SEPARATION
AGREEMENT AND GENERAL RELEASE
This Separation Agreement
and General Release (“Agreement”) is made and entered into this 31st day of
March 2004, by and between X.X. Xxxxxxxx, Inc. (“Grainger” as used in this
document means X.X. Xxxxxxxx, Inc. and all subsidiaries and affiliates, as well
as any present or former officer, director, employee, agent or benefit plan of
Grainger or any subsidiary or affiliate) and Xxxx X. Xxxxxxx, Xx. (the
“Officer”). The Officer, together with his Spouse, Xxxxxxxxx Xxxxxxx, (“Spouse”)
understand and voluntarily enter into this Agreement with Grainger and in
consideration of the compensation and benefit continuation described herein,
agree as follows:
| 1. |
Resignation as Officer; Separation Date. The Officer hereby
acknowledges that he has resigned effective March 1, 2004 as both an
Executive Officer and Officer of Grainger. Officer’s active employment
with Grainger shall cease effective April 30, 2004. (the “Resignation
Date”) |
| 2. |
Separation Payments; Retirement. Following the Resignation
Date, Grainger shall pay the Officer an amount representing Eighteen (18)
months of the Officer’s current base pay. Such amount shall be paid in
monthly installments (“Separation Payments”), less required deductions,
from the Resignation Date through October 31, 2005 (the “Retirement
Date”), at which time the Officer will be considered a retiree of the
Company. No Separation Payments shall be made to the Officer until at
least the eighth (8th) day following the day on which this Agreement is
fully executed, and provided that the Agreement is not revoked by the
Officer pursuant to Paragraph 22 prior to that date.
|
| |
(a)
|
Health, Dental and Life. Grainger will continue to provide,
through deductions from the Officer’s Separation Payments at the same rate
paid by employees, group health and dental benefits and life insurance as
currently maintained for the Officer, or as subsequently modified by
Grainger, through the Retirement Date. Dental benefits and group life
insurance will terminate earlier, however, on the date that the Officer
becomes eligible for benefit coverage through a subsequent employer. After
the Officer’s benefit coverage ceases on October 31, 2005, the Officer may
elect to continue group health and dental benefits under COBRA or health
benefits under Grainger’s retiree health program at the rate applicable to
a retiree with 25 years of service, who has attained age 55.
|
| |
(b)
|
Profit Sharing. For the 2004 and 2005 plan year(s), the
Officer will be eligible to share in contributions under the X. X.
Xxxxxxxx, Inc. Employees Profit Sharing Plan (“PST”) and the X. X.
Xxxxxxxx, Inc. Supplemental Profit Sharing Plan (“SPSP”). The Separation
Payments received in the relevant plan year(s) will be included for
purposes of determining the amount of the Officer’s contributions under
the PST (to the extent permitted by applicable law) and SPSP. After
October 31, 2005, the Officer will be eligible for distribution of his
vested funds in accordance with the terms of PST and SPSP applicable to
participants who are eligible to retire. |
| |
(c)
|
Separation Benefit. As soon as practicable after the
Retirement Date, all amounts attributable to Grainger’s former 1984 Frozen
Separation Severance Benefit Program will be paid to the Officer in a lump
sum, less required taxes and applicable withholding.
|
| |
(d)
|
Unemployment Benefits. As a Grainger retiree, the Officer
agrees that he will not apply for unemployment benefits while he continues
to receive Separation Payments through the Officer’s Retirement Date or at
any time in the future that would otherwise be chargeable to Grainger’s
unemployment insurance account. |
| |
(e)
|
Vacation. The Officer understands that he will not be
eligible for nor accrue any additional vacation eligibility after his
Resignation Date. Payment for any earned but unused vacation will be made
in the form of a lump sum, less required deductions, payable to the
Officer as soon as practicable following the Officer’s Resignation Date.
|
| |
(f)
|
Management Incentive Program (MIP). As additional separation
payments, the Officer will participate in the 2004 and 2005 MIP program.
Officer’s payments shall be based upon the Officer’s current salary and
target level, adjusted for company performance and shall include a
calculation taking into account the “30% personal objective” component.
Calculation of this component shall be based upon the average earned by
employees in Leadership Bands A-D. Officer’s 2005 MIP payment shall be
pro-rated at a rate of 10/12th. Each year’s award will be paid during the
first quarter of the subsequent year. The Officer will not be eligible for
any award with respect to years after 2005.
|
| |
(g)
|
Executive Deferred Compensation Plan. Subsequent to the
Retirement Date, the Officer shall be eligible to receive benefit payments
that the Officer had previously elected to defer under the Executive
Deferred Compensation Plan, in accordance with the terms of that Plan.
|
| |
(h)
|
Executive Death Benefit Plan. The Officer will continue as a
participant under the X. X. Xxxxxxxx, Inc. Executive Death Benefit Plan
(the “Death Benefit Plan”) for 18 months after the Resignation Date and
will thereafter be considered a retiree of Grainger for purposes of post
employment benefits under the Death Benefit Plan. The benefit payment by
Grainger to the Officer’s designated beneficiary in the event of the
Officer’s death shall be determined and paid in accordance with the
provisions of the Death Benefit Plan at the date of the Officer’s death,
except that the Officer’s monthly salary and target MIP percentage as of
the Resignation Date shall be used in any necessary calculations.
|
| |
(i)
|
Automobile Allowance. Officer will be provided with an
automobile allowance in the amount of $20,000.00 per year for the years
2004 (already received) and 2005. |
| |
(j)
|
All
other benefits and the Officer’s eligibility to participate in any other
Grainger employee programs will cease as of the Resignation Date, except
as provided or referenced in this Agreement or after the Retirement Date
under programs made available to Grainger retirees.
|
| 4. |
Stock
Options and/or Restricted Stock. The Officer will be eligible to
exercise all vested stock options pursuant to the terms of the X. X.
Xxxxxxxx, Inc. 1990 Long Term Stock |
2
| |
Incentive Plan and the X.X. Xxxxxxxx, Inc. 2001 Long Term Stock
Incentive Plan and existing stock option agreements. Options will continue
to vest through the Retirement Date, and any remaining unvested options
will fully vest as of the Retirement Date. Thereafter, all options must be
exercised on or before the expiration date of each option or within six
(6) years of the Officer’s Retirement Date, whichever should occur first.
The Officer further understands and agrees that the non-competition
provisions of restricted stock and/or stock option agreements to which the
Officer is a party, which provisions are incorporated herein by reference,
including without limitation the Non-Competition Agreement dated 11/8/96,
the X.X. Xxxxxxxx, Inc. Stock Option Award Agreement dated April 30, 2003,
and the X.X. Xxxxxxxx, Inc. Restricted Stock Agreement dated November
8,1996 (collectively, the “non-competition provisions”), will remain in
full force and effect, and are in addition to and not superceded by any
other obligation set forth in this Agreement. The Officer acknowledges and
agrees that, for purposes of such agreements, the Officer’s employment
with Grainger shall be considered terminated on the Termination Date
hereunder, and the term “Date of Termination” as used in the
Non-Competition Agreement dated November 8, 1996, shall mean the
Termination Date hereunder. The Officer understands that he will not be
eligible for any further grants of stock options after the Resignation
Date. |
| |
Grainger
management shall recommend to the Compensation Committee of the Board
(CCOB) at a CCOB meeting that it approves amendment of the Officer’s
Restricted Stock Agreements dated November 8, 1996 in the amount of 20,000
shares. Such amendment shall provide that, subject to the Officer’s
compliance with all terms and conditions of the non-competition provisions
and this Agreement, as of October 31, 2005 all of the Officer’s existing
shares of restricted stock of the Company granted under such agreements,
which stock is currently in the possession of Grainger, shall not be
forfeited but shall be delivered to the Officer free of all restrictions,
less any shares retained for the purpose of the payment of withholding or
other taxes to the extent permitted by law.
|
| |
As
previously elected by you, Grainger shall also provide Officer with 5,000
Restricted Stock Units, that are otherwise vested, on Officer’s Retirement
Date, free of all restrictions, less any shares retained for the purpose
of the payment of withholding or other taxes to the extent permitted by
law. |
| 5. |
Additional Services. At the Officer’s request, Grainger will
continue to provide the Officer all necessary and appropriate professional
services for income tax return preparation through the 2006 tax year.
|
| 6. |
General Release and Waiver of Claims. In exchange and in
consideration for the promises, obligations, and agreements undertaken by
Grainger herein, which the Officer agrees and acknowledges are adequate
and sufficient consideration, the Officer, together with his Spouse and on
behalf of himself, his agents, representatives, attorneys, assigns, heirs,
executors, administrators, and other personal representatives, releases
and forever discharges Grainger, its related entities, parent company, and
subsidiaries, and all of their officers, employees, directors, agents,
attorneys, personal representatives, predecessors, successors, and assigns
(hereinafter collectively referred to as the “Releasees”) from any and all
claims of any kind which he has, or might have, as of the date of this
Agreement; or which are based on any facts which exist or existed on or
before the date of this Agreement. The claims the Officer is
|
3
| |
releasing include, but are not limited to, all claims relating in
any way to his employment at Grainger or his/her separation from that
employment; and all claims under Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, 42 U.S.C. § 1981, the Equal Pay
Act, the Employee Retirement Income Security Act, the Americans with
Disabilities Act, the Federal Rehabilitation Act, the Age Discrimination
in Employment Act, the Older Worker Benefit Protection Act, the Illinois
Human Rights Act, the Illinois Wage Payment and Collection Act, or any
other federal, state or local law relating to employment, discrimination,
retaliation, or wages, or under the common law of any state (including,
without limitation, claims relating to contracts, wrongful discharge,
retaliatory discharge, defamation, intentional or negligent infliction of
emotional distress, and wrongful termination of benefits). The Officer
also releases and forever discharges Grainger and all other Releasees from
any and all other demands, claims, causes of action, obligations,
agreements, promises, representations, damages, suits, and liabilities
whatsoever, both known and unknown, in law or in equity, which he has or
might have as of the date of this Agreement. The Officer understands that
this paragraph of this Agreement contains a complete and general release
of any claim that he now has against Grainger, or could ever have against
Grainger, based on any fact, event, or omission that has occurred up to
the time at which he signs the Agreement. |
| |
The
Officer does not intend to nor is he waiving any rights or claims that may
arise after the date that he signs this Agreement, nor any right on the
Officer’s part to challenge the knowing and voluntary nature of this
release with respect to claims under ADEA. Notwithstanding the foregoing,
the Officer does not waive any rights he may have to benefits available
after termination under any company-sponsored employee benefit plan, or
any rights he may have to insurance protection and/or indemnification for
actions taken by the Officer while an employee, officer and/or director of
Grainger. The Officer acknowledges that this is an individually negotiated
Agreement and he agrees that his termination of employment with Grainger
is not pursuant to an employment termination program as that term is used
in the ADEA. |
| |
The
Officer understands that this waiver and release is an essential and
material term of this Agreement and that, without such provision, no
agreement would have been reached by the parties.
|
| 7. |
Covenant Not to Xxx. The Officer, together with his Spouse,
agree not to pursue or permit to be filed or pursued against Grainger, any
claim or action before any federal, state or local administrative,
legislative or judicial body based on any claim or liability described in
the foregoing section, or otherwise related to the Officer’s employment
with Grainger, and understand that the purpose of this waiver and release
is to dispose of, with finality, any claims that the Officer may have
against Grainger so that there will be no disputes or controversies
concerning any matters following the Resignation Date. Neither the Officer
nor his Spouse has any such claim or lawsuit outstanding at this time, nor
does the Officer or his Spouse know of any such potential claim or lawsuit
that may be asserted by the Officer, his Spouse or any other person in
connection with the Officer’s employment with Grainger. The Officer
understands that the terms of this Section do not apply to a challenge to
the knowing and voluntary nature of this release with respect to claims
under ADEA. |
4
| 8. |
Non-Disparagement. The Officer, together with his Spouse,
agree to take no action in derogation or disparagement of Grainger, its
business, or its strategic interests. The Officer, together with his
Spouse, further agree not to discuss or otherwise comment on Grainger, its
business, or its strategic interests, in public, for publication on
electronic media (including but not limited to chat rooms, message boards,
or the like), in similar public forums, or otherwise, other than
communication of publicly available information. Grainger agrees that it
will make no public statements nor sanction any action in derogation or
disparagement of the Officer or his Spouse.
|
| 9. |
Non-Interference with Business Relationships. The Officer
agrees not to interfere with the employment of any Grainger employee or
otherwise with the business relationships of Grainger, and to the extent
required to enforce this promise, agrees not to induce, directly or
indirectly, any Grainger customer or supplier to breach any contract with
Grainger, and further agrees not to solicit, attempt to hire, or hire,
directly or indirectly, any Grainger employee, or request, induce or
advise any such employee to leave the employment of Grainger at any time
before the Retirement Date and for one year thereafter. Should the Officer
wish to hire a Grainger employee in contravention of this Section, or to
perform work which is precluded by the Officer’s non-competition
obligations referenced in Section 4 above, the Officer understands that he
may request that Grainger agree that the Officer may perform such work or
offer employment to such employee, and that with Grainger’s written
agreement, which it may withhold at its sole discretion, the Officer may
do so. |
| 10. |
Return of Property; Business Expenses. On or before the
Officer’s Resignation Date, the Officer agrees to account for and return
to Grainger all Grainger property, including but not limited to
proprietary information, which is in the Officer’s possession or control.
This property includes (but is not limited to) personal computers (and
related equipment and software), correspondence, files, reports, minutes,
plans, records, surveys, diagrams, computer print-outs, floppy disks,
manuals, client/customer information and documentation, and any company
research, goals, objectives, recommendations, proposals or other
information relating to Grainger, its business, or its clients or
customers, which is not generally known to the public, and which the
Officer acquired in the course of his employment with Grainger.
Notwithstanding, Officer shall be permitted to retain his Grainger laptop
computer, less any Grainger installed software that may otherwise be
installed on that computer. The Officer further agrees that all business
expenses incurred prior to the Resignation Date that are reimbursable in
accordance with Grainger’s normal policies and procedures have been
reimbursed to the Officer or submitted for reimbursement, and that other
than as specifically provided in this Agreement, the Officer will not
incur any additional business expenses after the Resignation Date.
|
| 11. |
Confidential Information. The Officer agrees to refrain from
ever disclosing to anyone outside the employment of Grainger any
confidential or trade secret information, whether in oral, written and/or
electronic form, including but not limited to information that (a) relates
to Grainger’s past, present and future research, development, technical
and non-technical data and designs, finances, marketing, products,
services, customers, suppliers, and other business activities of any kind
or (b) has been identified, either orally or in writing, as confidential
by Grainger; provided that this limitation shall not apply to information
that is part of the public domain through no breach of this Agreement or
is acquired from a third party not under
|
5
|
similar
nondisclosure obligations to Grainger. The Officer acknowledges that
his/her obligations under any confidentiality or nondisclosure or similar
agreements or provisions that the Officer previously executed will remain
in full force and effect. Further, through the Retirement Date, the
Officer agrees to fully comply with all policies of Grainger regarding
confidential or trade secret information, inasmuch as the Officer is
receiving compensation from Grainger. |
| 12. |
Cooperation with Company. The Officer agrees to both make
himself available and to provide reasonable cooperation to Grainger or its
attorneys to assist Grainger or serve as a witness in connection with any
matter, litigation or potential litigation in which the Officer may have
knowledge, information, or expertise. The Officer also agrees to provide
Grainger or its designated representatives, upon request, with information
and assistance about programs, processes, and projects related to the
Officer’s job responsibilities while employed by Grainger; to answer any
questions relating to the work to which the Officer was assigned; and to
otherwise provide reasonable cooperation to Grainger regarding matters
relating to this Agreement and the Officer’s employment with Grainger.
|
| 13. |
Breach of Agreement; Misconduct. The Officer, together with
his Spouse, understands and agrees that if, after receiving all or any
part of the payments and benefits described herein, the Officer breaches
this Agreement, or commits or is discovered to have committed any act of
embezzlement, fraud or theft with respect to the property of Grainger, or
deliberately causes or is discovered to have deliberately caused, any
loss, damage, injury or other endangerment to Grainger’s property,
reputation or past, present, or future directors, officers or employees,
Grainger reserves the right to demand repayment of all such payments and
benefits. Grainger shall further be released from any future payment then
due and shall discontinue any and all benefit coverage (other than retiree
health coverage, vested benefits under the PST and SPSP, and COBRA
coverage if otherwise available). To the extent permitted by law, the
Officer and his/her Spouse further understand and agree that Grainger
reserves the right to pursue all other available remedies in an effort to
preserve its legitimate business interests. The Officer also agrees to
indemnify and hold harmless Grainger from any loss, cost, damage, or
expense, excluding attorneys’ fees, which Grainger may incur because of
the Officer’s violation of this Agreement. The Officer understands that
this Section does not apply to a challenge to the knowing and voluntary
nature of this release with respect to claims under ADEA.
|
| 14. |
Supersedes Other Agreements. Other than any vested rights
that the Officer may have under employee benefit plans subject to ERISA,
or contained within any Non-Competition obligation previously acknowledged
by Officer, the Officer understands that this Agreement supersedes any and
all obligations (written or oral) which Grainger otherwise might have to
the Officer or his Spouse for compensation or other expectations of
remuneration or benefit on the Officer’s part. The Officer specifically
acknowledges that all of Grainger’s obligations under the Change in
Control Employment Agreement dated as of March 25, 1999 (the “Change in
Control Agreement”) shall become null and void as of the Resignation Date.
|
| 15. |
Acceleration upon Change in Control. All unpaid cash amounts
payable to the Officer under this Agreement shall become immediately
payable in full upon the occurrence of a Change in Control (as defined in
the Change in Control Agreement); provided that this Section 15
shall |
6
|
not
apply with respect to the plans referenced in Sections 3(g) and 3(h) of
this Agreement, concerning which plans the Change in Control provisions
therein contained shall govern. With respect to unpaid cash amounts
payable to the Officer under this Agreement pursuant to the MIP, PST, and
SPSP, such amounts, prorated as appropriate, are to be determined as
provided under the Change in Control Agreement. In the event of a Change
in Control, the Officer will be eligible to immediately participate in
Grainger’s retiree health program, as it may be in effect from time to
time, at the premium rate applicable to a retiree with 25 years of
service, who has attained age 55. |
| 16. |
Continuation After Death. The Officer understands that in
the event of the Officer’s death, Grainger’s obligations under this
Agreement will extend to the Officer’s beneficiaries, heirs, executors,
administrators, personal representatives and assigns.
|
| 17. |
Agreement Not Assignable. The Officer and his Spouse
understand that neither the Officer nor his Spouse may assign, and
represent that they have not assigned, this Agreement nor any rights or
Grainger’s obligations under this Agreement to any other person.
|
| 18. |
Entire Understanding. The Officer and his Spouse understand
and agree that this Agreement contains the entire understanding between
the parties and may not be amended except by mutual agreement in an
amendment executed by all parties. |
| 19. |
Severability. The provisions of this Agreement are declared
to be severable, which means that if any provision of this Agreement or
the application thereof is found to be invalid, the invalidity shall not
affect other provisions or applications of this Agreement, which will be
given effect without the invalid provisions or applications.
|
| 20. |
Confidentiality of Agreement. The Officer and his Spouse
represent and agree to keep the terms, amount and fact of this Agreement
completely confidential, and that the Officer and his/her Spouse will not
disclose any information concerning this Agreement to anyone; provided,
however, that this Section will not prevent the Officer or his Spouse from
disclosing information concerning this Agreement to the Officer or his
Spouse’s attorneys, accountants, financial or tax advisors, a designated
Grainger official, or as required by law. Notwithstanding, in accordance
with Treasure Regulation 1.6011-4(b)(3)(iii) each party (and each
employee, representative, or other agent of each party) to this Agreement
may disclose to any and all persons, without limitation of any kind, the
tax treatment, tax structure, and all materials of any kind provided to
the other party relating to such tax treatment and tax structure.
|
| 21. |
Jurisdiction and Governing Law. This Agreement shall in all
respects be interpreted, enforced and governed by and under the laws of
the State of Illinois. |
| 22. |
Voluntary Agreement. The Officer and his Spouse acknowledge
that the payments and benefits that Grainger is providing hereunder exceed
the compensation and benefits otherwise payable to the Officer or on the
Officer’s behalf, and that such compensation and benefits are provided by
Grainger in exchange for execution of this Agreement. The Officer and his
Spouse acknowledge that they were given twenty-one (21) days to consider
the terms of this Agreement, that either the Officer or his Spouse may
revoke this Agreement at any time |
7
|
within
seven (7) days after the date that the Officer and his/her Spouse sign it,
and that they have been advised to and have had the opportunity to seek
out counsel of their own choice. Any revocation must be communicated in
writing, via personal delivery or overnight mail, to Xxxxx X. Xxxxxx,
Labor Counsel, X.X. Xxxxxxxx, Inc., 000 Xxxxxxxx Xxxxxxx, Xxxx Xxxxxx,
Xxxxxxxx 00000. The Officer and his/her Spouse further understand that
this Agreement does not take effect until after the expiration of the
seven (7) day period for revocation. All referenced Separation Payments
and applicable benefits identified in this Agreement will automatically
cease on the 21st day should the Officer not return a fully executed copy
of this Agreement to Grainger within the specified 21st day consideration
period. The Officer and his Spouse have read this Agreement and understand
all of its terms. |
I have read this
Separation Agreement and General Release and I understand all of its terms. I
voluntarily execute this Separation Agreement and General Release with full
knowledge of its meaning, on this 31st
day of March, 2004.
I have read this
Separation Agreement and General Release and I understand all of its terms. I
voluntarily execute this Separation Agreement and General Release with full
knowledge of its meaning, on this 31st day of March, 2004.
X.X. Xxxxxxxx, Inc.
8
