Exhibit 10-36
March 18, 1996
Xx. Xxxxxx X. Xxxx
0000 Xxxxx Xxxx
Xx. Xxxxxxxxxx, XX 00000
Dear Manny:
This letter confirms our agreement concerning your termination of employment
with Xxxxxx International Inc. and its affiliates ("Company"). You and the
Company acknowledge that your employment termination is by mutual agreement, and
that it is completely independent of the reduction in force the Company
announced in the fourth quarter of 1993.
You will cease to be an employee and an officer of the Company effective May 3,
1996 ("Termination Date"). Until your Termination Date, you will assist the
Company in the smooth transition of your responsibilities to your successors.
You will continue to receive your current salary, monthly car allowance, and
flexible spending allowance until your Termination Date.
You will be eligible to receive a pro-rated bonus, up to a maximum of $78,000,
under the 1996 Officer Incentive Compensation Plan. Your bonus will be
determined based on the extent to which the Company achieves the 1996
performance criteria under the Plan and based on the extent to which you satisfy
your obligation to assist the Company in the smooth transition of your
responsibilities to your successors. Your 1996 bonus will be determined and
paid at the same time and in the same manner applicable to all other
participants in the Plan.
You will not earn any restricted shares for 1996 performance under the Company's
1989 Long-Term Incentive Plan (LTI-3).
Before your Termination Date, you will receive a total of $42,560, in a single
sum, for all of your accrued but unused vacation time, in accordance with the
Company's policy. You will not accrue any vacation time after your Termination
Date.
You are eligible to receive medical coverage through the Company's retiree
medical plan, in accordance with the plan's provisions. You may postpone
retiree medical coverage and elect, in accordance with a federal statute
(COBRA), to continue your medical and dental benefits under the Company's
Flexible Benefits Program for up to 18 months after your Termination Date. You
may not obtain medical coverage through the retiree medical plan and COBRA
simultaneously.
You are eligible to continue your active participation in the Company's
Incentive Investment Plan until your Termination Date, in accordance with the
Plan's provisions. Your vested accrued benefits in the Incentive Investment
Plan will be distributed in accordance with its provisions.
Your active participation in the Xxxxxx International Inc. and Subsidiaries
Pension Plan ("Pension Plan") will continue until your Termination Date, in
accordance with the Plan's provisions. Your vested accrued benefit in the
Pension Plan will be distributed in accordance with its provisions.
In addition, the Company will provide you with a non-qualified and unfunded
supplemental pension benefit ("Pension Supplement") equal to the difference
between your accrued benefit under the qualified Pension Plan determined as of
your Termination Date and the accrued benefit you would have under the qualified
Pension Plan if on your Termination Date you were five years older, and had five
additional years of benefit service. Your non-qualified and unfunded
supplemental pension benefit will be paid to you at the same time and in the
same manner as your benefit under the qualified Pension Plan. In the event of
your death prior to your Termination Date, the provisions of this paragraph will
be applied as if your Termination Date were the day before your death and you
selected a pension payment option of 100% Joint and Survivor. The five
additional years of benefit service and the five additional years of age
provided in this paragraph will not be counted when determining the amount you
must pay for coverage through the Company's retiree medical plan.
Your participation, if any, in the Company's Employee Stock Purchase Plan will
cease on your Termination Date. You will receive a cash refund of the balance,
if any, in your subscription account, in accordance with the Plan's provisions.
You are eligible to continue your participation in the Company's split-dollar
life insurance plan. Your participation will continue in accordance with the
plan's provisions as they apply to participants whose employment terminates
after accumulating 65 age and years of participation points under the
Company's Pension Plan.
Your stock options and restricted shares will be vested or forfeited as listed
below:
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OPTIONS
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# of
Date Options Option Expiration
Granted Type Granted Price Date(2) Vesting
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7/30/90 NQ 11,517(1) $24.36(1) 8/2/96 all are vested; may exercise
before expiration date
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8/9/91 NQ 8,794(1) $34.15(1) 8/2/96 all are vested; may exercise
before expiration date
--------------------------------------------------------------------------------------------------------------
8/3/92 NQ 2,303(1) $36.66(1) 8/2/96 all are vested; may exercise
before expiration date
--------------------------------------------------------------------------------------------------------------
8/2/93 NQ 16,500 $26.00 8/2/96 11,000 are vested; may exercise
before expiration date; remainder
will be vested on 8/2/96 and you
may exercise them on 8/2/96 only
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7/31/95 NQ 23,700 $37.25 8/2/96 None are vested; all will be
forfeited on the expiration date
unless accelerated vesting
occurs, in accordance with the
option grant terms and conditions,
before the expiration date
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(1)As equitably adjusted in connection with the Caremark spin-off
(2)Option expiration dates consistent with option grant terms and conditions
relating to employment termination.
RESTRICTED SHARES
---------------------------------------------------------------------------------------------------------
Date # of Shares
Granted Granted Vesting Date Disposition
---------------------------------------------------------------------------------------------------------
9/7/90 15,580 1 year after 12,453 shares have been earned, vested and
earned distributed; 3,127 shares were earned in 1995
and will be allowed to vest on 12/31/96
---------------------------------------------------------------------------------------------------------
12/7/92 9,200 1 year after 5,189 shares were earned in 1995 and will be
earned allowed to vest on 12/31/96; remaining 4,011
will be forfeited on your Termination Date
---------------------------------------------------------------------------------------------------------
2/17/92 19,115 12/31/98 12,743 shares will be allowed to vest on
12/31/96; you may elect to have shares
withheld to pay the taxes due on 12/31/96, but
the 12,743 shares (less the shares withheld to
pay taxes) will not be distributed to you until
12/31/98, the original vesting date. The
remaining 6,372 shares will be forfeited on
your Termination Date.
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You will not receive any additional grants of options or restricted shares.
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Your participation in the Shared Investment Plan will continue in accordance
with the Plan's provisions.
To preserve your rights to make various elections under the Company's Flexible
Benefits Program, Pension Plan and Incentive Investment Plan, you must contact
the Human Resources Department before your Termination Date. To exercise your
stock options, you must contact the Stockholder Services Department.
You acknowledge that the compensation and benefits provided in the Agreement
exceed the compensation and benefits which you would normally receive in
connection with your employment termination. In exchange for the compensation
and benefits under this Agreement, you waive your right to file or participate
as a class member in any claims or lawsuits (whether or not you now know of the
basis for the claims or lawsuits) with federal or state agencies or courts
against the Company and its employee benefit plans, including their present and
former directors, officers, employees, agents and fiduciaries. This general
waiver and release includes, but is not limited to, all claims of unlawful
discrimination in regard to age, race, sex, color, religion, national origin and
handicap under Title VII of the Civil Rights Act, the Age Discrimination in
Employment Act or any other federal or state statutes, all claims for wrongful
employment termination or breach of contract and any other claims relating to
your employment or termination of employment with the Company. This waiver and
release also apply to your heirs, assigns, executors and administrators. This
waiver and release do not waive rights or claims which may arise after the date
this Agreement is signed except as stated in the next three sentences.
To be eligible to receive the Pension Supplement described above, you agree that
this waiver and general release will be deemed to be signed by you again when
your Pension Supplement begins to be paid. To be eligible to receive the
restricted stock which was earned in 1995 and allowed to vest on December 31,
1996, you agree that this waiver and general release will be deemed to be signed
by you again when those shares are distributed to you. To be eligible to
receive the additional shares of restricted stock which are distributable to you
on December 31, 1998, you agree that this waiver and general release will be
deemed to be signed by you again when those shares are distributed to you.
You agree: (a) not to intentionally disparage the Company, its employees or
products; (b) not to intentionally engage in actions contrary to the interests
of the Company; (c) not to disclose or allow disclosure of any provisions of
this Agreement, except to your attorney or pursuant to subpoena or court order
(although the Company may be required to disclose this Agreement in its 1996
proxy statement and as an exhibit to its Form 10-K for 1995); (d) to conduct the
transition period in a constructive and positive manner; (e) to remain bound by
the non-compete and confidentiality provisions of your employment agreement with
the Company; and (f) to return to the company, by May 10, 1996, all Company
property, including proprietary information.
In addition to the obligations under your employment agreement with the Company,
you agree that, until one year from your Termination Date, you will not directly
or indirectly, as a consultant, employee or owner, engage in any activity which
is competitive with
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the businesses of the Company, on your Termination Date, without the Company's
prior approval. I assure you it is the Company's intention to be fair and
reasonable in considering this issue and to grant such approval whenever your
competition will not adversely affect one of the Company's major businesses.
All amounts payable to you or on your behalf under this Agreement will be
reported to appropriate governmental agencies as taxable income to the extent
required, and appropriate withholding will be made where necessary. In
addition, all amounts payable to you under this Agreement are expressed as
amounts prior to payment or withholding of any taxes, and the Company will not
gross-up the amounts or otherwise reimburse you for the taxes you pay relating
to such amounts.
The amounts payable to you under this Agreement are in lieu of all severance
compensation and other severance benefits from the Company to which you might
otherwise be entitled. The Company may terminate the Pension Supplement,
forfeit all of your outstanding restricted stock and eliminate your 1996 cash
bonus eligibility if you fail to comply with any of your obligations under this
Agreement.
You acknowledge that the compensation and benefits provided to you under this
Agreement assume your continued employment with the Company until your
Termination Date. If you die before your Termination Date, your employment,
salary and perquisite allowances will cease on the date of your death, and
the 1996 cash bonus which is payable to you as well as the restricted stock
which is allowed to vest in accordance with this agreement will be paid to
your surviving spouse, or to your estate if your spouse does not survive you.
Your Pension Supplement will be administered as specified on page 2 of this
Agreement. All other compensation and benefits for which you are eligible
under this Agreement will be determined based on the death benefit provisions
of the applicable plans.
You acknowledge that the Company has made no promises to you which are not
included in this Agreement, that this Agreement contains the entire
understanding between you and the Company relating to your employment
termination, and that it supersedes the pension supplement agreement between you
and the Company dated October 4, 1995. You acknowledge that the terms of this
Agreement are contractually binding. If any portion of this Agreement is
declared invalid or unenforceable, the remaining portions of this Agreement will
continue in force.
You acknowledge that you carefully read the terms of this Agreement, you know
and understand its content and meaning, you were given a 21-day period to review
it, you were encouraged to consult with an attorney before accepting it, and you
accept it voluntarily.
If this letter accurately reflects our agreement, please sign two copies, and
return one of them to me by April 8, 1996.
The terms of this Agreement have been approved by the Compensation Committee
of the Xxxxxx International Inc. Board of Directors.
Sincerely,
------------------------- ACCEPTED AND AGREED:
Xxxxxx X. Xxxxxx Xx.
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(Signature)
------------------------
(Date)
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