EXHIBIT 10.1
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December 1, 2006
Xx. Xxxxx X. X'Xxxxxxx
0 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Dear Xxx:
This letter agreement confirms the terms and conditions agreed to
concerning your retirement from Xxxxxxxx, Inc. ("Xxxxxxxx") effective on
January 31, 2007. Until such date, you will retain the title of Vice
President, although such title confers no executive officer powers to you
nor does it enhance, alter or diminish any benefits to which you are
otherwise entitled pursuant to your Employment Agreement dated February 29,
1996.
In consideration of the mutual promises and agreements contained in this
letter agreement, the adequacy and receipt of which all parties
acknowledge, you and Xxxxxxxx agree as follows:
1. Xxxxxxxx will pay that portion of your regular bi-weekly salary in
the amount of $7,803.85, less customary deductions, through your
January 31, 2007 retirement date.
2. Xxxxxxxx will pay your accrued but unused vacation through your
January 31, 2007 retirement date on or before February 1, 2007.
3. Xxxxxxxx will make a lump sum payment to you in the amount of
$103,500, less customary deductions, representing incentive
compensation for fiscal 2006 determined on the basis of your target
incentive compensation plan participation (40%) and the actual ratio
of incentive operating income to plan incentive operating income for
such fiscal year applicable to all plan participants on or about
November 30, 2006 (or such later date on which incentive compensation
is paid to Xxxxxxxx'x executive officers for fiscal 2006). The lump
sum payment to you provided in paragraph 4 below represents the only
payment you will be entitled to receive in respect of bonus or
incentive compensation for any period of employment after
September 30, 2006.
4. Xxxxxxxx will make a lump sum payment to you in the amount of
$431,234, less customary deductions, representing eighteen month's
salary and bonus for the period February 1 2007 through July 31, 2008
(the "Severance Period") calculated pursuant to Section 4 (d) (ii) of
your Employment Agreement. Such lump sum payment shall be made on
August 10, 2007 (but, in any event, not sooner than six months
following your retirement date). Additionally, Xxxxxxxx waives any
right of offset of employment income against such payment and
benefits (pursuant to Section 4 (d) (ii) of your Employment
Agreement) in the event you obtain employment with another employer
or have earnings from self-employment.
5. From and after your retirement date, Xxxxxxxx may, from time-to-time,
require your services to assist in any transition matters or for
other issues that may arise. You agree to provide such services at
mutually agreeable times upon reasonable notice at a rate of $800 per
day or part thereof that you actually provide such services. Your
provision of such services will be as an "independent contractor" and
not as an employee.
Xx. Xxxxx X. X'Xxxxxxx
December 1, 2006
Page 2
6. Medical and other insurance benefits for you and your dependent(s)
will continue during the severance period through July 31, 2008.
After that date, you and your dependent(s) will be eligible for
benefits under the company's current retiree medical and insurance
benefits plan through your 65th birthday. Your eligibility shall not
be subject to the entry age requirement contained in such plan. Your
cost for such coverage through your 65th birthday will be no higher
than the amount paid by full-time employees from time to time for
coverage under the Xxxxxxxx medical benefits plan. Participation for
you and your dependent(s) in the retiree medical and insurance
benefits plan will be subject to enrollment in the plan. In the
event Xxxxxxxx materially amends or terminates the retiree medical
and insurance benefit plan, Xxxxxxxx shall use reasonable efforts to
continue to provide you and your dependent(s) with benefits
comparable to those under the current plan; provided, however, that
Xxxxxxxx shall not be required to expend any amount in excess of the
"average per retiree amount" it was spending, at the time of such
amendment or termination, to provide retiree medical and insurance
benefits to retirees covered by such plan. At termination of
coverage for you and your dependent(s) under the retiree medical and
insurance benefits plan upon your attainment of age 65, continuation
of medical insurance benefits for dependent(s) shall be available
under C.O.B.R.A.
7. Your right to purchase the shares of Xxxxxxxx common stock under
previously granted stock option awards shall be exercisable in
accordance with the terms of the individual grant agreements to the
extent of all shares granted thereunder. Please advise Xxxxxxxx'x
Human Resources Department in writing of your intent to exercise such
options at the appropriate time in order that such exercise(s) may be
completed in a timely manner.
8. The one thousand two hundred (1,200) Performance Shares awarded to
you on February 14, 2006 shall vest in full on the date Performance
Share awards granted in February vest for other recipients of such
awards.
9. Pursuant to the terms of the Xxxxxxxx, Inc. Retirement Plan
("Retirement Plan") and the Supplemental Key Executive Retirement
Plan of Xxxxxxxx, Inc. (amended and restated as of October 1, 2002)
("Supplemental Plan") you will be entitled to a combined annual
retirement benefit of $109,822.71, payable in monthly installments in
the form of a 50% joint and survivor annuity if married, otherwise in
the form of a single life annuity, commencing on April 1, 2012. The
combined retirement benefit is calculated on the basis of and credits
you with service of twenty (20) years under the Supplemental Plan.
The portion of this benefit payable by the Retirement Plan represents
a non-forfeitable right to receive a pension commencing on April 1,
2012 and the accrued annual benefit (paid in the form of a 50% joint
and survivor annuity) amounts to $47,038.96 at January 31, 2007. The
amount payable by Xxxxxxxx under the terms of the Supplemental Plan
shall be the excess of the combined annual retirement benefit of
$109,822.71 over the accrued Retirement Plan benefit of $47.038.96,
or $62,783.75 per year. The precise amount payable from the
respective plans are estimated and are subject to certain elections
and actuarial assumptions that can only be determined at the payment
date. The aggregate amount of the combined benefit, however, is
fixed at $109,822.71. Additionally, you may elect to receive such
benefits at an earlier date under the provisions of each of the
plans, which benefit shall be actuarially adjusted (as determined by
the provisions of the Retirement Plan) to reflect your election to
begin benefit(s) at an earlier age.
Xx. Xxxxx X. X'Xxxxxxx
December 1, 2006
Page 3
10. Upon the presentation of appropriate documentation, Xxxxxxxx will
reimburse you for customary business expenses incurred prior to your
retirement, but not previously submitted. You will also be entitled
to be reimbursed for business expenses incurred with the approval of
Xxxxxxxx in performing services at the request of Xxxxxxxx in
accordance with Section 5 above.
11. You acknowledge that you served as Xxxxxxxx'x Chief Financial Officer
during the fiscal year ended September 30, 2006, the financial
results of which are currently being audited by Pricewater-
houseCoopers ("PWC"). In light of your position during such fiscal
year, you will provide reasonable cooperation to Xxxxxxxx and PWC, in
connection with such audit, including signing (or co-signing) any
management representation letter or "404" compliance certification
which Xxxxxxxx determines is appropriate to be provided to PWC and a
customary back-up certificate in connection with Xxxxxxxx'x
Disclosure Committee process with respect to such audit and
Xxxxxxxx'x Annual Report on Form 10-K filed with the SEC in
connection therewith. You may limit your responses in any such
letter or certificate to events occurring prior to October 16, 2006.
12. Should you desire to pursue further career opportunities, Xxxxxxxx
will arrange for the payment of or reimburse you for the cost of
outplacement services in an amount not to exceed $15,000.
13. Xxxxxxxx will reimburse you for legal expenses associated with the
negotiation of this agreement in an amount not to exceed $7,500.
14. Please direct any employment reference requests to Xxxxxxxx'x
President and Chief Executive Officer.
15. You acknowledge that your employment with Xxxxxxxx will end on
January 31, 2007. You agree to vacate your office and return to
Xxxxxxxx all of its property in your possession including, but not
limited to, Xxxxxxxx'x files, customer lists, equipment (other than
laptop computer and related peripheral equipment), keys, credit
cards, tapes, records, manuals, employee lists, brochures, files,
catalogs, price lists, cost information, financial records, and all
copies thereof on or before January 31, 2007. If, during the period
between the date hereof and your retirement date, Xxxxxxxx determines
that your services to Xxxxxxxx can be adequately performed from your
residence, you agree to provide any such services from such location.
16. You acknowledge that your position with Xxxxxxxx resulted in your
exposure and access to confidential and proprietary information which
you did not have access to prior to holding this position and which
information is of great value to Xxxxxxxx. The disclosure of such
information by you would cause irreparable damage to Xxxxxxxx. You
will use your best efforts and the utmost diligence not to disclose
any and all confidential and proprietary information related to
Xxxxxxxx.
17. You acknowledge that the terms and conditions of the Xxxxxxxx Non-
Competition and Confidentiality Agreement that you executed on
September 10, 1990, remain in full force and effect.
Xx. Xxxxx X. X'Xxxxxxx
December 1, 2006
Page 4
18. You, and anyone claiming through you, waive and release Xxxxxxxx and
any and all parents, divisions, subsidiaries, partnerships,
affiliates and/or other related entities of Xxxxxxxx (whether or not
such entities are wholly owned) and each of those entities' past,
present, and future owners, trustees, fiduciaries, shareholders,
directors, officers, administrators, agents, partners, employees,
attorneys, and the predecessors, successors, and assigns of each of
them (collectively, the "Released Parties"), from any and all claims,
whether known or unknown, which you have, have ever had, or may ever
have against any of the Released Parties arising from or related to
any act, omission, or thing occurring at any time prior to your
signing this letter agreement including, but not limited to, any and
all claims that in any way result from, or relate to, your employment
or cessation of employment with any of the Released Parties. These
released claims further include, but are not limited to, any and all
claims that you could assert or could have asserted in any federal,
state, or local court, commission, department, or agency under any
common law theory, or under any fair employment, employment,
contract, tort, federal, state, or local law, regulation, ordinance,
or executive order including under the following laws as amended from
time to time: the Age Discrimination in Employment Act, the Older
Workers' Benefit Protection Act, the Civil Rights Act of 1866, the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans
With Disabilities Act, the Illinois Human Rights Act, and the Xxxx
County Human Rights Ordinance. This release shall not apply with
respect to the obligations of Xxxxxxxx under this letter agreement or
(to the extent not relating to compensation, incentive pay,
retirement benefits, severance pay and health and related benefits)
your Employment Agreement dated February 29, 1996, or any claims you
may have under ERISA with respect to any employee benefit plan of
Xxxxxxxx.
19. Xxxxxxxx, on behalf of itself and any and all of its shareholders,
parents, divisions, subsidiaries, partnerships, and affiliates and
its and each of their past, present and future owners, trustees,
fiduciaries, shareholders, directors, officers, employees, agents,
attorneys, successors and assigns ("Releasing Parties"), agrees not
to xxx and hereby releases you and your heirs, successors and assigns
(collectively, the "Released Parties"), from any and all claims,
whether known or unknown, which any Releasing Party has, ever had, or
may ever have against any of the Release Parties arising from or
related to your employment by Xxxxxxxx or any act, omission, or thing
occurring during the course of your employment with Xxxxxxxx, except
for claims arising out of your gross negligence or willful
misconduct. For purposes of this provision, no action or omission
shall be considered "willful" unless taken without a reasonable
belief that such action or omission was in the best interests of
Xxxxxxxx.
20. You acknowledge that the existence and terms of this letter agreement
are confidential and that you will not disclose the terms or
existence of this letter agreement to anyone other than to your
attorney, accountant, and immediate family, whom you shall ensure
will comply with the terms of this confidentiality provision.
21. You acknowledge that you have been informed that you may consult with
a lawyer of your choice and that you have had sufficient time to
consult with a lawyer before executing this letter agreement. You
also acknowledge that you are entitled to a period of at least 21
days within which to consider this letter agreement.
Xx. Xxxxx X. X'Xxxxxxx
December 1, 2006
Page 5
22. Within seven days following the date of your execution of this letter
agreement, you shall have the right to revoke this letter agreement
by serving within such seven-day period written notice of your
revocation upon Xxxxxxxx'x Senior Vice President and Chief Financial
Officer. If you do not revoke this letter agreement during this
seven-day period, this letter agreement shall become effective on the
eighth day after the date of your execution of this letter agreement
and you shall have no further right to revoke this letter agreement.
23. All notices and other communications required or permitted under this
letter agreement shall be deemed to have been duly given and made if
in writing and if served personally on the party for whom intended or
deposited, postage prepaid, certified or registered mail, return
receipt requested, in the United States mail to your address above,
if the notice is to you, or if the notice is to Xxxxxxxx, to
Xxxxxxxx'x Senior Vice President and Chief Financial Officer at the
address on this letterhead, or to such other address as either party
may designate in writing thereafter.
24. The obligations and rights undertaken by Xxxxxxxx and Executive
pursuant to this letter agreement and other agreements referred to
herein shall inure to the obligation and benefit of successors and
assigns of each of the parties.
25. This letter agreement, the Employment Agreement between you and
Xxxxxxxx dated February 29, 1996 and the Xxxxxxxx Non-Competition and
Confidentiality Agreement that you executed on September 10, 1990,
embody the entire agreement and understanding of you and Xxxxxxxx
with regard to all matters and those documents supersede any and all
prior and/or contemporaneous agreements and understandings, oral or
written, between you and Xxxxxxxx. From and after the date of your
acceptance of this letter agreement, all of your rights to receive
compensation, incentive pay, retirement benefits, severance pay or
health or related benefits in connection with your retirement and
separation from Xxxxxxxx shall be only as set forth in this letter
agreement and Xxxxxxxx shall have no further obligations to you with
respect to such matters under the Employment Agreement or Xxxxxxxx'x
Executive Special Severance Plan.
Please sign one original of this letter agreement and return it to me in
the enclosed FedEx envelope. You may retain the other original for your
file.
Xxx, we wish you the best of luck in your retirement or any future
endeavors that you may pursue.
Very truly yours,
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
I have read, understand, and voluntarily agree to be bound by each of the
terms contained in this letter.
______________________ Dated: December 1, 2006
Xxxxx X. X'Xxxxxxx
