BENEFITS AND EMPLOYMENT MATTERS
ALLOCATION AGREEMENT
by and among
CULBRO CORPORATION,
and
CULBRO LAND RESOURCES, INC.
and
GENERAL CIGAR HOLDINGS, INC.
dated as of January __, 1997
TABLE OF CONTENTS
Page No.
BENEFITS AND EMPLOYMENT MATTERS............................................ 1
RECITALS................................................................... 1
ARTICLE I
DEFINITIONS................................................................ 2
Section 1.1 Definitions.............................................. 2
401(k) Plans......................................................... 2
(i) Holdings 401(k) Plan..................................... 2
(ii) Culbro 401(k) Plan....................................... 2
(iii) CLR 401(k) Plan.......................................... 2
Annual Incentive Compensation Plan................................... 2
(i) Culbro Annual Incentive Compensation Plan (General Cigar) 2
(ii) Culbro Annual Incentive Compensation Plan (Corporate)... 2
(iii) Culbro Annual Incentive Corporation Plan
(Imperial Nurseries)................................... 2
Asset Transfer Date.................................................. 2
CLR 401(k) Plan...................................................... 3
CLR Employee......................................................... 3
CLR Exercise Ratio................................................... 3
CLR Individual....................................................... 3
CLR Option........................................................... 3
CLR Stock............................................................ 3
CLR Stock Plan....................................................... 3
COBRA ............................................................... 3
Code ............................................................... 3
Commission........................................................... 3
Conversion Award..................................................... 3
Cross-over ISO....................................................... 3
Culbro 401(k) Plan................................................... 3
Culbro Employee...................................................... 3
Culbro Exercise Ratio................................................ 4
Culbro Individual.................................................... 4
Culbro Option........................................................ 4
Culbro Retirement Plan............................................... 4
Culbro Terminee...................................................... 4
Deferred Compensation Plan........................................... 4
Director............................................................. 4
Distribution Date.................................................... 4
Employee............................................................. 4
(i) Holdings Employee........................................ 4
(ii) CLR Employee............................................. 4
(iii) Culbro Employee.......................................... 4
(iv) Culbro Terminee.......................................... 4
(v) Retained Employee........................................ 5
(vi) Transferred Employee..................................... 5
(vii) Group Employee........................................... 5
Employer............................................................. 5
ERISA ............................................................... 5
Existing Stock Plan.................................................. 5
(i) Culbro 1991 Employees Stock Plan......................... 5
(ii) Culbro 1992 Stock Plan................................... 5
(iii) Culbro 1996 Stock Plan................................... 5
(iv) Culbro 1993 Directors Option Plan........................ 5
(v) Culbro 1996 Directors Option Plan........................ 5
Group Employee....................................................... 5
Holdings 401(k) Plan................................................. 6
Holdings Employee.................................................... 6
Holdings Option...................................................... 6
Holdings Stock Plan.................................................. 6
HMO ............................................................... 6
IRS ............................................................... 6
ISO ............................................................... 6
Xxx Xxxxx Employment Agreement....................................... 6
Medical/Dental Plan.................................................. 6
(i) Holdings Medical/Dental Plans............................ 6
(ii) CLR Medical/Dental Plans................................. 6
(iii) Culbro Medical/Dental Plans.............................. 6
Medical Retirees..................................................... 6
Merger Date.......................................................... 6
Option............................................................... 7
Performance Plan..................................................... 7
Plan ............................................................... 7
Post-Conversion Price................................................ 7
Post-Distribution Transfer........................................... 7
Pre-Distribution Stock Price......................................... 7
Qualified Beneficiary................................................ 7
(i) Holdings Qualified Beneficiary........................... 8
(ii) CLR Qualified Beneficiary................................ 8
(iii) Culbro Qualified Beneficiary............................. 8
Reformed Culbro Option............................................... 8
Retained Employee.................................................... 8
Retained Individual.................................................. 8
Retiree Medical/Dental Benefits...................................... 8
Service Credit....................................................... 8
Stock ............................................................... 8
(i) Holdings Stock........................................... 8
(ii) CLR Stock................................................ 8
(iii) Culbro Stock............................................. 8
Transferred Employee................................................. 8
Transferred Individual............................................... 9
Welfare Plan......................................................... 9
Section 1.2 Other Terms.............................................. 9
Section 1.3 Certain Constructions.................................... 9
Section 1.4 Sections................................................. 9
Section 1.5 Survival................................................. 9
ARTICLE II
EMPLOYEE BENEFITS.......................................................... 9
Section 2.1 General.................................................. 9
(a) Allocation of Responsibilities on the Asset Transfer Date 9
(b) Assumption of Liabilities on Asset Transfer Date......... 10
(c) Service Credits.......................................... 10
Section 2.2 401(k) Plans............................................. 10
(a) Establishment of the CLR 401(k) Plan..................... 10
(b) Culbro 401(k) Plan....................................... 11
(c) Transfer of Account Balances............................. 11
(d) Regulatory Filings....................................... 11
Section 2.3 Culbro Retirement Plan................................... 12
(a) Transferred Employees.................................... 12
(b) Assumption of Plan by Holdings........................... 12
Section 2.4 Deferred Compensation Plan............................... 12
(a) Assumption of Plan by Holdings........................... 12
(b) No Termination of Service................................ 13
Section 2.5 Stock Plans.............................................. 13
(a) CLR Stock Plan........................................... 13
(b) Holdings Stock Plan...................................... 13
(c) Existing Stock Plans..................................... 13
(d) Reformation of Existing Awards........................... 13
(e) Exercise Prices of Reformed Options...................... 14
(f) Merger................................................... 14
(g) Anti-Dilution Measures................................... 14
(h) Effect of Post-Distribution Transfer on Conversion Awards 14
Section 2.6 Annual Incentive Compensation Plans...................... 15
Section 2.7 Culbro Long Term Performance Plan........................ 15
Section 2.8 Xxx Xxxxx Employment Agreement........................... 15
Section 2.9 Holdings Medical/Dental Plans............................ 15
(a) Liability for Claims..................................... 15
(b) Continuation Coverage Administration..................... 16
(c) Continuation Coverage Claims............................. 16
(d) Liability for Medical Retirees........................... 16
Section 2.10 CLR Medical/Dental Plans................................ 16
Section 2.11 Employer Liability under Welfare Plans.................. 17
Section 2.12 Preservation of Right To Amend or Terminate Plans....... 17
Section 2.13 Reimbursement........................................... 17
Section 2.14 Payroll Reporting and Withholding....................... 17
(a) Form W-2 Reporting....................................... 17
(b) Forms W-4 and W-5........................................ 18
(c) Garnishments, Tax Levies, Child Support Orders, and Wage
Assignments.............................................. 18
(d) Authorizations for Payroll Deductions.................... 18
ARTICLE III
LABOR AND EMPLOYMENT MATTERS............................................... 18
Section 3.1 Separate Employers....................................... 19
Section 3.2 Employment Policies and Practices........................ 19
Section 3.3 Matters Concerning Administration........................ 19
(a) Administrative Services In Connection With The CLR Plans. 19
(b) Allocation of Group Insurance Reserves................... 19
Section 3.4 Notice of Claims......................................... 19
Section 3.5 Assumption of Unemployment Tax Rates..................... 19
Section 3.6 Employees on Leave of Absence............................ 19
Section 3.7 No Third Party Beneficiary Rights........................ 20
Section 3.8 Attorney-Client Privilege................................ 20
ARTICLE IV
DEFAULT.................................................................... 20
Section 4.1 Default.................................................. 20
Section 4.2 Force Majeure............................................ 20
ARTICLE V
MISCELLANEOUS.............................................................. 20
Section 5.1 Access to Information; Cooperation....................... 20
Section 5.2 Assignment............................................... 21
Section 5.3 Headings................................................. 21
Section 5.4 Severability of Provisions............................... 21
Section 5.5 Parties Bound............................................ 21
Section 5.6 Notices.................................................. 21
Section 5.7 Further Action........................................... 22
Section 5.8 Waiver................................................... 22
Section 5.9 Governing Law............................................ 22
Section 5.10 Consent to Jurisdiction................................. 22
Section 5.11 Entire Agreement........................................ 22
BENEFITS AND EMPLOYMENT MATTERS
ALLOCATION AGREEMENT
THIS BENEFITS AND EMPLOYMENT MATTERS ALLOCATION
AGREEMENT (this "Agreement") is made this ___ day of _________, 199__ by and
among Culbro Corporation, a New York corporation ("Culbro"), Culbro Land
Resources, Inc., a Delaware corporation and a wholly-owned subsidiary of Culbro
("CLR"), and General Cigar Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of Culbro ("Holdings") (each, singly, a "Party" and
collectively, the "Parties").
RECITALS
WHEREAS, Culbro, directly and through subsidiaries, (i) manufactures
and markets cigars and grows, processes and sells cigar wrapper tobacco (the
"Cigar Business"), (ii) cultivates for sale container and field grown nursery
products principally to nursery centers and mass merchandisers, and owns and
operates wholesale nursery sales and service centers (the "Nursery Business")
and (iii) owns, builds and manages commercial and industrial properties and
develops residential subdivisions on real estate in Connecticut and
Massachusetts (the "Real Estate Business") (which Nursery Business and Real
Estate Business constitute the "CLR Business");
WHEREAS, the Board of Directors of Culbro has determined that it is
in the best interests of Culbro to separate the Cigar Business on the one hand,
and the CLR Business on the other hand, and, in order to effect such separation,
to transfer to CLR the stock of certain Culbro subsidiaries principally engaged
in the CLR Business and certain other assets relating principally to the CLR
Business (as more specifically defined herein, the "Asset Transfers"), and
thereafter to distribute all of the outstanding shares of common stock, par
value $0.01 per share, of CLR to the holders of Culbro common stock (the
"Distribution");
WHEREAS, subsequent to the Asset Transfers and prior to the
Distribution, Holdings intends to consummate an initial public offering of its
shares of common stock, par value $0.01 per share (the "Offering");
WHEREAS, following the Distribution, subject to certain conditions,
Culbro intends to merge with and into Holdings (the "Merger") pursuant to a
certain merger agreement (the "Merger Agreement");
WHEREAS, in connection with the Distribution, Culbro and CLR have
set forth in a certain distribution agreement (the "Distribution Agreement") the
corporate transactions required to effect the Asset Transfers, the Distribution
and the Merger, and the agreements that will govern certain matters following
the Distribution and the Merger;
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WHEREAS, pursuant to the aforesaid Distribution Agreement, Culbro
Holdings, and CLR have agreed to enter into an agreement allocating
responsibilities with respect to employee compensation, benefits, labor and
certain other employment matters pursuant to the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the meanings indicated below:
401(k) Plans: any of the following Plans, as the context indicates,
maintained pursuant to Section 401(a) of the Code:
(i) Holdings 401(k) Plan: the Culbro 401(k) Plan, as renamed amended
and continued following the Distribution Date as described in Section
2.2(b)(i); or
(ii) Culbro 401(k) Plan: The Culbro Companies Incorporated 401(k)
Savings Plan and Trust, as maintained by Culbro immediately prior to the
Distribution Date; or
(iii) CLR 401(k) Plan: the 401(k) Plan and Trust established by CLR
as described in Section 2.2(a) as of the Distribution Date primarily for
the benefit of CLR Employees.
Annual Incentive Compensation Plan: a Plan providing incentive
compensation to eligible Employees based upon achievement of performance
criteria by the Employer, the operating unit of the Employer to which the
Employee is assigned, or otherwise, including the following Plans as in effect
immediately prior to the Asset Transfers:
(i) Culbro Annual Incentive Compensation Plan (General Cigar); and
(ii) Culbro Annual Incentive Compensation Plan (Corporate); and
(iii) Culbro Annual Incentive Corporation Plan (Imperial Nurseries).
Asset Transfer Date: the asset transfer date as set forth in the
Distribution Agreement.
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CLR 401(k) Plan: the CLR 401(k) Plan as defined under the definition
of 401(k) Plan contained herein.
CLR Employee: a CLR Employee as defined under the definition of
Employee contained herein.
CLR Exercise Ratio: the ratio of (a) the Post Conversion Price of
CLR Stock to (b) the sum of the Post Conversion Price of CLR Stock and the Post
Conversion Price of Culbro Stock.
CLR Individual: any individual who (i) is a Transferred Employee, or
(ii) a CLR Employee, or (iii) is a dependent or beneficiary of any individual
described in clause (i) or (ii).
CLR Option: an option to purchase CLR Stock under the CLR Stock Plan
pursuant to a substitution of stock option under Section 2.5(d).
CLR Stock: CLR Stock as defined under the definition of Stock
contained herein.
CLR Stock Plan: the 1997 stock option plan of CLR as described in
Section 2.5(a).
COBRA: Code Section 4980B and ERISA Sections 601 through 608,
establishing employer requirements for continuation of health care benefits for
certain current and former employees or dependents thereof.
Code: the Internal Revenue Code of 1986, as amended, or any
successor legislation.
Commission: the Securities and Exchange Commission.
Conversion Award: an award of an Option to reflect the effect of the
Distribution on Culbro Options held immediately prior to the Distribution in
accordance with Section 2.5.
Cross-over ISO: any CLR ISO held by a Culbro Employee or Holdings
Employee, or any Culbro ISO held by a CLR Employee, respectively, following the
Distribution.
Culbro 401(k) Plan: the Culbro 401(k) Plan as defined under the
definition of 401(k) Plan contained herein.
Culbro Employee: a Culbro Employee as defined under the definition
of Employee contained herein.
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Culbro Exercise Ratio: the ratio of (a) the Post-Conversion Price of
Culbro Stock to (b) the sum of the Post Conversion Price of Culbro Stock and the
Post Conversion Price of CLR Stock.
Culbro Individual: any individual who is (i) a Culbro Employee, (ii)
a Culbro Terminee, or (iii) a dependent or beneficiary of any individual
specified in clauses (i) or (ii).
Culbro Option: an option to purchase Culbro Stock pursuant to the
Existing Stock Plans or the Xxx Xxxxx Employment Agreement.
Culbro Retirement Plan: the Culbro Corporation Employees Retirement
Plan, as amended through January 1, 1994, and as further amended form time to
time thereafter.
Culbro Terminee: a Culbro Terminee as defined under the definition
of Employee contained herein.
Deferred Compensation Plan: The Culbro Deferred Incentive
Compensation Plan, as in existence immediately prior to the Asset Transfers.
Director: a member of the Board of Directors of Holdings, Culbro or
CLR, as the context indicates.
Distribution Date: the date on which the Distribution occurs.
Employee: an individual who is identified as being in any of the
following categories:
(i) Holdings Employee: any individual who is an Employee of
Holdings or any 100% direct or indirect subsidiary of Holdings immediately
prior to the Asset Transfer Date or who becomes an employee of Holdings or
any 100% direct or indirect subsidiary of Holdings on or following the
Asset Transfer Date; or
(ii) CLR Employee: any individual who is an Employee of CLR or
any 100% direct or indirect subsidiary of CLR immediately prior to the
Asset Transfer Date or who becomes an employee of CLR or any 100% direct
or indirect subsidiary of CLR on or following the Asset Transfer Date; or
(iii) Culbro Employee: any individual who is an employee of
Culbro prior to the Asset Transfer Date, but not including individuals who
are employees of (a) CLR or any 100% direct or indirect subsidiary of CLR
prior to the Asset Transfer Date or (b) any business unit of Culbro that
becomes a 100% direct or indirect subsidiary or business unit of CLR
pursuant to the Asset Transfers; or
(iv) Culbro Terminee: any individual formerly employed by
Culbro who terminated such employment prior to the Asset Transfer Date,
including but not
4
limited to any Culbro Employee or Director who retired prior to the Asset
Transfer Date; or
(v) Retained Employee: any individual who immediately prior to
the Asset Transfer Date was a Group Employee, and who on or immediately
following the Asset Transfer Date is an Employee of Culbro or Holdings or
any 100% direct or indirect subsidiary of Holdings; or
(vi) Transferred Employee: any individual who immediately
prior to the Asset Transfer Date was a Group Employee, and who on or
immediately following the Asset Transfer Date is an Employee of CLR or any
100% direct or indirect subsidiary of CLR; or
(vii) Group Employee: any individual who immediately prior to
the Asset Transfer Date is an Holdings Employee, a CLR Employee, or a
Culbro Employee.
Employer: Holdings, CLR or Culbro, as the context indicates.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, or any successor legislation.
Existing Stock Plans: any of the following stock-based compensation
plans which provide for awards of additional compensation to eligible Employees
in the form of stock appreciation rights or nonqualified or incentive options to
purchase Employer Stock, maintained by Culbro prior to the Distribution Date for
eligible Group Employees and eligible Culbro Directors, as the case may be, as
described below:
(i) Culbro 1991 Employees Stock Plan: the Culbro Corporation
1991 Employees Incentive Stock Option Plan, which provides for awards of
non-qualified and incentive Culbro Options to eligible Group Employees.
(ii) Culbro 0000 Xxxxx Xxxx: the Culbro Corporation 1992 Stock
Plan, which provides for awards of non-qualified and incentive Culbro
Options to eligible Group Employees.
(iii) Culbro 0000 Xxxxx Xxxx: the Culbro Corporation 1996
Stock Plan, which provides for awards of non-qualified and incentive
Culbro Options to eligible Group Employees.
(iv) Culbro 1993 Directors Option Plan: the Culbro Corporation
1993 Stock Option Plan for Non-Employee Directors which provides for
awards of non-qualified Culbro Options to Culbro's non-employee Directors.
5
(v) Culbro 1996 Directors Option Plan: the Culbro Corporation
1996 Stock Option Plan for Non-Employee Directors which provides for
awards of non-qualified Culbro Options to Culbro's non-employee Directors.
Group Employee: a Group Employee as defined under the definition of
Employee contained herein.
Holdings 401(k) Plan: the Holdings 401(k) Plan as defined under the
definition of 401(k) Plan contained herein.
Holdings Employee: a Holdings Employee as defined under the
definition of Employee contained herein.
Holdings Option: an option to purchase Holdings Stock pursuant to
the Holdings Stock Plan, or, following the Merger, pursuant to the Existing
Stock Plans or the Xxx Xxxxx Employment Agreement.
Holdings Stock Plan: the 1997 stock plan of Holdings, as described
in Section 2.5(b).
HMO: any health maintenance organization organized under 42 U.S.C.
ss.300e-9, or a state health maintenance organization statute that provides
medical services for Retained Individuals or CLR Individuals under any Plan.
IRS: the Internal Revenue Service.
ISO: an option awarded as an incentive stock option under Section
422 of the Code.
Xxx Xxxxx Employment Agreement: the employment agreement between Xxx
X. Xxxxx and Culbro, dated as of April 8, 1994.
Medical/Dental Plan: a Welfare Plan providing health benefits to
Employees and their dependents as described below:
(i) Holdings Medical/Dental Plans: the Culbro Medical/Dental
Plans as renamed and continued by Holdings after the Merger pursuant to
Section 2.9; or
(ii) CLR Medical/Dental Plans: the Medical/Dental Plans to be
established by CLR in accordance with Section 2.10; or
(iii) Culbro Medical/Dental Plans: any Medical/Dental Plans
maintained prior to the Merger.
6
Medical Retirees: any Culbro Terminee (or dependent or beneficiary
thereof) who was retired or disabled on or before the Asset Transfer Date, and
who was receiving or otherwise entitled to receive Retiree Medical/Dental
Benefits, other than, or in addition to, coverage mandated by COBRA, as a
retiree (or dependent or beneficiary thereof) under any Culbro Medical/Dental
Plan immediately prior to the Asset Transfers.
Merger Date: the date the Merger is consummated.
Option: a nonqualified or incentive option to purchase Stock under
an Existing Stock Plan, the CLR Stock Plan, or the Holdings Stock Plan, as the
context indicates.
Performance Plan: the Culbro Long Term Performance Plan, as in
effect immediately prior to the Asset Transfers.
Plan: any plan, policy, arrangement, contract or agreement providing
compensation benefits for any group of Employees or former Employees or
individual Employee or former Employee, or the dependents or beneficiaries of
any such Employee or former Employee, whether formal or informal or written or
unwritten, and including, without limitation, any means, whether or not legally
required, pursuant to which any benefit is provided by an Employer to any
Employee or former Employee or the beneficiaries of any such Employee or former
Employee, adopted or entered into by a Party prior to, or upon the Distribution.
The term "Plan" as used in this Agreement does not include any contract,
agreement or understanding entered into by Culbro prior to the Asset Transfers,
or any contract, agreement or understanding entered into by Culbro, Holdings or
CLR after the Asset transfers relating to settlement of actual or potential
Employee related litigation claims.
Post-Conversion Price: the average of (i) the per share New York
Stock Exchange closing price of Culbro Stock, or (ii) the mean between the
closing representative bid and asked prices for CLR Stock as reported by NASDAQ
or any successor quotation system, as the context indicates, during the
ten-trading day period immediately following the Distribution Date. If, for any
reason, Culbro Stock is not traded on the New York Stock Exchange on an "ex
dividend" basis with respect to the Distribution on any day during the
ten-trading day period immediately following the Distribution Date, then the
Post-Conversion Price for Culbro Stock on such date shall be equal to the
closing New York Stock Exchange price of Culbro Stock, on such day, less the
mean between the closing representative bid and asked prices for CLR Stock as
reported on NASDAQ or any successor quotation system, on such day.
Post-Distribution Transfer: a transfer of employment where an
employee of one Party leaves the service of such Party to immediately begin
employment with another party occurring on or prior to November 28, 1998.
Pre-Distribution Stock Price: the New York Stock Exchange closing
price per share for Culbro Stock immediately prior to the Distribution Date
(before giving effect to the
7
Distribution), trading regular way, with a due xxxx for the special dividend of
CLR Stock to made in connection with the Distribution.
Qualified Beneficiary: an individual (or dependent thereof) who
either (1) experiences a "qualifying event" (as that term is defined in Code
Section 4980B(f)(3) and ERISA Section 603) while a participant in any
Medical/Dental Plan, or (2) becomes a "qualified beneficiary" (as that term is
defined in Code Section 4980B(g)(1) and ERISA 607(3)) under any Medical/Dental
Plan, and who is included in any one of the following categories:
(i) Holdings Qualified Beneficiary: any Retained Individual
(or dependent thereof) who, prior to the Asset Transfer Date, was a
Qualified Beneficiary under any Culbro Medical/Dental Plan; or
(ii) CLR Qualified Beneficiary: any Transferred Individual (or
dependent thereof) who, prior to the Asset Transfer Date, was a Qualified
Beneficiary under any Culbro Medical/Dental Plan; or
(iii) Culbro Qualified Beneficiary: any Culbro Individual who,
immediately following the Asset Transfer Date, is not a Holdings Qualified
Beneficiary or a CLR Qualified Beneficiary and who, immediately prior to
the Asset Transfer Date, was a Qualified Beneficiary under any Culbro
Medical/Dental Plan.
Reformed Culbro Option: an option to purchase Culbro Stock, issued
pursuant to an Conversion Award.
Retained Employee: a Retained Employee as defined under the
definition of Employee contained herein.
Retained Individual: any individual who (i) is a Retained Employee,
or (ii) is, as of the Asset Transfer Date, a Culbro Terminee whose last
employment with Culbro or subsidiary of Culbro was with a Cigar Business, or
(iii) is a dependent or beneficiary of any individual described in clause (i) or
(ii).
Retiree Medical/Dental Benefits: health, medical and dental benefits
provided to a Culbro Terminee (or a dependent or beneficiary thereof) who is a
retiree under any Culbro Medical/Dental Plan, not including any coverage
mandated by COBRA.
Service Credit: the period taken into account under any Plan for
purposes of determining length of service or plan participation to satisfy
eligibility, vesting, benefit accrual and similar requirements under such Plan.
Stock: the common stock of Culbro, Holdings or CLR, as more
specifically described below:
8
(i) Holdings Stock: the Class A common stock, par value $0.01
per share, of Holdings; or
(ii) CLR Stock: the Class A common stock, par value $0.01 per
share, of CLR; or
(iii) Culbro Stock: the common stock, par value $1.00 per
share, of Culbro prior to the Merger Date.
Transferred Employee: a Transferred Employee as defined under the
definition of Employee contained herein.
Transferred Individual: any individual who (i) is a Transferred
Employee or (ii) is, as of the Asset Transfer Date, a Culbro Terminee (x) whose
last employment with Culbro or a subsidiary of Culbro was with a Transferred
Business or (y) whose employment with Culbro was primarily related to a CLR
Business, or (iii) is a dependent or beneficiary of any individual described in
clause (i) or (ii).
Welfare Plan: any Plan which provides medical, health, disability,
accident, life insurance, death, dental or any other welfare benefit, including,
without limitation, any post-employment benefit as described in Section 3(1) of
ERISA or the regulations thereunder.
Section 1.2 Other Terms. Any capitalized terms used herein but not
defined herein shall have the meaning set forth in the Distribution Agreement.
Section 1.3 Certain Constructions. References to the singular in
this Agreement shall refer to the plural and vice-versa and references to the
masculine shall refer to the feminine and vice-versa.
Section 1.4 Sections. References to a "Section" are, unless
otherwise specified, to one of the Sections of this Agreement.
Section 1.5 Survival. Obligations described in this Agreement shall
remain in full force and effect and shall survive the Asset Transfer Date, the
Distribution Date and the Merger Date.
ARTICLE II
EMPLOYEE BENEFITS
Section 2.1 General.
(a) Allocation of Responsibilities on the Asset Transfer Date.
On the Asset Transfer Date CLR shall retain or assume responsibility as
employer for the
9
CLR Employees, except to the extent retained or assumed by Holdings, as
the case may be, under this Agreement or any other agreement relating to
the Asset Transfers, Distribution, or Merger. On the Asset Transfer Date
Holdings shall retain or assume responsibility as employer for the
Retained Employees, except to the extent retained or assumed by CLR under
this Agreement or any other agreement relating to the Asset Transfers.
Effective on or after the Asset Transfer Date, Culbro shall not retain or
assume responsibility as employer for any Retained Employees or any CLR
Employees except as specifically provided under this Agreement or any
other agreement relating to the Asset Transfers, Distribution, or Merger.
The assumption or retention of responsibility as employer by Holdings or
CLR described in this Section 2.1 shall not, of itself, constitute a
severance or a termination of employment under any Plan of severance
maintained by Culbro nor shall it constitute a change of control of Culbro
for purposes of any Plan.
(b) Assumption of Liabilities on Asset Transfer Date. Except
as specifically provided in this Agreement, or as otherwise agreed by the
Parties:
(i) Except as provided in Section 2.1(b)(iii),
immediately following the Asset Transfers, Holdings shall assume or
retain, as the case may be, all benefit obligations and all related
rights in connection with any Plan (except with respect to CLR
Employees), and CLR shall have no further liability with respect
thereto; and
(ii) Except as provided in Section 2.1(b)(iii),
immediately following the Asset Transfers, CLR shall assume or
retain, as the case may be, all benefit obligations and all related
rights in connection with any Plan with respect to the CLR
Employees, and Holdings shall have no further liability with respect
thereto.
(iii) Following the Asset Transfers and prior to the
Merger, Culbro shall retain all benefits obligations and related
rights in connection with the exercise of Culbro Options or Reformed
Culbro Options.
(c) Service Credits. In connection with the Asset Transfers,
Distribution and Merger, as the case may be, and for purposes of
determining Service Credits under any Plan, the Parties shall credit each
of their respective Employees and Directors with such Employee's or
Director's Service Credit as reflected in the Culbro payroll system
records as of the date of the Asset Transfers, Distribution, or Merger, as
the case may be. Such Service Credit shall continue to be maintained as
described herein for as long as the Employee or Director does not
terminate employment (or in the case of a Director, does not cease
providing services as a Director).
Section 2.2 401(k) Plans.
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(a) Establishment of the CLR 401(k) Plan. Effective as of the
Distribution Date, CLR shall take, or cause to be taken, all action
necessary and appropriate to establish and administer a new 401(k) Savings
Plan and Trust (the "CLR 401(k) Plan"). As described in Section 2.2(c),
the CLR 401(k) Plan shall receive a plan-to-plan transfer of all
participant account balances or accrued benefits under the Culbro 401(k)
Plan which are attributable to Transferred Employees who, immediately
prior to the Distribution Date, were participants in or otherwise entitled
to benefits under the Culbro 401(k) Plan. CLR shall provide benefits under
such CLR 401(k) Plan after the Distribution for all such Transferred
Employees and (and CLR Employees admitted to participation in such Plan
after the Distribution) subject to the terms and provisions of such Plan.
The CLR 401(k) Plan shall be intended to qualify for tax-favored treatment
under Sections 401(a) and 401(k) of the Code and to comply with the
requirements of ERISA.
(b) Culbro 401(k) Plan.
(i) Transferred Employees. Culbro shall take all actions
necessary and appropriate to provide that all amounts credited to
the account of Transferred Employees participating in the Culbro
401(k) Plan shall be fully nonforfeitable, effective as of the
Distribution. Culbro shall be responsible for making all employer
contributions (including any matching contributions) required
pursuant to the Culbro 401(k) Plan with respect to such Transferred
Employees through the Distribution Date.
(ii) Retained Employees and Culbro Terminees. Except as
provided in Section 2.2(a), following the Distribution Date and
prior to the Merger, Culbro shall retain sole responsibility for all
liabilities and obligations under the Culbro 401(k) Plan, and CLR
shall have no liability or obligation with respect thereto. As soon
as practicable after the Merger Date, Holdings shall take, or cause
to be taken, all action necessary and appropriate to assume and
continue the Culbro 401(k) Plan and to amend and rename the Culbro
401(k) Plan as the General Cigar Holdings, Inc. 401(k) Savings Plan
and Trust.
(c) Transfer of Account Balances. As soon as practicable
following the Distribution, Culbro shall cause the trustees of the Culbro
401(k) Plan to effect a transfer to the trustees or other funding agent of
the CLR 401(k) Plan of the account balances and accrued benefits of all
Transferred Employees which shall be established as account balances or
accrued benefits of such individuals under the CLR 401(k) Plan. Each such
transfer shall comply with Section 414(1) of the Code and the requirements
of ERISA and the regulations promulgated thereunder. CLR shall cause the
trustees or other funding agent of the CLR 401(k) Plan to accept the
plan-to-plan transfer from the Holdings 401(k) Plan trustees, and to
credit the accounts of such Transferred Employees under the CLR 401(k)
Plan with amounts transferred on their behalf.
11
(d) Regulatory Filings. CLR and Culbro shall, in connection
with the plan-to-plan transfer described in Section 2.2(c), cooperate in
making any and all appropriate filings required by the Commission or the
IRS, or required under the Code or ERISA or any applicable securities laws
and the regulations thereunder, and take all such action as may be
necessary and appropriate to cause such plan-to-plan transfer to take
place as soon as practicable after the Distribution Date or otherwise when
required by law. Further, CLR shall seek a favorable IRS determination
letter that the CLR 401(k) Plan, as organized, satisfies all qualification
requirements under Section 401(a) of the Code. Notwithstanding the
foregoing, such plan-to-plan transfers shall take place pending issuance
of such favorable determination letter. The Parties shall each make any
necessary amendments on a retroactive basis to the CLR 401(k) Plan or the
Culbro 401(k) Plan, respectively, as required by the IRS to issue the
favorable determination letter described above.
Section 2.3 Culbro Retirement Plan
(a) Transferred Employees. Effective as of the Distribution
Date, the Culbro Board of Directors shall take or cause to be taken all
actions necessary and appropriate to amend the Culbro Retirement Plan to
provide that Transferred Employees will cease to accrue further benefits
under the Culbro Retirement Plan following the Distribution, and to
provide that all benefits accrued by such participants through the date of
the Distribution shall be fully nonforfeitable. Culbro and the Culbro
Retirement Plan shall retain all liabilities and obligations associated
with Transferred Employees accrued prior to the Distribution Date, and CLR
shall not assume any such liabilities or obligations associated with
Transferred Employees. Following the Distribution, Culbro may, at Culbro's
discretion, continue to maintain the Culbro Retirement Plan, as it may be
amended, in accordance with its terms.
(b) Assumption of Plan by Holdings. Effective as of the
Merger, Culbro and Holdings shall take, or cause to be taken, all actions
necessary and appropriate for Holdings to assume and continue sponsorship
and administration of the Culbro Retirement Plan, and Holdings shall
thereupon be solely responsible for all liabilities and obligations
associated with the Culbro Retirement Plan. Upon the consummation of the
Merger, Holdings will assume and may, at Holdings' discretion, continue to
maintain the Retirement Plan, and participants (other than CLR Employees)
shall continue to accrue benefits in the Retirement Plan, as it may be
amended, in accordance with its terms.
Section 2.4 Deferred Compensation Plan.
(a) Assumption of Plan by Holdings. Effective as of the Asset
Transfer Date, Holdings shall assume sole responsibility for all
liabilities and obligations under the Culbro Corporation Deferred
Incentive Compensation Plan, and CLR shall have no liability or obligation
with respect thereto. As soon as practicable
12
after the Asset Transfer Date, Holdings shall take, or cause to be taken,
all action necessary and appropriate to amend and rename the Deferred
Incentive Compensation Plan as the General Cigar Holdings, Inc. Deferred
Incentive Compensation Plan. Holdings shall provide future benefits
thereunder accruing after the Asset Transfer Date for all persons who, on
the Asset Transfer Date, were participants in or otherwise entitled to
benefits under the Deferred Incentive Compensation Plan and for any
persons who are admitted to participate therein on or after the Asset
Transfer Date. All accrued benefits, rights and Service Credit shall
continue under the Deferred Incentive Compensation Plan.
(b) No Termination of Service. To the extent permitted by
applicable law, the Parties shall take any and all actions necessary to
provide that the Asset Transfers, Distribution, or Merger, as the case may
be, shall not constitute a termination of any participant's service for
purposes of the Deferred Compensation Plan. Post Distribution Transfers
shall not constitute a separation of any participant's service for
purposes the Deferred Compensation Plan.
Section 2.5 Stock Plans.
(a) CLR Stock Plan. Effective as of the Distribution Date, CLR
shall take, or cause to be taken, all action necessary and appropriate to
establish and administer a new stock-based compensation plan (the "CLR
Stock Plan"), and to provide Conversion Awards of CLR Stock or CLR Options
for all CLR Employees or Culbro Employees and Directors, in accordance
with Section 2.5(d). All awards under the CLR Stock Plan shall be
denominated in CLR Stock. CLR shall assume all obligations with respect
to, and shall administer, all Conversion Awards denominated in CLR Stock
under the CLR Stock Plan under the terms governing such awards of Culbro
Stock or Culbro Options prior to the conversion, except as adjusted or
amended herein.
(b) Holdings Stock Plan. Prior to the Offering, Holdings shall
adopt a new stock option plan (the "Holdings Stock Plan"), which will
provide for the grant of incentive and nonqualified options to certain
Holdings Employees, and, in addition, pursuant to the such Holdings Stock
Plan, options to purchase shares of Holdings Stock with an aggregate
exercise price of $1,000,000 will be granted to certain persons formerly
employed by Villazon & Company, Inc.
(c) Existing Stock Plans. Effective as of the Distribution
Date, except with respect to options reformed as CLR Options, Culbro shall
retain sole responsibility for all liabilities and obligations under the
Existing Stock Plans, and CLR shall have no liability or obligation with
respect thereto. Culbro shall provide future benefits accruing under the
Existing Stock Plans after the Distribution Date for all Retained
Employees and Culbro Directors who, on the Distribution Date, were
participants in or otherwise entitled to benefits under the Existing Stock
Plans and for Culbro Employees and Culbro Directors who are admitted to
participate therein on or after the Distribution Date.
13
(d) Reformation of Existing Awards
(i) On the Distribution Date, each nonqualified Culbro
Option shall be reformed as one Reformed Culbro Option and one CLR
Option each, except as described below, with terms identical to
those of the Culbro Option, except with respect to the exercise
price which shall be adjusted as provided in Section 2.5(e).
(ii) On the Distribution Date, each Culbro Option
awarded as an ISO shall be reformed as one Reformed Culbro ISO and
one CLR ISO each, except as described below with terms identical to
the Culbro ISO, except with respect to the exercise price which
shall be adjusted as provided in Section 2.5(e); provided, however,
that any Cross-over ISO not exercised within three months following
the Distribution Date shall thereupon automatically convert into a
nonqualified Option.
(e) Exercise Prices of Reformed Options. The exercise price of
each Reformed Culbro Option shall be equal to the product of the exercise
price of the applicable Culbro Option and the Culbro Exercise Ratio. The
exercise price of each such CLR Option shall be equal to the product of
the exercise price of the applicable Culbro Option and the CLR Exercise
Ratio.
(f) Merger. Adjustments made to any Stock Plan pursuant to the
Merger shall be as set forth in the Merger Agreement.
[(g) Anti-Dilution Measures. With respect to any Culbro
Options exercised after the Offering and prior to the consummation of the
Merger, Culbro shall pay to Holdings any amount received upon the exercise
of a Culbro Option, which relates to the stock of Holdings, and in
exchange therefore, Holdings shall provide to Culbro a number of shares of
Class A Common Stock of Holdings equal to the number of shares of Culbro
Stock issued upon the exercise of such Culbro Option, multiplied by a
fraction, the numerator of which is equal to the number of shares of
Common Stock of Holdings (whether Class A or Class B) held by Culbro at
the time of the Offering, plus the number of shares of Common Stock that
would have been issuable upon exercise of all Culbro Options had such
exercise occurred subsequent to the Merger, and the denominator of which
is equal to the total number of shares of Culbro Stock outstanding prior
to the exercise of such Culbro Option, plus the total number of shares of
Culbro Stock that were subject to Culbro Options immediately prior to the
Offering.]
(h) Effect of Post-Distribution Transfer on Conversion Awards.
Conversion Awards shall be administered with respect to any provisions
relating to continuing employment requirements to give Service Credit for
service with the party employing the grantee as of the Distribution Date.
Solely with respect to such Conversion Awards (and not with respect to new
awards made after the Distribution Date), a Post-Distribution Transfer
shall not be deemed a termination of employment
14
for purposes of any provision requiring continued employment; the business
operation or business unit from which such employee terminates employment
shall promptly notify the administrator of the Option Plan of each party
of the occurrence of any termination subject to the provisions of this
Section 2.4(h). Whichever party is the new employer shall inform the
former employer of any termination of employment of such transferred
employee. Any termination of employment other than as described in this
Section 2.4(h) shall be treated by applying the applicable provisions of
the CLR Stock Plan or the Existing Stock Plan relating to terminations of
employment without the modifications described in this Section 2.4(h).
Section 2.6 Annual Incentive Compensation Plans. Effective as of the
Asset Transfer Date, the Parties shall take all actions necessary and
appropriate to provide (i) that Holdings shall assume and be solely responsible
for liabilities under the Culbro Annual Incentive Compensation Plan (Corporate),
and the Culbro Annual Incentive Compensation Plan (General Cigar), and (ii) that
CLR shall assume or retain sole responsibility for liabilities under the Culbro
Annual Incentive Compensation Plan (Imperial Nurseries), except with respect to
individuals specified on Exhibit A-1 hereto.
Section 2.7 Culbro Long Term Performance Plan.
(a) The parties shall take any and all actions necessary to
provide that, effective as of the Asset Transfer Date, Holdings shall
assume the Performance Plan and shall continue, in its own discretion, the
Performance Plan with respect to participants employed by Holdings or any
direct subsidiary of Holdings prior to the Asset Transfers. Holdings shall
assume all liabilities and obligations under the Performance Plan that
were in existence as of the Asset Transfer Date with respect to Culbro
Employees, Culbro Terminees, Holdings Employees or Holdings Terminees.
(b) CLR Employees shall be eligible to receive the portion of
their award, if any, earned through the Asset Transfer Date. Determination
and payment of any award under the Performance Plan shall be made by the
applicable Parties as soon as reasonably practicable after the Asset
Transfer Date, and payment of any award shall be made by Holdings, except
with respect to individuals specified on Exhibit A-2 hereto.
Section 2.8 Xxx Xxxxx Employment Agreement. Culbro and Holdings
shall take, or cause to be taken, all actions necessary and appropriate to
provide that, effective as of the Asset Transfer Date, Holdings shall assume
Culbro's obligations under the Xxx Xxxxx Employment Agreement. Each Culbro
Option granted pursuant to the Xxx Xxxxx Employment Agreement shall be reformed
as one CLR Option and one Holdings Option each, in accordance with Section 2.5
of this Agreement.
Section 2.9 Holdings Medical/Dental Plans.
15
(a) Liability for Claims. Except with respect to CLR Employees
as provided in Section 2.10, prior to the Asset Transfers Culbro shall
retain and shall be responsible for, and following the Asset Transfers
Holdings shall assume and be responsible for, or cause the applicable
insurance carriers or HMOs to be responsible for, all liabilities and
obligations related to claims asserted or incurred or premiums owed or due
under any Culbro Medical/Dental Plan.
(b) Continuation Coverage Administration. As of the Asset
Transfer Date, Holdings shall assume or retain and shall be solely
responsible for, or cause its insurance carriers or HMOs to be responsible
for, providing and administering the continuation coverage required by
COBRA as it relates to any Culbro Qualified Beneficiary or Holdings
Qualified Beneficiary, and CLR shall have no liability or obligation with
respect thereto.
(c) Continuation Coverage Claims. As of the Asset Transfer
Date, Holdings shall assume or retain and shall be responsible for, or
cause its insurance carriers or HMOs to be responsible for, all
liabilities and obligations in connection with claims asserted or incurred
or premiums owed through the Asset Transfer Date under any Culbro
Medical/Dental Plan in respect of any Culbro Qualified Beneficiary and
claims asserted or incurred or premiums owed after the Asset Transfer Date
under any Holdings Medical/Dental Plan in respect of any Culbro Qualified
Beneficiary or Holdings Qualified Beneficiary and CLR shall have no
liability or obligation with respect thereto. To the extent required by
COBRA, each Culbro Qualified Beneficiary and each Holdings Qualified
Beneficiary shall, to the extent applicable, for all purposes under any
new Holdings Medical/Dental Plan (i) have coverage which is substantially
comparable to that provided immediately prior to the Distribution Date,
(ii) have no preexisting condition limitation imposed other than that
which is or was already imposed under the applicable existing Plan, and
(iii) be credited with or otherwise have taken into account, to the extent
applicable, the expenses incurred towards deductibles, out-of-pocket
limits, maximum benefit payments, and any benefit usage towards plan
limits credited to such individual as of the Asset Transfer Date under the
terms of the applicable existing Plan as if such expenses and usage had
originally been credited to such individual under a Holdings
Medical/Dental Plan.
(d) Liability for Medical Retirees. As of the Asset Transfer
Date, Holdings shall assume or retain, as the case may be, and shall be
solely responsible for, or cause its insurance carriers or HMOs to be
responsible for, all liabilities and obligations whatsoever in connection
with claims asserted or incurred or premiums owed through or after the
Asset Transfer Date under the retiree coverage provisions of any Culbro
Medical/Dental Plan (or successor thereto) or any Holdings Medical/Dental
Plan in respect of any Medical Retiree, and CLR shall have no liability or
obligation with respect thereto.
Section 2.10 CLR Medical/Dental Plans. Prior to the Asset Transfers
Culbro shall retain and shall be responsible for, and following the Asset
Transfers, CLR shall
16
assume and be responsible for, or cause the applicable insurance carriers or
HMOs to be responsible for, all liabilities and obligations related to claims
asserted or incurred or premiums owed or due by any CLR Employee under any
Culbro Medical/Dental Plan, and as of the Asset Transfer Date, CLR shall adopt
Medical/Dental Plans which provide CLR Employees with substantially identical
benefits as are available under the Culbro Medical/Dental Plans immediately
prior to the Asset Transfers; provided, however, that following the Asset
Transfer Date, CLR may, at its discretion, amend, modify or terminate any CLR
Medical/Dental Plan. It is understood that any CLR Medical/Dental Plans may
provide for joint coverage under any Culbro Medical/Dental Plan or insurance
policy in effect as of the Asset Transfer Date, subject to a fee-sharing
arrangement between the Parties. For purposes of any Medical/Dental Plan, the
establishment of any CLR Medical/Dental Plan shall not, of itself, constitute a
severance or a termination of employment for Transferred Employees.
Section 2.11 Employer Liability under Welfare Plans. Except as
otherwise expressly provided herein, Culbro and/or Holdings shall retain all
liabilities accrued though the Asset Transfer Date under all Welfare Plans; CLR
shall be responsible only for liabilities accrued by CLR Employees under such
Welfare Plans following the Asset Transfer Date. Effective as of the Merger,
Holdings and Culbro shall take, or cause to be taken, such actions as are
necessary and appropriate to provide for Holdings to assume and or continue any
Welfare Plans maintained by Culbro as of the Merger Date.
Section 2.12 Preservation of Right To Amend or Terminate Plans.
Except as otherwise expressly provided in this Article II, no provisions of this
Agreement, including, without limitation, the agreement of Culbro, Holdings or
CLR to make a contribution or payment to or under any Plan herein referred to
for any period, shall be construed as a limitation on the right of Culbro
Holdings or CLR to amend such Plan or terminate its participation therein which
Holdings or CLR would otherwise have under the terms of such Plan or otherwise,
and no provision of this Agreement shall be construed to create a right in any
employee or former employee, or dependent or beneficiary of such employee or
former employee under a Plan which such person would not otherwise have under
the terms of the Plan itself; provided, however, that neither Party shall amend
any Plan to the extent that such amendment would have the effect of increasing
the liabilities of the other Party under any Plan of the other Party, without
such other Party's consent.
Section 2.13 Reimbursement. Culbro and CLR acknowledge that
Holdings, on the one hand, and CLR, on the other hand, may incur costs and
expenses, including, but not limited to, contributions to Plans and the payment
of insurance premiums arising from or related to any of the Plans which are, as
set forth in this Agreement, the responsibility of the other Party hereto.
Accordingly, Culbro and/or Holdings and CLR shall reimburse each other, as soon
as practicable, but in any event within thirty (30) days of receipt from the
other Party of appropriate verification, for all such costs and expenses.
Section 2.14 Payroll Reporting and Withholding.
17
(a) Form W-2 Reporting. CLR and Culbro and/or Holdings hereby
adopt the "alternative procedure" for preparing and filing IRS Forms W-2
(Wage and Tax Statements), as described in Section 5 of Revenue Procedure
84-77, 1984-2 IRS Cumulative Bulletin 753 ("Rev. Proc. 84-77"). Under this
procedure CLR as the successor employer shall provide all required Forms
W-2 to all Transferred Employees reflecting all wages paid and taxes
withheld by both Culbro as the predecessor and CLR as the successor
employer for the entire year during which the Distribution takes place.
Holdings shall provide all required Forms W-2 to all Retained Employees
reflecting all wages and taxes paid and withheld by Culbro before the
Distribution Date and by Holdings on and after the Distribution Date.
In connection with the aforesaid agreement under Rev. Proc. 84-77,
each business unit or business operation of Culbro shall be assigned to
either Holdings or CLR, depending upon whether it is a Retained Business
or a Transferred Business, and each Retained Employee or Transferred
Employee associated with such business unit or business operation shall be
assigned for payroll reporting purposes to Holdings or CLR, as the case
may be. Holdings and CLR shall be responsible for filing IRS Forms 941 for
their respective Employees.
(b) Forms W-4 and W-5. CLR and Holdings agree to adopt the
alternative procedure of Rev. Proc. 84-77 for purposes of filing IRS Forms
W-4 (Employee's Withholding Allowance Certificate) and W-5 (Earned Income
Credit Advance Payment Certificate). Under this procedure Holdings shall
provide to CLR as the successor employer all IRS Forms W-4 and W-5 on file
with respect to each Transferred Employee, and CLR will honor these forms
until such time, if any, that such Transferred Employee submits a revised
form.
(c) Garnishments, Tax Levies, Child Support Orders, and Wage
Assignments. With respect to Employees with garnishments, tax levies,
child support orders, and wage assignments in effect with Culbro on the
Asset Transfer Date, CLR as the successor employer with respect to each
Transferred Employee shall honor such payroll deduction authorizations and
will continue to make payroll deductions and payments to the authorized
payee, as specified by the court or governmental order which was filed
with Culbro.
(d) Authorizations for Payroll Deductions. Unless otherwise
prohibited by this or another agreement entered into in connection with
the Distribution, or by a Plan document, with respect to Transferred
Employees with authorizations for payroll deductions in effect with Culbro
on the Asset Transfer Date, CLR as the successor employer will honor such
payroll deduction authorizations relating to each Transferred Employee,
and shall not require that such Transferred Employee submit a new
authorization to the extent that the type of deduction by CLR does not
differ from that made by Culbro.
ARTICLE III
18
LABOR AND EMPLOYMENT MATTERS
Notwithstanding any other provision of this Agreement or any other
Agreement between CLR and Culbro to the contrary, CLR and Culbro understand and
agree that:
Section 3.1 Separate Employers. On and after the Distribution Date
and the separation of Employees into their respective companies, CLR and Culbro
will be separate and independent employers.
Section 3.2 Employment Policies and Practices. Subject to the
provisions of ERISA and any provision of this Agreement governing Service
Credits or Post-Distribution Transfers, and except as limited by applicable law
or agreement, CLR and Culbro may adopt, continue, modify or terminate such
employment policies, compensation practices, retirement plans, welfare benefit
plans, and other employee benefit plans of any kind or description, as each may
determine, in its sole discretion, are necessary or appropriate.
Section 3.3 Matters Concerning Administration.
(a) Administrative Services In Connection With The CLR Plans.
It is agreed that Culbro (and after the Merger, Holdings) will provide
administrative services to the CLR 401(k) Plan, the CLR Stock Plan, any
CLR Medical/Dental Plan, or any other Plan of CLR, from the Distribution
Date through November 29, 1997 at a reasonable fee to be agreed upon by
Culbro and CLR, which fee shall comply with ERISA and other applicable
law. Such services will be substantially similar to the services provided
by employees of Culbro under existing Culbro Plans. These administrative
services may be extended beyond November 29, 1997, if agreed to by Culbro
and CLR.
(b) Allocation of Group Insurance Reserves. The Parties hereby
agree to divide and allocate any surplus balances and any reserves
relating to any group insurance Plan maintained by Culbro prior to the
Distribution, in accordance with a formula and procedures to be adopted by
the Parties prior to the Distribution Date.
Section 3.4 Notice of Claims. Without limitation to the scope and
application to each Party in the performance of its duties under Section 3.3,
each Party will notify in writing and consult with the other Party prior to
making any settlement of an employee claim, for the purpose of avoiding any
prejudice to such other Party arising from the settlement.
Section 3.5 Assumption of Unemployment Tax Rates. Changes in state
unemployment tax experience from that of Culbro as of the Distribution Date
shall be handled as follows. In the event an option exists to allocate state
unemployment tax experience of Culbro, the Culbro experience shall be
transferred to CLR if this results in the lowest aggregate unemployment tax
costs for both Culbro and CLR combined, and the
19
Culbro experience shall be retained by Holdings if this results in the lowest
aggregate unemployment tax costs for Culbro and CLR combined.
Section 3.6 Employees on Leave of Absence. After the Distribution
Date, CLR shall assume responsibility, if any, as employer for all Employees
returning from an approved leave of absence who prior to the Distribution Date
were employed in a CLR Business.
Section 3.7 No Third Party Beneficiary Rights.
(a) Neither this Agreement nor any other intercompany
agreement among CLR, Culbro, and Holdings is intended to nor does it
create any third party contractual or other common law rights. No person
(including any Employee, any beneficiary or dependent thereof) shall be
deemed a third-party beneficiary of the agreements among CLR, Culbro, and
Holdings.
(b) Nothing contained in this Agreement shall confer upon any
Employee any right with respect to continuance of employment by any Party,
nor shall anything herein interfere with the right of any Party to
terminate the employment of any Employee at any time, with or without
cause, or restrict any Party in the exercise of its independent business
judgment in modifying any of the terms and conditions of the employment of
an Employee, except as provided by applicable law.
Section 3.8 Attorney-Client Privilege. Any provisions herein
requiring the Parties to this Agreement to cooperate shall not be deemed to be a
waiver of the attorney/ client privilege for any Party nor shall it require any
Party to waive its attorney/client privilege.
ARTICLE IV
DEFAULT
Section 4.1 Default. If any Party or Parties materially defaults
hereunder, the non-defaulting Party or Parties shall be entitled to all remedies
provided by law or equity (including reasonable attorneys' fees and costs of
suit incurred).
Section 4.2 Force Majeure. The Parties shall incur no liability to
each other due to a default under the terms and conditions of this Agreement
resulting from fire, flood, war, strike, lock-out, work stoppage or slow-down,
labor disturbances, power failure, major equipment breakdowns, construction
delays, accident, riots, acts of God, acts of United States' enemies, laws,
orders or at the insistence or result of any governmental authority or any other
delay beyond each other's reasonable control.
ARTICLE V
20
MISCELLANEOUS
Section 5.1 Access to Information; Cooperation. The Parties and
their authorized agents shall be given reasonable access to and may take copies
of all information relating to the subjects of this Agreement (to the extent
permitted by federal and state confidentiality laws) in the custody of any other
Party, including any agent, contractor, subcontractor, agent or any other person
or entity under the contract of such Party. The Parties shall provide one
another with such information within the scope of this Agreement as is
reasonably necessary to administer each Party's Plans. The Parties shall
cooperate with each other to minimize the disruption caused by any such access
and providing of information.
Section 5.2 Assignment. No Party shall, without the prior written
consent of the other, have the right to assign any rights or delegate any
obligations under this Agreement.
Section 5.3 Headings. The headings used in this Agreement are
inserted only for the purpose of convenience and reference, and in no way define
or limit the scope or intent of any provision or part hereof.
Section 5.4 Severability of Provisions. No Party to this Agreement
intends to violate statutory or common law by executing this Agreement. If any
section, sentence, paragraph, clause or combination of provisions in this
Agreement is in violation of any law, such sections, sentences, paragraphs,
clauses or combinations shall be inoperative and the remainder of this Agreement
shall remain in full force and effect and shall be binding upon the Parties.
Section 5.5 Parties Bound. This Agreement shall inure to the benefit
of and be binding upon the Parties hereto and their respective successors and
permitted assigns. Nothing herein, expressed or implied, shall be construed to
give any other person any legal or equitable rights hereunder.
Section 5.6 Notices. All notices, consents, approvals and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given when delivered personally or by overnight courier
or three days after being mailed by registered or certified mail (postage
prepaid, return receipt requested) to the named representatives of the Parties
at the following addresses (or at such other address for a Party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):
(a) if to Culbro:
Culbro Corporation
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: ____________________
21
(b) if to CLR:
Culbro Land Resources, Inc.
________________________________
Windsor, CT ______-______
Attention: _____________________
The Parties agree that, upon the request of another Party, the requested Party
will give copies of all of its notices, consents, approvals and other
communications hereunder to any lender to the requesting Party or other person
specified by such requesting Party.
Section 5.7 Further Action. The Parties shall cooperate in good
faith and take such steps and execute such papers as may be reasonably requested
by another Party to implement the terms and provisions of this Agreement.
Section 5.8 Waiver. The Parties agree that the waiver of any default
under any term or condition of this Agreement shall not constitute a waiver of
any subsequent default or nullify the effectiveness of that term or condition.
Section 5.9 Governing Law. All controversies and disputes arising
out of or under this Agreement shall be determined pursuant to the laws of the
State of New York, regardless of the laws that might be applied under applicable
principles of conflicts of laws.
Section 5.10 Consent to Jurisdiction. The Parties irrevocably submit
to the exclusive jurisdiction of (a) the Courts of the State of New York, or (b)
any federal district court where there is federal jurisdiction for the purpose
of any suit, action or other Court proceeding arising out of this Agreement.
Section 5.11 Entire Agreement. This Agreement and the Distribution
Agreement constitute the entire understanding between the Parties hereto, and
supersede all prior written or oral communications, relating to the subject
matter covered by said agreements. To the extent that the terms of this
Agreement and similar terms of the Distribution Agreement are in conflict, the
interpretation given to the conflicting terms of the Distribution Agreement
shall govern the interpretation and performance of this Agreement. No amendment,
modification, extension or failure to enforce any condition of this Agreement by
any Party shall be deemed a waiver of any of its rights herein. This Agreement
shall not be amended except by a writing executed by the Parties.
[SIGNATURE PAGE FOLLOWS]
22
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly as of the date first above written.
CULBRO CORPORATION, a New York corporation
By:________________________________________
Name:
Title:
CULBRO LAND RESOURCES, INC., a
Delaware corporation
By:________________________________________
Name:
Title:
GENERAL CIGAR HOLDINGS, INC., a Delaware
corporation
By:________________________________________
Name:
Title:
S-1
