc" (the "GARLOCK LTD Plan"). Any
employee receiving benefits under the Garlock LTD Plan shall remain an employee
of Xxxxxxx Sealing Technologies LLC or a subsidiary thereof.
ARTICLE 2
COLLECTIVE BARGAINING
Section 2.01 Collective Bargaining Agreements and Compliance with Local
Customs and Law. Effective as of the Distribution Date, EnPro or its
subsidiaries shall assume each collective bargaining agreement that relates to
any EIP Employees and shall assume all liabilities, responsibilities and
obligations, including the obligation to negotiate in good faith with respect to
such collective bargaining agreements. EnPro shall continue to observe any
foreign national master agreements applicable to any EIP Employees. EnPro shall
comply with local customs and legislation relating to employment including staff
councils, where required.
ARTICLE 3
BENEFIT PLANS
Section 3.01 Defined Benefit Pension Plans.
(a) Neither EnPro nor any of its subsidiaries shall become sponsoring
employers of the following plans which are sponsored by Xxxxxxxx:
(i) Xxxxxxxx Corporation Employees' Pension Plan (the "XXXXXXXX
PLAN"); and
(ii) Xxxxxxxx Corporation Wage Employees' Pension Plan.
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(b) Neither Xxxxxxxx nor any of its subsidiaries shall become
sponsoring employers of the following plans which are sponsored by Coltec or
Xxxxxxx Sealing Technologies LLC (the "COLTEC PLANS"):
(i) Retirement Program for Employees of Coltec Industries Inc and
Affiliated Companies (the "COLTEC PENSION PLAN");
(ii) Quincy Division Unit Pension Plan; and
(iii) Pension Plan for Hourly Employees of the Xxxxxxx Sealing
Technologies Division (Palmyra, New York) of Xxxxxxx Inc.
(c) With respect to any EIP Employee who is a participant in the
Xxxxxxxx Plan, the Distribution Date shall constitute a termination of
employment for purposes of such plan; provided, however, that all such employees
shall be deemed vested under such plan on the Distribution Date. The Coltec
Pension Plan shall be amended to provide that EIP Employees who are participants
in the Xxxxxxxx Plan and who do not elect to commence the payment of pension
benefits under the Xxxxxxxx Plan prior to or on the Distribution Date shall
receive credit (for purposes of vesting and benefit determination) for all
service and earnings accrued under the Xxxxxxxx Plan; provided, however, that
the amount payable under the Coltec Plan shall be offset by any amount payable
from the Xxxxxxxx Plan. The Coltec Pension Plan shall be further amended to
provide that EIP Employees who are participants in the Xxxxxxxx Plan who elect
to commence payment of pension benefits under the Xxxxxxxx Plan on or prior to
the Distribution Date shall receive credit for service accrued under the
Xxxxxxxx Plan for vesting purposes, but shall receive no such credit for benefit
determination purposes and such participant's benefit under the Coltec Pension
Plan shall not be offset by benefits paid under the Xxxxxxxx Plan.
(d) In December 2001, all liabilities and associated assets relating
to current retirees within the Coltec Pension Plan, active employees who will be
employed by Xxxxxxxx or a subsidiary of Xxxxxxxx after the Distribution Date,
and former employees who were vested in the Coltec Pension Plan were transferred
from the Coltec Pension Plan to the Xxxxxxxx Plan. Xxxxxxxx shall cause one or
more transfers of liabilities and assets between the Xxxxxxxx Plan and the
Coltec Pension Plan to reflect changes in the employment status of EIP Employees
or other employees that participate in these plans that occur between November
2001 and the Distribution Date. Any transfer of assets pursuant to this true-up
process shall reflect the termination value of the liabilities; provided,
however that such transfer shall comply with Section 414 of the Internal Revenue
Code.
Section 3.02 Defined Contribution Plans.
(a) Neither EnPro nor any of its subsidiaries shall become sponsoring
employers of the following plans which are sponsored by Xxxxxxxx (the "XXXXXXXX
401(K) PLANS"):
(i) Xxxxxxxx Corporation Employees' Savings Plan;
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(ii) Xxxxxxxx Corporation Wage Employees' Savings Plan; and
(iii) Xxxxxxxx Corporation Savings Plan for Xxxx Employees.
(b) Neither Xxxxxxxx nor any of its subsidiaries shall become
sponsoring employers of the following plans which are sponsored by Coltec (the
"COLTEC DC PLANS"):
(i) Coltec Industries Inc Retirement Savings Plan; and
(ii) Coltec Industries Inc Retirement Accumulation Plan.
(c) Xxxxxxxx shall not have any responsibilities or obligations with
respect to the Coltec DC Plans after the Distribution Date. Any participant in
the Coltec DC Plans who will not become an EIP Employee shall have their balance
transferred to one of the Xxxxxxxx 401(k) Plans, depending on their employment
status.
(d) With respect to any EIP Employee who is a participant in a
Xxxxxxxx 401(k) Plan, the Distribution Date shall constitute a termination of
employment for purposes of such plan and any affected employee shall have the
right to take any action authorized by the plan in the event of a termination of
employment, including the right to rollover the account balance to the Coltec DC
Plans.
Section 3.03 Health and Welfare Plans. EnPro shall not assume any employee
health and welfare benefit plans of Xxxxxxxx but, instead, shall enter into
contracts with third party benefit providers to maintain medical, dental, life
insurance, long-term disability insurance and flexible spending account benefits
through 2002 that are substantially the same as benefits available to EIP
Employees immediately prior to the Distribution Date. EIP Employees shall cease
participation in the health and welfare benefit plans of Xxxxxxxx as of the
Distribution Date and shall commence participation in the health and welfare
benefit plans provided by EnPro. Health and welfare benefit plan claims incurred
by EIP Employees prior to the Distribution Date shall continue to be processed
and paid under the Xxxxxxxx health and welfare plans. EnPro shall reimburse
Xxxxxxxx for Xxxxxxxx'x out-of-pocket expenses from any health and welfare claim
of an EIP Employee incurred prior to the Distribution Date but paid by Xxxxxxxx
after the Distribution Date; provided, however, that Xxxxxxxx shall continue to
pay such claims in the ordinary course prior to the Distribution Date. For
health and welfare claims incurred before the Distribution Date, EnPro shall be
entitled to the benefit of any third party (i.e. non-captive) insurance coverage
maintained by Xxxxxxxx in respect of such claims.
Section 3.04 Retiree Medical and Life Insurance Coverage. Following the
Distribution Date, EnPro or the responsible subsidiary of EnPro, as the case may
be, shall provide retiree medical or life insurance coverage to (i) any active,
retired or terminated employee participating in the Quincy Division Unit Pension
Plan or the Pension Plan for Hourly Employees of the Xxxxxxx Sealing
Technologies Division (Palmyra, New York) of Xxxxxxx Inc who is currently or who
later becomes entitled to such coverage, (ii) any EIP Employee who retires after
the Distribution Date who is currently or who later becomes entitled to such
coverage, and (iii) any person who is
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currently or who later becomes entitled to such coverage who was an employee of
a Discontinued Operation, as defined below. Xxxxxxxx shall continue to provide
retiree medical and life insurance coverage for all other retirees entitled to
such coverage on the Distribution Date. For purposes of this Agreement, the term
"DISCONTINUED OPERATION" refers to any business owned directly or indirectly by
Coltec or its predecessors which ceased operating or was divested prior to July
1999, including, but not limited to, Crucible Inc., Colt Firearms Division of
Colt Industries Inc, Xxxxxx Automotive Inc, Xxxxxx Performance Products Inc,
Farnam Sealing Systems, Inc, Lubrikup Company, Precision Seal Corporation, and
the Valves and Industrial Plastics Division of Coltec Industrial Products, Inc.
This Section 3.04 is not intended to create any obligation to provide benefits
to any retiree, but rather, is intended merely to allocate such obligations to
the extent they may already exist.
Section 3.05 Certain Non-qualified Benefit Plans. Xxxxxxxx shall amend its
Savings Benefit Restoration Plan ("SBRP") and the Coltec Industries Inc Benefits
Equalization Plan ("BEP") (which will be sponsored by a subsidiary of Xxxxxxxx
after the Distribution Date) to permit EIP Employees to remain participants in
such plans after the termination of employment with Xxxxxxxx or a subsidiary of
Xxxxxxxx. The accrued benefit in any non-qualified plan shall remain frozen
except to the extent such benefit may change as a result of investment earnings
pursuant to the terms of the plan after the Distribution Date. The amendment
shall provide that participation shall cease upon the employee's termination of
employment from EnPro. Xxxxxxxx shall provide EnPro with a list of EIP Employees
who are participants in the SBRP or the BEP. EnPro shall notify Xxxxxxxx in the
event any EIP Employee who is a participant in the SBRP or the BEP ceases to be
employed with EnPro.
ARTICLE 4
EXECUTIVE COMPENSATION
Section 4.01 Executive Compensation.
(a) EnPro shall be solely responsible for any cash incentive
compensation program that measures the performance of EnPro for the entire year
of 2002 as though EnPro were an independent company for that time. EIP Employees
shall not be entitled to any Management Incentive Plan or Senior Management
Incentive Plan payment from Xxxxxxxx for the year 2002.
(b) For purposes of the Xxxxxxxx Stock Option Plan, the Distribution
Date shall result in the termination of employment for EIP Employees who are
participants in such plan. As a result, all unvested options shall be forfeited
and the period for exercising vested options shall expire 90 days after the
Distribution Date. Options held by EIP Employees who are eligible to retire as
of the Distribution Date will be treated as though such employee retired as of
the Distribution Date.
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(c) For purposes of the Xxxxxxxx Long-term Incentive Compensation
("LTIP") program, EIP Employees who are participants in that program will be
entitled to a portion of the actual payout, when the applicable performance
period ends, pro-rated to reflect the period of time through the Distribution
Date; provided, however, that an EIP Employee must continue to be employed with
EnPro or a subsidiary of EnPro on the last day of the applicable performance
period to be entitled to a LTIP payout pursuant to this paragraph.
(d) Any Management Continuity Agreements with EIP Employees will be
terminated as of the Distribution Date.
(e) EnPro shall be responsible for any retention payments payable to
EIP Employees after the Distribution Date pursuant to any retention agreements
regardless of when such agreements were entered into. Xxxxxxxx shall provide
EnPro with cash (in excess of the cash to be provided to EnPro for general
working capital at the Distribution Date) in an amount sufficient to pay the
retention payments which become payable upon the Distribution Date.
(f) EIP Employees who owned restricted shares of Xxxxxxxx common stock
shall have the Restricted Share Agreements to which they are a party amended to
provide that the restrictions regarding transfer shall not cause a forfeiture of
such shares on the Distribution Date, but instead shall cause a forfeiture upon
termination of employment with EnPro. Xxxxxxxx shall provide EnPro with a list
of EIP Employees who hold restricted shares. EnPro shall notify Xxxxxxxx in the
event any EIP Employee who holds restricted shares ceases to be employed with
EnPro.
ARTICLE 5
EMPLOYEE CLAIMS
Section 5.01 Claims of Employees. For purposes of this Agreement, the term
"EMPLOYMENT-RELATED CLAIM" shall refer to any liability or claim relating to the
employment, or the termination of employment, of any current or former employee
of EnPro or its direct or indirect subsidiaries, including Coltec and its
predecessors, which claims shall include, but not be limited to, claims alleging
wrongful termination, unlawful discrimination, breach of employment contract,
workers' injury claims covered by various workers' compensation laws, violations
of various employee health and safety requirements and severance expenses.
EnPro, or the responsible subsidiary of EnPro, shall bear sole responsibility
for any uninsured Employment-related Claim not paid or liquidated as of the
Distribution Date incurred either before, on or after the Distribution Date,
except for Employment-related Claims related to employees of businesses and
subsidiaries that are transferred to Xxxxxxxx as part of the dividend of
Coltec's aerospace business for which Xxxxxxxx, or the responsible subsidiary of
Xxxxxxxx, shall bear sole responsibility. Xxxxxxxx shall remain responsible for
all Employment-related Claims incurred prior to the Distribution Date that are
insured by third parties. EnPro shall reimburse Xxxxxxxx for Xxxxxxxx'x
out-of-pocket expenses (including legal and
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administrative costs) from Employment-related Claims incurred prior to the
Distribution Date but paid by Xxxxxxxx after the Distribution Date; provided,
however, that Xxxxxxxx shall continue to pay uninsured liabilities and claims in
the ordinary course prior to the Distribution Date. Xxxxxxxx shall reimburse
EnPro for EnPro's out-of-pocket expenses (including legal and administrative
costs) paid by EnPro on or after the Distribution Date from Employment-related
Claims related to employees of businesses and subsidiaries that are transferred
to Xxxxxxxx as part of the dividend of Coltec's aerospace business.
ARTICLE 6
GENERAL
Section 6.01 Notices. All notices, requests, consents and other
communications hereunder must be in writing and will be deemed to have been duly
given (a) when received if personally delivered or sent by facsimile, (b) one
business day after being sent by nationally recognized overnight delivery
service, or (c) five business days after being sent by nationally registered or
certified mail, return receipt requested, postage prepaid, and in each case
addressed as follows (any party by written notice to the other party in the
manner prescribed by this section may change the address or the persons to whom
notices thereof shall be directed):
To Xxxxxxxx at:
Xxxxxxxx Corporation
Four Coliseum Centre
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
To EnPro at:
EnPro Industries, Inc.
____ Xxxxxxxx Xxxxxxxxx, Xxxxx ___
Xxxxxxxxx, Xxxxx Xxxxxxxx _____
Fax: (704) ___-____
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Attention: General Counsel
with a copy to:
Xxxxxxxx, Xxxxxxxx & Xxxxxx P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Section 6.02 Interpretation. The headings contained in this Agreement are
solely for convenience of reference and shall not be given any effect in the
construction or interpretation of this Agreement. Whenever the word "including"
is used in this Agreement, it shall be deemed to be followed by the words
"without limitation." Whenever a reference is made in this Agreement to a
"party" or "parties," such reference shall be to a party or parties to this
Agreement unless otherwise indicated. The use of any gender herein shall be
deemed to be or include the other genders and the use of the singular herein
shall be deemed to include the plural (and vice versa), wherever appropriate.
Whenever a reference is made in this Agreement to an Article or Section, such
reference shall be to an Article or Section of this Agreement unless otherwise
indicated. The use of the words "hereof" and "herein" and words of similar
import shall refer to this entire Agreement and not to any particular section,
subsection, clause, paragraph or other subdivision of this Agreement, unless the
context clearly indicates otherwise. Each party stipulates and agrees that the
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement to favor any party against the other, and that no party, including any
drafting party, shall have the benefit of any legal presumption (including
"meaning of the authors") or the detriment of any burden of proof by reason of
any ambiguity or uncertain meaning contained in this Agreement.
Section 6.03 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by each party, or in the case of a waiver, by the party against whom
the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Section 6.04 Nonexclusive Remedies. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
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Section 6.05 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party, which consent
shall not be unreasonably withheld.
Section 6.06 Third-Party Beneficiaries. Nothing contained in this Agreement
is intended to nor shall it confer upon any Person or entity, other than the
parties hereto and their respective subsidiaries, successors and permitted
assigns, any benefit, right or remedies under or by reason of this Agreement.
Section 6.07 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of New York, without regard to the
conflict of laws principles thereof.
Section 6.08 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Section 6.09 Entire Agreement. This Agreement, the Ancillary Agreements and
the Distribution Agreement constitute the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties with respect to the subject matter hereof and thereof. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein or in the Ancillary Agreements and the Distribution Agreement
has been made or relied upon by any party. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Distribution Agreement or an Ancillary Agreement.
Section 6.10 Severability. If any one or more of the provisions contained
in this Agreement should be declared invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected or impaired thereby
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
a declaration, the parties shall modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner so
that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
Section 6.11 Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution and in the sole
discretion of the Xxxxxxxx Board of Directors without the approval of EnPro or
of Xxxxxxxx'x shareholders. In the event of such termination, no party shall
have any liability of any kind to any other party on account of such
termination.
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Section 6.12 Survival. All covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
XXXXXXXX CORPORATION
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Name:
Title:
ENPRO INDUSTRIES, INC.
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Name:
Title:
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