EXHIBIT (c)(4)
XXXXX PRODUCTS CO.
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Employee Benefit and Severance Principles
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January 14, 2000
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Background
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The Board of Directors of Xxxxx Products Co., a Pennsylvania corporation
("Xxxxx") (together with its foreign subsidiaries, the "Company") has on this
date approved an Agreement and Plan of Merger (the "Merger Agreement") among
Xxxxx, Malibu Acquisition Corp. ("Sub" or "Purchaser") and Siemens Energy &
Automation, Inc. ("Siemens Energy & Automation" or "Parent"), providing, inter
alia, for (i) a tender offer by Sub for all of the issued and outstanding
capital stock of Xxxxx, (ii) the Merger of Sub with and into Xxxxx (the
"Merger") and (iii) the consequent acquisition by Siemens Energy & Automation,
for cash, of all of the issued and outstanding capital stock of Xxxxx. The date
on which the Merger shall become effective is referred to herein as the
"Effective Time."
The Board of Directors of Xxxxx is adopting these Principles to memorialize
certain determinations made by the Board, coincident with its approval of the
Merger Agreement, to provide for equitable treatment of Xxxxx'x employees from
and after the Effective Time and to retain the services of certain officers in
connection with the transition. In Section 6.8(j) of the Merger Agreement,
Parent has agreed to implement and carry out these principles with the same
effect as if fully set forth in the Merger Agreement.
1. Past Service Credit. For purposes of meeting any service requirements
for participation, vesting or early retirement under any pension or other
benefit plans sponsored by Purchaser, Parent or the Company in which the
employees of the Company shall be covered after the Effective Time, Purchaser or
Parent shall cause appropriate action to be taken to cause the service of the
Company employees with the Company or any of its subsidiaries that is considered
vesting service under the Company Pension Plan to be recognized as service under
such plans.
2. Maintenance of Aggregate Benefits. At the Effective Time, Purchaser
or Parent shall cause appropriate action to be taken to cause those individuals
who are actively employed by the Company at the Effective Time to be covered by
benefit plans that are comparable in the aggregate to the benefits that those
employees had at the Effective Time, provided, however, nothing in this Section
shall (i) require Purchaser or Parent to provide any equity based plan not
generally made available to employees of Purchaser and Parent, or (ii) prevent
the sponsor of such plans from amending or modifying such plans at any time
after the Effective Time, provided, that such amendments or modifications are
not contrary to the provisions of Section 6.8 of the Merger Agreement.
3. Pre-existing Condition Limitations. In addition, Purchaser or Parent
shall cause appropriate action to be taken to cause any health plans under which
employees of the Company shall be covered after the Effective Time to waive any
pre-existing condition requirements with respect to the employees of the Company
and their eligible dependents.
4. Special Severance. The Company shall continue the employment of each
of Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, and Xxxxxx X. Xxxxxxxxxx
(each, a "Designated Officer") for a period of not less than six (6) months (the
"Initial Period") after the Effective Time at salaries at least equal to those
in effect for each Designated Officer on the date hereof. If during the period
commencing on the first day after the expiration of the Initial Period and
ending on the second anniversary of the Effective Time (the "Protected Period")
the Company or any successor thereto discharges any Designated Officer other
than for Cause (as defined on Exhibit A hereto) or by reason of the Designated
Officer's death, or if the Designated Officer resigns for Good Reason (as
defined on Exhibit A hereto) the Company or any successor thereto shall:
(A) make a lump sum payment to such Designated Officer of an
amount equal to one week's pay for each of the Designated Officer's years
of service, calculated in accordance with paragraph 1 of this Statement of
Principles;
(B) provided that such Designated Officer enters into, and does
not breach in any material respect Parent's customary release and 12 month
non-compete agreement (with respect to the material business or businesses
in which such Designated Officer was engaged at any time during the 24
month period prior to termination), pay such Designated Officer, over the
ensuing 12 months, an amount equal to, and on essentially the same schedule
as, the base salary that would have been paid to such Designated Officer if
he had remained employed for those 12 months at the base salary in effect
on the date of his termination;
(C) continue the medical coverage in effect for such Designated
Officer on the date of his termination for the remainder of the Protected
Period; and
(D) provide such Designated Officer appropriate outplacement
services.
If any payment to be made hereunder, together with the other payments and
benefits that the Designated Officer is entitled to receive from the Company or
any successor thereto would be subject to the excise tax imposed by (S)4999 of
the Internal Revenue Code of 1986 (as amended) (the "Code"), the payments to be
made hereunder shall be reduced, but only to the extent necessary in the
opinion (a copy of which shall be furnished to the Designated Officer) of
Parent's independent auditors so that those payments will be deductible by the
Company or any successor under Code (S)280G and not subject to excise tax under
Code (S)4999. Any such determination with respect to Xx. Xxxxx shall be made
in accordance with his Employment Agreement described below.
Anything in this Section 4 to the contrary notwithstanding, in the event
that Xxxxxx X. Xxxxx becomes entitled to severance benefits hereunder, he shall
be entitled to the greater of the severance benefits provided herein, or the
severance benefits provided in event of his termination
of service under the terms of the Employment Agreement dated October 31, 1997
between Xx. Xxxxx and the Company.
5. Split Dollar Life Insurance. Parent and Purchaser shall, and shall
cause the Company to, honor in accordance with their existing terms the split
dollar life insurance arrangements between the Company and those of its
employees covered by such arrangements on the date hereof, provided that except
as to individuals retired on or before January 14, 2000 or who retire after
January 14, 2000 under circumstances entitling them to an immediate pension
under a pension plan maintained by the Company or any successor, no such
arrangement shall remain in effect following termination of employment.
6. Canadian and United Kingdom Retirement Plans. Purchaser or an
affiliate of Purchaser will become the plan sponsor of the retirement plans
maintained by the Company in Canada and the United Kingdom.
Exhibit A
As used in Section 3 of these Principles,
(A) The term "Cause" shall mean the (A) a material failure by the
Designated Officer to perform substantially the duties owed to the Company or
any successor thereto, provided that such failure (if curable) is not cured
within 15 days following the Designated Officer's receipt of written notice of
that failure, or (B) conviction of the Designated Officer of a felony, or (C)
conviction of the Designated Officer of a misdemeanor involving moral turpitude.
No act or omission on the part of the Designated Officer shall be considered
"willful" unless it is done or omitted in bad faith or without reasonable belief
that the action or omission was in the best interests of the Company or any
successor thereto.
(B) A resignation shall be for "Good Reason" if
(i) subsequent to the Effective Time and without such Designated
Officer's express written consent, there has been a material
reduction in such Designated Officer's duties and
responsibilities with the Company (or any successor thereto)
from those immediately prior to the Effective Time;
(ii) subsequent to a Effective Time, a reduction by the Company or
any successor thereto in such Designated Officer's base salary
as in effect on the date immediately preceding the Effective
Time; or
(iii) subsequent to the Effective Time and without such Designated
Officer's express written consent, the Company or any successor
thereto shall have required such Designated Officer to be based
anywhere other than within twenty-five (25) miles of his office
location on the date immediately preceding the date of the
Effective Time, except for required travel on the Company's or
any successor's business to an extent substantially consistent
with his business travel obligations prior to the Effective Time
with such reasonable increases, if any, as may be necessitated
by Parent and Purchaser's reasonable business needs in view of
the nature of their international operations.
