[LETTERHEAD]
December 16, 1999 Personal and Confidential
Xxxx X. Xxxx
0000 Xxxxxxxx Xxxx.
Lake Oswego, OR 97035
Dear Xxxx:
As you know, following the sale of the Color Printing and Imaging
Division ("CPID"), your employment situation with Tektronix will be changing.
The purpose of this letter agreement (the "Agreement") is to describe the timing
and impact of certain matters relating to your employment and additional
benefits to be paid to you in accordance with this Agreement. This letter is
contingent upon the closing of the Xerox/CPID transaction.
1. Resignation as Officer. Currently you are Senior Vice
President and Chief Financial Officer of Tektronix, Inc. and
an officer of certain of Tektronix' subsidiaries. You will
resign all of these officer positions following the closing of
the sale of CPID, the specific date to be determined by me
(the "Effective Date"). Forms of resignation are attached as
Exhibit A. I anticipate that this will be approximately the
same time that I step down as Chief Executive Officer.
2. New Assignment. On the Effective Date you will go on special
assignment, reporting to me as Chairman to assist in an
orderly transition of the management of Tektronix to a new
Chief Executive Officer and a new Chief Financial Officer and
on special projects I may assign to you. You will remain
available to work on these matters on an on-call full-time
basis until May 27, 2000. You will continue as an employee of
Tektronix and your annual base pay and benefits will remain at
their current levels through your last day of employment,
except as provided in this Agreement. Tektronix
will provide office space and clerical assistance for you as
needed until May 27, 2000. You will continue to be treated as
an "insider" of Tektronix for purposes of Tektronix' xxxxxxx
xxxxxxx policies.
3. Last Day of Employment. Your official separation date and last
day of employment will be May 27, 2000, at which time you will
go through the normal employment termination exit process.
4. Announcements. Any internal or public announcement by
Tektronix or you of the reasons for your departure from
Tektronix shall be consistent with the press release issued by
Tektronix on October 21, 1999. Tektronix and you will not make
statements inconsistent with this reason for your departure.
5. Final Paycheck. You will receive a final paycheck on your last
day of employment for work through that date. Unless your
assignment requires full-time work by you until May 27, 2000,
you will be expected to use all of your accrued vacation by
your last day of employment.
6. Cash Payment. In recognition of your past contributions to
Tektronix, and in consideration of the services to be rendered
prior to May 27, 2000 and subject to your fulfilling your
obligations under this Agreement (including execution of the
Release in accordance with paragraph 17 and your continued
employment through May 27, 2000 except for a termination on
account of your death or disability), Tektronix will pay you a
cash payment equal to $876,000 (the "Cash Payment"), subject
to applicable withholding. Tektronix shall pay the Cash
Payment by June 15, 2000.
7. Termination of Certain Agreements. The benefits provided for
in this Agreement are paid to you in lieu of, and not in
addition to, severance amounts payable under the Executive
Severance Agreement, the Tektronix Severance Pay Plan, the
Change of Control Agreement, or any other plan, policy or
practice of Tektronix. The Executive Severance Agreement dated
September 22, 1993 and the Change of Control Agreement dated
September 22, 1993 and the Change of Control Agreement dated
September 10, 1993 will be terminated as of the Closing of the
sale of CPID and of no further force and effect. You
specifically acknowledge that, in the event there is a "change
of control" within the meaning of the Change of Control
Agreement after the Closing of the sale of CPID, you will not
be entitled to any benefits under the Change of Control
Agreement.
8. Group Health Benefits. Tektronix will reimburse you for up to
$15,000 in retirement health plan premiums (medical and
dental) beginning May 28, 2000, but for not more than 24
months. After the Tektronix-paid medical coverage ends, you
may continue to participate in the retiree medical plan by
paying the full premium cost yourself. In addition, under the
federal COBRA continuation regulations, you are entitled to
extend coverage under a Tektronix dental plan in which you or
your dependents are enrolled for the eighteen-month statutory
period. The employee benefits department will be sending you a
coverage election form at the beginning of June 2000.
9. Option Vesting. Attached on Exhibit B is a statement that
shows the status of your options through November 17, 1999.
Subject to your fulfilling your obligations under this
Agreement (including execution of the Release and continued
employment through May 27, 2000 other than in the event of
death or disability), as of your last day of employment (A)
the vesting of all unvested unexercised stock options will be
accelerated in full and (B) the options may be exercised at
any time until May 27, 2005, but in no event later than the
original expiration date for the options as set forth in the
applicable option agreement.
*NOTE: In all cases, the extension to exercise does not extend
the original term of the option grant. For example, if an
option were to expire on its own terms on December 31, 2000,
the extension of the exercise period as provided in this
Agreement would NOT extend the exercise date beyond that date.
In the event of your death, your estate has only 90 days to
exercise the options.
MECHANICS OF EXERCISE AFTER SEPARATION. You can continue to
use the "cashless" exercise option. Upon exercise, taxes,
including FICA, will continue to be withheld, and Tektronix
will report the income and withholdings to the IRS. The income
will be reported as wage income, and you will receive a W-2
(not a 1099) at the end of the year in which the option is
exercised.
10. Restricted Stock. The restricted shares previously awarded
under the Long Term Incentive Plan ("LTIP") for fiscal years
1998-2000 (12,000 shares) and held by Tektronix will remain
subject to the existing terms and will be released only if,
when and to the extent that the existing performance criteria
have been satisfied. This determination will be made after May
27, 2000 in accordance with the LTIP. The treatment of the
restricted shares previously
awarded under the LTIP for fiscal years 1999-2001 (10,000) and
held by Tektronix will be as determined by the Board of
Directors of Tektronix prior to May 27, 2001.
11. Income Tax Returns. Income tax returns for the calendar years
1999 and 2000 will (if you so desire) be prepared by Xxxxxxxx
& Touche and paid for by Tektronix.
12. Financial Counseling Services. Xxxxxxxx, Xxxxxx & Xxxxxxxx
will continue to provide counseling services, to be paid for
by Tektronix, through December 31, 2000.
13. Results Share and APIP. You will continue to participate in
the Results Sharing Plan until your last day of employment on
the same terms as you now participate. You will continue to
participate in the Annual Performance Improvement Plan
("APIP") until your last day of employment on the same terms
as you now participate, except that, subject to your
fulfilling the terms of this Agreement (including execution of
the Release and continued employment through May 27, 2000
other than in the event of death or disability), the minimum
amount that Tektronix will pay you under the APIP for FY2000
will be $219,000. If the APIP performance criteria for FY2000
are revised following the sale of CPID, the revised criteria
will also apply in calculating your benefits (subject to the
$219,000 minimum payment).
14. SERP. Your benefits will continue to accrue under your
Supplemental Executive Retirement Agreement with Tektronix
dated March 17, 1993 (the "SERP Agreement") until May 27,
2000. You will be paid a benefit (your "SERP") under the SERP
Agreement in accordance with its terms, with the following
modifications. Other capitalized terms used here have the
meanings provided in the SERP Agreement. Your SERP will be
calculated, before offsets under the Cash Balance Plan, the
Retirement Equalization Plan and the Split Dollar Policy, at
39.57 [Note: Calculation is attached] percent of your Final
Average Compensation for the five year period ending May 27,
2000. Final Average Compensation will include only base pay,
Results Share and APIP and will not include other payments or
benefits made pursuant to this Agreement. Your SERP will be
calculated as of May 27, 2000, using the amount of the
Retirement Plan Offsets (under the Cash Balance Plan and
Retirement Equalization Plan) determined as of that date. The
Split Dollar Offset as of May 27, 2000 shall be $1,863,192.
Your unfunded SERP will be paid in a
lump sum that is the actuarial equivalent of the SERP benefit
stated in single life annuity form. Tektronix and you agree
that the factor to be used to convert the monthly annuity to
an actuarial equivalent lump sum amount shall be 148.2180092.
Tektronix will pay your unfunded SERP benefit to you at a time
it selects, but no earlier than May 27, 2000 and no later than
December 31, 2000. In making such selection Tektronix will
consider the income tax impact on you and Tektronix, but will
have absolute discretion over the time of payment. Your
benefits under the Cash Balance Plan, Retirement Equalization
Plan and Split Dollar Policy will be paid as provided in the
applicable plan or policy.
15. Split Dollar Life Insurance. Tektronix will pay to the
insurance company on your behalf $54,733 on June 23, 2000 and
another $54,733 on June 23, 2001 for the premiums on the split
dollar life insurance policy maintained on your life in
accordance with Amendment No. 1 dated June 23, 1994 to your
Executive Severance Agreement. At the same time as these
payments, Tektronix will pay you an amount of cash equal to
your projected federal and state income tax and payroll tax
obligation on the combination of the $54,733 payment and such
amount of cash. Tektronix will have the right, at its
discretion, to prepay at any time the payments provided by
this paragraph 15. These payments are in lieu of any other
payments by Tektronix under Amendment No. 1 to the Executive
Severance Agreement and of any obligation to gross up those
payments for taxes. Tektronix will continue to pay interest
due on the loan secured by such life insurance until April 20,
2002, at which point the principal amount of the loan will be
repaid out of the cash surrender value of the policy. Upon
payoff of such loan, the Split Dollar Life Insurance policy
shall be released from the collateral assignment as security
for such loan and shall belong solely to you.
16. Other Benefits. Your participation in the executive health
examination program and reimbursements to you for home
security system costs will terminate on December 31, 2000.
Tektronix will pay up to $18,000 to a third party outplacement
firm selected by you to provide career counseling assistance
to you for a period of two years following your last day of
employment. Other executive benefits (including your golf
membership) will terminate on the Effective Date. Tektronix
will continue to reimburse you for reasonable business
expenses relating to the performance of your duties under this
Agreement, but this shall not include
reimbursement for any travel expenses to the Portland area
from any city where you may be located.
17. Release. You understand that as a condition to receiving the
Cash Payment and certain of the other benefits offered in this
Agreement, you must execute, deliver and not revoke your
acceptance of the terms set forth in the Release of Claims
attached hereto as Exhibit C. The Release should be executed
and returned on your last day of employment. You have the
right to consult with legal counsel of your own choice and at
your own expense and we advise you to do so before signing the
Release.
18. Assistance in Litigation. In the event Tektronix requests
assistance, you agree to assist until December 31, 2001, in
defense of ongoing or future litigation or claims about which
you have knowledge without additional compensation. You will,
however, be reimbursed for reasonable out-of-pocket expenses
approved in advance by Tektronix.
19. Confidentiality. You agree to hold confidential the terms of
this Agreement. You may disclose the terms to your wife,
accountant, attorney, financial advisor, and taxing
authorities only as may be necessary for your legal and
financial affairs or as required by law. Except for these
disclosures, you agree not to reveal the terms of this
Agreement. You understand that Tektronix may have a legal
obligation to disclose some or all of the terms of this
Agreement. This provision will continue in full force and
effect even after all payments have been made under this
Agreement.
20. Noncompetition. Until May 27, 2002, you agree that you will
not, without the prior written consent of the Chairman of the
Board of Directors of Tektronix, directly or indirectly,
whether as employee, officer, director, independent
contractor, consultant, stockholder, partner, or otherwise,
engage or assist others to engage in or have any interest in
any business which competes with Tektronix in the sale of test
and measurement equipment in any geographic area in which
Tektronix markets or has marketed its products during the year
preceding the date of this letter; provided, however, that
this paragraph will not prevent you from holding shares in a
publicly traded company that competes with Tektronix so long
as your ownership interest is less than five percent (5%) of
the outstanding shares of the Company. You agree and
acknowledge that the time, scope, and geographic area and
other provisions of this paragraph have been specifically
negotiated and that such time, scope,
geographic areas, and other provisions are reasonable under
the circumstances. You further agrees that if, despite this
express agreement, a court should hold any portion of this
paragraph as unenforceable for any reason, the maximum
restrictions of time, scope and geographic area reasonable
under the circumstances, as determined by the court, will be
substituted for the restrictions held unenforceable.
21. Non-Solicitation. Until May 27, 2001, you agree that neither
you nor any business in which you are an officer, a director,
a partner or have an ownership interest will actively solicit
directly or indirectly any existing employee of Tektronix
without the written consent of Tektronix. The foregoing
covenant shall not apply to a business in which you are an
officer, director, partner or owner, if you had no prior
actual knowledge of the solicitation. "Ownership interest" in
a publicly traded company shall mean the ownership of more
than five percent (5%) of the outstanding shares of the
company.
22. General. You acknowledge that this Agreement contains the
entire agreement between you and Tektronix regarding the terms
of your separation from employment. There have been no other
representations or commitments by Tektronix other than those
stated above.
If you have any questions or we can provide additional information,
please let me know.
Sincerely,
XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
Attachments: Exhibit A - Form of Resignation
Exhibit B - Stock Option Statement
Exhibit C - Release of Claims
ACKNOWLEDGED AND AGREED:
XXXX X. XXXX
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Xxxx X. Xxxx
Date: December 17, 1999
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