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EXHIBIT 2.3
EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
AGREEMENT, dated as of November 5, 1999 (the "Agreement"), by and
between Xxxxxx Corporation ("Parent"), a Delaware corporation, and Xxxxxx
Worldwide, Inc., a Delaware corporation ("Company").
WHEREAS, the Parent Board of Directors intends to effect the
Distribution (as defined herein); and
WHEREAS, Parent and Company wish to provide for the allocation of
assets and liabilities and certain other matters with respect to employee
benefit plans, executive compensation plans and certain other employee plans
and arrangements in connection with the Distribution.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Company Employee" means each employee of Company, including a
Company Transfer Employee.
1.2 "Company SERP" means the Xxxxxx Worldwide, Inc. Supplemental
Executive Retirement Savings Plan and the Xxxxxx Worldwide, Inc. Supplemental
Executive Retirement Plan.
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1.3 "Company Stock Incentive Plan" means the Xxxxxx Worldwide, Inc.
Stock Incentive Plan.
1.4 "Company Transfer Employee" means each employee of Parent who
becomes an employee of Company on or after the Distribution Date and on or
before December 31, 1999.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Distribution" means the pro rata distribution to Parent's
stockholders of a number of shares of Company common stock that is equal to
approximately 90% of the shares of Company common stock outstanding after the
Distribution Date, as described in the Registration Statement on Form 10 and
any amendments thereto filed by the Company with the Securities and Exchange
Commission.
1.7 "Distribution Date" has the meaning given to such term in the
Registration Statement on Form 10 and any amendments thereto filed by the
Company with the Securities and Exchange Commission.
1.8 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.9 "Xxxxxx 401(k) Plan" means the Xxxxxx Corporation Retirement Plan.
1.10 "Xxxxxx Pension Plan" means the Xxxxxx Corporation Pension Plan.
1.11 "Parent Employee" means each employee of Parent, including a
Parent Transfer Employee.
1.12 "Parent Performance Shares" means performance share awards
granted under the Parent Stock Incentive Plan.
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1.13 "Parent SERP" means any nonqualified supplemental executive
retirement plan maintained for the benefit of Parent employees, or Company
Employees who were employed at any time by Parent.
1.14 "Parent Stock Incentive Plan" means the Xxxxxx Corporation Stock
Incentive Plan.
1.15 "Parent Stock Options" means stock options granted under the
Parent Stock Incentive Plan.
1.16 "Parent Transfer Employees" means employees of Company who become
employees of Parent on or after the Distribution Date and on or before December
31, 1999.
1.17 "PEP" means the Xxxxxx Worldwide, Inc. Pension Equity Plan.
1.18 "Record Date" has the meaning given to such term in the
Registration Statement on Form 10 and any amendments thereto filed by the
Company with the Securities and Exchange Commission.
1.19 "SIP" means the Xxxxxx Worldwide, Inc. Savings Incentive Plan, as
amended from time to time.
1.20 "Transfer Date" with respect to each Company Transfer Employee or
Parent Transfer Employee, means the first date on or after the Distribution
Date that he or she is actively at work for Company following a transfer from
Parent, or is actively at work for Parent following a transfer from Company, as
applicable.
ARTICLE II
RETIREMENT PLANS
2.1 SIP.
(a) In General Company has previously established the SIP for the
benefit of its employees. As soon as practicable after the date hereof and
effective as of the Distribution Date,
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Company shall take, or cause to be taken, all necessary and appropriate action
to allow each Company Transfer Employee to be enrolled in the SIP as soon as
practicable after his or her Transfer Date. Effective no later than the
Distribution Date, Company shall cause the SIP to be amended such that amounts
under the SIP after such date shall not be applied to purchase the common stock
of Parent.
(b) Service Credit. The employment of each Company Transfer Employee
with Parent shall be treated as employment with Company for purposes of
eligibility and vesting under the SIP.
(c) Xxxxxx 401(k) Plan Transfer. Company shall take such action as is
necessary or appropriate to cause the SIP to accept the transfer of the assets
and liabilities of the Xxxxxx 401(k) Plan described in ss. 2.2(d) of this
Agreement (including making amendments, as necessary or appropriate, to the
SIP) and to satisfy the requirements of Section 401(a) of the Code and related
Code Sections with respect to such transfer.
(d) Parent Employees' SIP Account Balances. As soon as practicable
after January 1, 2000, the Company shall cause the SIP to transfer to the
Xxxxxx 401(k) Plan the assets and liabilities of the SIP attributable to Parent
Employees (including any outstanding Parent Employee loans from the SIP).
2.2 Xxxxxx 401(k) Plan.
(a) In General. Parent has previously established the Xxxxxx 401(k)
Plan for the benefit of its employees. As soon as practicable after the date
hereof and effective as of the Distribution Date, Parent shall take, or cause
to be taken, all necessary and appropriate action to allow each Parent Transfer
Employee to be enrolled in the Xxxxxx 401(k) Plan as soon as practicable after
his or her Transfer Date.
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(b) Service Credit. The employment of each Parent Transfer Employee
with Company shall be treated as employment with Parent for eligibility and
vesting purposes under the Xxxxxx 401(k) Plan.
(c) SIP Transfer. Parent shall take such action as is necessary or
appropriate to cause the Xxxxxx 401(k) Plan to accept the transfer of the
assets and liabilities of the SIP described in ss. 2.1(d) of this Agreement
(including making amendments, as necessary or appropriate, to the Xxxxxx 401(k)
Plan) and to satisfy the requirements of Section 401(a) of the Code and related
Code Sections with respect to such transfer.
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(d) Company Employees' Xxxxxx 401(k) Plan Account Balances . As soon
as practicable after January 1, 2000, Parent shall cause the Xxxxxx 401(k) Plan
to transfer to the SIP the assets and liabilities of the Xxxxxx 401(k) Plan
attributable to Company Employees (including any outstanding Company Employee
loans from the Xxxxxx 401(k) Plan).
2.3 PEP.
(a) In General. Company has previously established the PEP for the
benefit of its employees. As soon as practicable after the date hereof and
effective as of the Distribution Date, Company shall take, or cause to be
taken, all necessary and appropriate action to allow Company Transfer Employees
to be enrolled in the PEP subject to the terms and conditions of the PEP. If
the banks in the current credit facilities or any replacement credit facilities
provide notice to the Company that they intend to exercise their rights to take
security or waive their rights under section 7.3 of the credit facilities, then
Company promptly shall provide written notice to the Pension Benefit Guaranty
Corporation, with a copy to Parent, after the banks give such notice to
Company.
(b) Service Credit. The employment of each Company Transfer Employee
with Parent shall be treated as employment with Company for eligibility and
vesting purposes under the PEP.
(c) Former Company Employees' PEP Accrued Benefits. Each Parent
Employee with a vested benefit in the PEP may request (1) a distribution of the
vested portion of his or her PEP accrued benefit as soon as practicable after
January 1, 2000, (2) a rollover of the vested portion of his or her PEP accrued
benefit to an "eligible retirement plan" (as defined in Section 401(a)(31) of
the Code) or (3), if the vested portion of his or her PEP accrued benefit
exceeds $5,000, that the vested portion of his or her accrued benefit remain in
the PEP.
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(d) PEP Trust Agreement. Parent shall take such action as is necessary
or appropriate to cause the assets of the PEP that are invested in the Xxxxxx
Corporation Master Trust to be transferred to a trust established for the PEP.
2.4 Xxxxxx Pension Plan. Parent shall continue to be responsible for
any Financial Accounting Statement 87 liability with respect to the Xxxxxx
Pension Plan, and Parent shall assume all responsibility for the administration
and valuation of the Xxxxxx Pension Plan before and after the Distribution.
ARTICLE III
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
Company shall not assume any liability whatsoever with respect to the
Parent SERP, and Parent shall not assume any liability with respect to Company
SERP. The Company shall have no right to claim any assets held in a Parent
rabbi trust.
ARTICLE IV
STOCK INCENTIVE PLAN
4.1 Establishment of Company Stock Incentive Plan. At or prior to the
Distribution Date, Company shall establish the Company Stock Incentive Plan for
the benefit of Company Employees who hold outstanding awards under the Parent
Stock Incentive Plan at the Distribution Date and such other Company Employees
as are designated by the Company to benefit under such Plan (such employees are
referred to hereinafter as the "Stock Incentive Employees").
4.2 Stock Options. As soon as practicable after the Distribution Date,
the Stock Incentive Employees shall surrender for cancellation their
outstanding Parent Stock Options, if any, in exchange for options to purchase
shares of Company common stock ("Company Stock
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Options"), and Parent Stock Options held by Stock Incentive Employees shall be
replaced with options to purchase shares of Company common stock issued under
the Company Stock Incentive Plan. The number of shares subject to each Company
Stock Option will be determined by multiplying the number of shares subject to
each Parent Stock Option by a number equal to (a) the closing price of a share
of Parent common stock on the New York Stock Exchange on the Record Date,
divided by (b) the opening price of a share of Company common stock on the New
York Stock Exchange on the day following the Distribution Date (the "Company
Adjustment Ratio"). The price of each Company Stock Option will be determined
by dividing the option price of each Parent Stock Option by the Company
Adjustment Ratio.
4.3 Performance Shares. As soon as practicable after the Distribution
Date, Parent Performance Shares held by the Stock Incentive Employees shall be
forfeited, and Company shall issue Company Performance Shares under the Company
Stock Incentive Plan to replace such Parent Performance Shares in an amount
equal to the result of multiplying the Parent Performance Shares by the Company
Adjustment Ratio. The performance targets for such Company Performance Shares
shall be established by Company as soon as practicable following the
Distribution Date. Notwithstanding the foregoing, prior to the forfeiture of
the Stock Incentive Employees' Parent Performance Shares, the Stock Incentive
Employees shall be paid all dividends and other distributions accrued with
respect to such Parent Performance Shares through and including the
Distribution Date including any dividend paid in shares of Company which will
be paid in accordance with the terms of the Parent Stock Incentive Plan
including withholding for applicable taxes.
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ARTICLE V
OTHER BENEFITS
5.1 Cessation or Continuation of Coverage. Effective as of his or her
Transfer Date, each Company Transfer Employee, together with dependents
thereof, shall cease to be covered by Parent's employee welfare benefit plans,
including but not limited to plans, programs, policies and arrangements which
provide medical and dental coverage, life and accident insurance and disability
coverage (collectively, "Welfare Plans"), and each Parent Transfer Employee,
together with dependents thereof, shall cease to be covered by Company's
Welfare Plans. Company Employees and their dependents shall continue to be
covered under the dependent care spending accounts covering such Company
Employees immediately before the Distribution Date ("Pre-Distribution
Accounts") through December 31, 1999, and Parent shall continue to administer
the Pre-Distribution Accounts under the Accordia contract on behalf of Company
Employees and their dependents for claims incurred under the Pre-Distribution
Accounts during the calendar year 1999. Company shall pay any administrative
costs associated with the administration of the claims described in the
immediately preceding sentence and continued participation by each Company
Transfer Employee in his or her Pre-Distribution Account during 1999 and after
his or her Transfer Date shall be determined under the terms of such
Pre-Distribution Account.
5.2 Responsibility for Claims Incurred. Parent shall retain
responsibility for all Welfare Plan claims incurred by each Company Transfer
Employee and his or her dependents prior to his or her Transfer Date, and
Company shall retain responsibility for all Welfare Plan claims incurred by
each Parent Transfer Employee and his or her dependents prior to his or her
Transfer Date (other than any such claims incurred by Parent Transfer Employees
under the Xxxxxx Dependent Care Spending Account).
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Company shall be responsible for all Welfare Plan claims incurred by
each Company Transfer Employee after his or her Transfer Date (other than any
such claims incurred by Company Transfer Employees under the Xxxxxx Dependent
Care Spending Account before January 1, 2000), and Parent shall be responsible
for all Welfare Plan claims incurred by each Parent Transfer Employee after his
or her Transfer Date. For purposes of this Section, a claim shall be deemed to
have been incurred on the date on which medical or other treatment or service
was rendered and not the date of the inception of the related illness or injury
or the date of submission of a claim related thereto.
5.3 Certain Health Plan Provisions.
(a) In General. Any pre-existing condition requirement in any of
Company's Welfare Plans that are medical, dental or health plans shall be
waived with respect to Company Transfer Employees only to the extent required
by any applicable law, and any pre-existing condition requirement in any of
Parent's Welfare Plans that are medical, dental or health plans shall be waived
with respect to Parent Transfer Employees only to the extent required by any
applicable law.
(b) Company Retirees. Former employees retired from the Company who
are covered under any Parent Welfare Plan on August 31, 1999 shall cease to be
covered under such Parent Welfare Plan on September 1, 1999 and shall be
covered by a Company Welfare Plan starting on that date. Company shall be
responsible for any Financial Accounting Statement 106 liability and reporting
with respect to such retired Company employees.
5.4 Vacation. Any earned, but not taken, vacation time with Parent of
each Company Transfer Employee shall become the responsibility of Company
effective as of his or her Transfer Date, and Parent shall cease to have any
liability in respect thereof. Any earned, but not
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taken, vacation time with Company of each Parent Transfer Employee shall become
the responsibility of Parent, and Company shall cease to have any liability in
respect thereof.
5.5 Xxxxxx Corporation Merit Scholarship Program. Company shall assume
the liability for the cost of funding any scholarship for the year 2000 for the
child of a Company Employee who has been selected to participate or who is
selected to participate in the Xxxxxx Corporation Merit Scholarship Program for
the year 2000.
Parent shall be responsible for the cost of funding any scholarship
for the year 2000 for the child of a Parent Employee who has been selected to
participate or who is selected to participate in the Xxxxxx Corporation Merit
Scholarship Program for the year 2000.
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement. This Agreement and the Agreement and Plan of
Distribution between Company and Parent dated as of October 22, 1999 (the
"Distribution Agreement") shall constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
previous negotiations, discussions, agreements and understandings with respect
to such subject matter.
6.2 Indemnity. Except as specifically provided in this Agreement and
the Distribution Agreement,
(a) Except as set forth in the Ancillary Workers Compensation
Agreement, Company shall be responsible for any and all Liabilities or Losses
(as such terms are defined in the Distribution Agreement) relating to the
employment of Company Employees or former Company Employees by the Company
without regard to whether such Liabilities or Losses are
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incurred before, on or after the Distribution Date and shall indemnify and hold
Parent harmless for such Liabilities and Losses; and
(b) Parent shall be responsible for any and all Liabilities or Losses
relating to the employment of Parent Employees or former Parent Employees by
Parent without regard to whether such Liabilities or Losses are incurred
before, on or after the Distribution Date and shall indemnify and hold Company
harmless for such Liabilities and Losses. Otherwise, the indemnification
provisions of Article III of the Distribution Agreement shall be applicable to
this Agreement and are hereby incorporated herein by reference.
6.3 Claims and Dispute Resolution. The claims and dispute resolution
provisions of Article V of the Distribution Agreement shall be applicable to
this Agreement and are hereby incorporated herein by reference.
6.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed in the State of New York.
6.5 Notices. All notices and other communications hereunder shall be
in writing, shall reference this Agreement and shall be hand delivered or
mailed by registered or certified mail (return receipt requested) or sent by
any means of electronic message transmission with delivery confirmed (by voice
or otherwise) to the parties at the following addresses (or at such other
addresses for a party as shall be specified by like notice) and will be deemed
given on the date on which such notice is received:
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To Parent:
Xxxxxx Corporation
0000 Xxxx XXXX Xxxx.
Xxxxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Corporation
0000 Xxxx XXXX Xxxx.
Xxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Company:
Xxxxxx Worldwide, Inc.
0000 Xxxxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
6.6 Amendments. This Agreement may not be modified or amended except
by an agreement in writing signed by the parties.
6.7 Successors and Assigns. Neither party may assign its rights or
delegate any of its duties or obligations under this Agreement without the
prior written consent of the other party. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and assigns.
6.8 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and their respective subsidiaries and should not
be deemed to confer upon third
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parties any remedy, claim, liability, reimbursement, claim of action or other
right in excess of those existing without reference to this Agreement.
6.9 Titles and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
6.10 Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any Jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such' prohibition or
unenforceability in any jurisdiction shall not invalidate or render such
provision unenforceable in any other jurisdiction.
6.11 Access to Information. Company and Parent shall provide each
other with access to information reasonably necessary in order to carry out the
provisions of this Agreement (including Parent files relating to retired
company employees and premium reconciliation for billing and collections
through the Distribution Date).
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first hereinabove written.
ATTEST: XXXXXX CORPORATION
/s/ Xxxxx X. Xxxxxx By:/s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Secretary Title: Vice President - Treasurer
ATTEST: XXXXXX WORLDWIDE, INC.
/s/ J. Xxxxxxx Xxxxx By:/s/ Xxxxx X. XxxXxxxxx
Name: J. Xxxxxxx Xxxxx Name: Xxxxx X. XxxXxxxxx
Title: Secretary Title: Executive Vice President and
Chief Financial Officer
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