EMPLOYEE MATTERS AGREEMENT
Exhibit 10.1
THIS EMPLOYEE MATTERS AGREEMENT, dated as of ______________, 2014, is entered into by and between ▇▇▇▇▇▇▇ International, Inc. (“▇▇▇▇▇▇▇ International”), and ▇▇▇▇▇▇▇ Electronics, Inc. (“▇▇▇▇▇▇▇ Electronics”). ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics are also referred to in this Agreement individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, ▇▇▇▇▇▇▇ International has determined that it would be appropriate, desirable and in the best interests of ▇▇▇▇▇▇▇ International and the shareholders of ▇▇▇▇▇▇▇ International to separate the ▇▇▇▇▇▇▇ Electronics Business from ▇▇▇▇▇▇▇ International;
WHEREAS, ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics have entered into the Separation and Distribution Agreement, dated as of ________________, 2014 (the “Distribution Agreement”), in connection with the separation of the ▇▇▇▇▇▇▇ Electronics Business from ▇▇▇▇▇▇▇ International (the “Transaction”) and the Distribution of ▇▇▇▇▇▇▇ Electronics Common Shares to shareholders of ▇▇▇▇▇▇▇ International;
WHEREAS, the Distribution Agreement also provides for the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the separation of ▇▇▇▇▇▇▇ Electronics and its subsidiaries from ▇▇▇▇▇▇▇ International; and
WHEREAS, to ensure an orderly transition under the Distribution Agreement, it will be necessary for the Parties to allocate between them Assets, Liabilities and responsibilities with respect to certain employee compensation and benefit plans and programs, and certain other employment matters.
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Distribution Agreement.
“Affiliate” has the meaning set forth in the Distribution Agreement.
“Agreement” means this Employee Matters Agreement, together with all schedules hereto and all amendments, modifications, and changes hereto entered into pursuant to Section 13.9.
“Assets” has the meaning set forth in the Distribution Agreement.
“Benefit Management Records” has the meaning set forth in Section 3.3(b).
“Benefit Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA, and any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing
for benefits, perquisites or compensation of any nature to any Employee, or to any eligible family member, dependent, or beneficiary of any such Employee, including pension plans (qualified and nonqualified), thrift plans, deferred compensation plans (qualified and nonqualified), supplemental pension plans and welfare plans, and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, medical, retiree medical, dental, vision, travel and accident, life, disability and accident insurance, tuition reimbursement, travel reimbursement, vacation, sick, personal or bereavement days, leaves of absences and holidays of ▇▇▇▇▇▇▇ International or ▇▇▇▇▇▇▇ Electronics, as applicable.
“Business Days” means any day other than a Saturday or Sunday or a day on which banking institutions in Jasper, Indiana are authorized or requested by Law to close.
“COBRA” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq. of ERISA and at Section 4980B of the Code.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder by the U.S. Department of the Treasury.
“Distribution” has the meaning set forth in the Distribution Agreement.
“Distribution Agreement” has the meaning set forth in the recitals to this Agreement.
“Distribution Date” has the meaning set forth in the Distribution Agreement.
“Distribution Ratio” shall be the ratio of three (3) ▇▇▇▇▇▇▇ Electronics Common Shares for every four (4) shares of ▇▇▇▇▇▇▇ International Common Shares.
“Effective Time” has the meaning set forth in the Distribution Agreement.
“Employee” means any ▇▇▇▇▇▇▇ International Group Employee, Former ▇▇▇▇▇▇▇ International Group Employee, ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee.
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FICA” has the meaning set forth in Section 3.1(f).
“FMLA” means the U.S. Family and Medical Leave Act, as amended, and the regulations promulgated thereunder.
“Former ▇▇▇▇▇▇▇ Electronics Group Employees” means all former employees of the ▇▇▇▇▇▇▇ International Group who (i) primarily provided services for the benefit of the ▇▇▇▇▇▇▇ Electronics Business at the time their employment terminated or (ii) at the time of termination of employment, primarily provided services for a business for which any Liability, including Liabilities associated with Employees, is reflected on the ▇▇▇▇▇▇▇ Electronics Balance Sheet.
“Former ▇▇▇▇▇▇▇ International Group Employee” means all former employees of the ▇▇▇▇▇▇▇ International Group who have an employment end date on or before the Effective Time, excluding all ▇▇▇▇▇▇▇ Electronics Group Employees and Former ▇▇▇▇▇▇▇ Electronics Group Employees.
2
“FSA Participation Period” has the meaning set forth in Section 8.3(b)(i).
“FUTA” has the meaning set forth in Section 3.1(f).
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.
“IRS” means the Internal Revenue Service.
“▇▇▇▇▇▇▇ Electronics” has the meaning set forth in the preamble to this Agreement.
“▇▇▇▇▇▇▇ Electronics APSA” means an Annual Performance Share Award to a ▇▇▇▇▇▇▇ Electronics Group Employee under the ▇▇▇▇▇▇▇ Electronics Equity Plan or under the ▇▇▇▇▇▇▇ International Equity Plan and adjusted as provided in Article IV.
“▇▇▇▇▇▇▇ Electronics Benefit Plan” means any Benefit Plan sponsored or maintained by a member of the ▇▇▇▇▇▇▇ Electronics Group following the Effective Time.
“▇▇▇▇▇▇▇ Electronics Bonus Plans” means bonus plans adopted by ▇▇▇▇▇▇▇ Electronics as of the Effective Time that are comparable to the ▇▇▇▇▇▇▇ International Bonus Plans.
“▇▇▇▇▇▇▇ Electronics Business” has the meaning set forth in the Distribution Agreement.
“▇▇▇▇▇▇▇ Electronics Common Share Fund” means an investment fund in the ▇▇▇▇▇▇▇ Electronics 401(k) Plan or the ▇▇▇▇▇▇▇ International 401(k) Plan, as applicable, that holds ▇▇▇▇▇▇▇ Electronics Common Shares and cash.
“▇▇▇▇▇▇▇ Electronics Common Shares” means the shares of common stock, having no par value per share, of ▇▇▇▇▇▇▇ Electronics.
“▇▇▇▇▇▇▇ Electronics Entity” means any member of the ▇▇▇▇▇▇▇ Electronics Group, including any Transferred Group Entity.
“▇▇▇▇▇▇▇ Electronics Equity Plan” means the plan adopted by ▇▇▇▇▇▇▇ Electronics as of the Effective Time under which ▇▇▇▇▇▇▇ Electronics may provide awards comparable to awards provided by ▇▇▇▇▇▇▇ International under the ▇▇▇▇▇▇▇ International, Inc. Amended and Restated 2003 Stock Option and Incentive Plan.
“▇▇▇▇▇▇▇ Electronics 401(k) Plan” has the meaning set forth in Section 6.1.
“▇▇▇▇▇▇▇ Electronics 401(k) Plan Participants” has the meaning set forth in Section 6.2.
“▇▇▇▇▇▇▇ Electronics Group” shall have the same meaning as the term “▇▇▇▇▇▇▇ Electronics Group” in the Distribution Agreement.
“▇▇▇▇▇▇▇ Electronics Group Employee” means any individual who primarily provides services for the benefit of a member of the ▇▇▇▇▇▇▇ Electronics Group, including a Transferred Group Entity, immediately prior to the Effective Time.
“▇▇▇▇▇▇▇ Electronics Incentive Bonus Plan” means an incentive bonus plan adopted by ▇▇▇▇▇▇▇ Electronics as of the Effective Time that is comparable to the ▇▇▇▇▇▇▇ International Incentive Bonus Plan.
3
“▇▇▇▇▇▇▇ Electronics LTPSA” means a Long Term Performance Share Award to a ▇▇▇▇▇▇▇ Electronics Group Employee under the ▇▇▇▇▇▇▇ Electronics Equity Plan or under the ▇▇▇▇▇▇▇ International Equity Plan and adjusted as provided in Article IV.
“▇▇▇▇▇▇▇ Electronics Post-Distribution Share Value” means the weighted average closing price per share of ▇▇▇▇▇▇▇ Electronics Common Shares trading on the NASDAQ during Regular Trading Hours on the first five (5) Trading Days following the Distribution Date.
“▇▇▇▇▇▇▇ Electronics PSAs” means performance share awards to ▇▇▇▇▇▇▇ Electronics Group Employees, including ▇▇▇▇▇▇▇ Electronics APSAs and ▇▇▇▇▇▇▇ Electronics LTPSAs issued under the ▇▇▇▇▇▇▇ Electronics Equity Plan or the ▇▇▇▇▇▇▇ International Equity Plan and adjusted as provided in Article IV.
“▇▇▇▇▇▇▇ Electronics Ratio” means the quotient obtained by dividing the ▇▇▇▇▇▇▇ Electronics Post-Distribution Share Value by the ▇▇▇▇▇▇▇ International Pre-Distribution Share Value.
“▇▇▇▇▇▇▇ Electronics SERP” means a nonqualified supplemental employee retirement plan adopted by ▇▇▇▇▇▇▇ Electronics as of the Effective Time that is comparable to the ▇▇▇▇▇▇▇ International SERP.
“▇▇▇▇▇▇▇ Electronics SERP Participant” shall have the meaning set forth in Section 7.1(a).
“▇▇▇▇▇▇▇ Electronics Severance Arrangements” shall have the meaning set forth in Section 11.1.
“▇▇▇▇▇▇▇ Electronics Welfare Plan” means any Welfare Plan sponsored or maintained by any one or more members of the ▇▇▇▇▇▇▇ Electronics Group immediately after the Effective Time.
“▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date” has the meaning set forth in Section 8.1.
“▇▇▇▇▇▇▇ Electronics Welfare Plan Participants” has the meaning set forth in Section 8.1.
“▇▇▇▇▇▇▇ International” has the meaning set forth in the preamble to this Agreement.
“▇▇▇▇▇▇▇ International APSA” means an Annual Performance Share Award under the ▇▇▇▇▇▇▇ International Equity Plan.
“▇▇▇▇▇▇▇ International Benefit Plan” means any Benefit Plan sponsored or maintained by a member of the ▇▇▇▇▇▇▇ International Group immediately prior to the Effective Time, excluding any such Benefit Plan that becomes a ▇▇▇▇▇▇▇ Electronics Benefit Plan.
“▇▇▇▇▇▇▇ International Bonus Plans” shall have the meaning set forth in Section 5.1.
“▇▇▇▇▇▇▇ International Common Share Fund” means an investment fund in the ▇▇▇▇▇▇▇ International 401(k) Plan or the ▇▇▇▇▇▇▇ Electronics 401(k) Plan, as applicable, that holds ▇▇▇▇▇▇▇ International Common Shares and cash.
“▇▇▇▇▇▇▇ International Common Shares” means the ▇▇▇▇▇▇▇ International Class A common stock, par value $0.05 per share, and Class B common stock, par value $0.05 per share.
“▇▇▇▇▇▇▇ International Director” means any individual who is or was previously a non-employee member of the board of directors of ▇▇▇▇▇▇▇ International.
4
“▇▇▇▇▇▇▇ International Entity” means any member of the ▇▇▇▇▇▇▇ International Group.
“▇▇▇▇▇▇▇ International Equity Plan” means the ▇▇▇▇▇▇▇ International, Inc. Amended and Restated 2003 Stock Option and Incentive Plan.
“▇▇▇▇▇▇▇ International Group” has the meaning set forth in the Distribution Agreement.
“▇▇▇▇▇▇▇ International Group Employee” means any individual who is employed by a member of the ▇▇▇▇▇▇▇ International Group immediately prior to the Effective Time, excluding any ▇▇▇▇▇▇▇ Electronics Group Employee.
“▇▇▇▇▇▇▇ International Incentive Bonus Plan” means the ▇▇▇▇▇▇▇ International, Inc. 2010 Profit Sharing Incentive Bonus Plan.
“▇▇▇▇▇▇▇ International LTPSA” means a Long Term Performance Share Award under the ▇▇▇▇▇▇▇ International Equity Plan.
“▇▇▇▇▇▇▇ International Post-Distribution Share Value” means the weighted average closing price per share of ▇▇▇▇▇▇▇ International Common Shares trading on the NASDAQ during Regular Trading Hours on the first five (5) Trading Days following the Distribution Date.
“▇▇▇▇▇▇▇ International Pre-Distribution Share Value” means the weighted average closing price per share of ▇▇▇▇▇▇▇ International Common Shares trading on the NASDAQ during Regular Trading Hours on the last five (5) Trading Days immediately preceding the Distribution Date.
“▇▇▇▇▇▇▇ International PSAs” means performance share awards, including ▇▇▇▇▇▇▇ International APSAs and ▇▇▇▇▇▇▇ International LTPSAs issued under the ▇▇▇▇▇▇▇ International Equity Plan.
“▇▇▇▇▇▇▇ International Ratio” means the quotient obtained by dividing the ▇▇▇▇▇▇▇ International Post-Distribution Share Value by the ▇▇▇▇▇▇▇ International Pre-Distribution Share Value.
“▇▇▇▇▇▇▇ International SERP” means the ▇▇▇▇▇▇▇ International, Inc. Supplemental Employee Retirement Plan.
“▇▇▇▇▇▇▇ International 401(k) Plan” means the ▇▇▇▇▇▇▇ International, Inc. Retirement Plan (Plan No. 001).
“▇▇▇▇▇▇▇ International 401(k) Plan Participants” has the meaning set forth in Section 6.3(a).
“▇▇▇▇▇▇▇ International U.S. Welfare Plan” means the ▇▇▇▇▇▇▇ International, Inc. Master Welfare Benefits Plan (Plan No. 520).
“Law” has the meaning set forth in the Distribution Agreement.
“Liabilities” has the meaning set forth in the Distribution Agreement.
“NASDAQ” means The NASDAQ Stock Market LLC.
“Non-U.S. ▇▇▇▇▇▇▇ Electronics Welfare Plans” has the meaning set forth in Section 9.2(b).
“Non-U.S. ▇▇▇▇▇▇▇ International Welfare Plans” has the meaning set forth in Section 9.2(a).
5
“Party” or “Parties” has the meaning set forth in the preamble to this Agreement.
“Person” has the meaning set forth in the Distribution Agreement.
“Privacy Contract” means any contract entered into in connection with applicable privacy protection Laws or regulations.
“Regular Trading Hours” means the period beginning at 9:30 A.M. New York City time and ending at 4:00 P.M. New York City time.
“Securities Act” means the Securities Act of 1933, as amended.
“Subsidiary” has the meaning set forth in the Distribution Agreement.
“Tax” has the meaning set forth in the Tax Matters Agreement.
“Tax Matters Agreement” means the Tax Matters Agreement, dated as of , 2014 by and among ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics.
“Trading Day” means the period of time during any given calendar day, commencing with the determination of the opening price on the NASDAQ and ending with the determination of the closing price on the NASDAQ, in which trading and settlement in ▇▇▇▇▇▇▇ International Common Shares or ▇▇▇▇▇▇▇ Electronics Common Shares are permitted on the NASDAQ.
“Transaction” has the meaning set forth in the recitals to this Agreement.
“Transferred Group Adoption Date” means the applicable date prior to the Effective Time on which ▇▇▇▇▇▇▇ International and/or ▇▇▇▇▇▇▇ Electronics determine to have any or all of the ▇▇▇▇▇▇▇ Electronics Benefit Plans adopted by a Transferred Group Entity.
“Transferred Group Entity” means each ▇▇▇▇▇▇▇ International Entity that will become a ▇▇▇▇▇▇▇ Electronics Entity as of the Effective Time.
“Transition Services Agreement” has the meaning set forth in the Distribution Agreement.
“U.S.” means the United States of America.
“WARN” means the U.S. Worker Adjustment and Retraining Notification Act, as amended, and the regulations promulgated thereunder, and any applicable state or local Law equivalent.
“Welfare Plan” means, where applicable, a “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, wellness, prescription drug, dental, vision, and mental health and substance abuse), disability benefits, or life, accidental death and disability, and business travel insurance, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs, paid time off programs, contribution funding toward a health savings account, flexible spending accounts, or cashable credits of ▇▇▇▇▇▇▇ International or ▇▇▇▇▇▇▇ Electronics, as applicable.
Section 1.2 Interpretation. In this Agreement, unless the context clearly indicates otherwise:
(a)words used in the singular include the plural and words used in the plural include the singular;
6
(b)if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;
(c)reference to any gender includes the other gender and the neuter;
(d)the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;
(e)the words “shall” and “will” are used interchangeably and have the same meaning;
(f)the word “or” shall have the inclusive meaning represented by the phrase “and/or”;
(g)relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;
(h)all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Saving Time, as applicable, on the date in question;
(i)whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;
(j)accounting terms used herein shall have the meanings historically ascribed to them by ▇▇▇▇▇▇▇ International and its Subsidiaries, including ▇▇▇▇▇▇▇ Electronics for this purpose, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;
(k)reference to any Article, Section or schedule means such Article or Section of, or such schedule to this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;
(l)the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;
(m)the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to, or otherwise assist in, the consummation of a desired result and which do not require the performing Party to expend funds or assume Liabilities other than expenditures and Liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the Distribution;
(n)reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by this Agreement;
(o)reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;
(p)references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;
7
(q)if there is any conflict between the provisions of the main body of this Agreement and the schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such schedule;
(r)unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the U.S.;
(s)the titles to Articles and headings of Sections contained in this Agreement, in any schedule and Exhibit and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and
(t)any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.
ARTICLE II
GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
Section 2.1General Principles. It is the intention of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics that all employment-related Liabilities associated with ▇▇▇▇▇▇▇ Electronics Group Employees and Former ▇▇▇▇▇▇▇ Electronics Group Employees, whether prior to, on or after the Effective Time, are to be assumed by ▇▇▇▇▇▇▇ Electronics, except as otherwise specifically set forth in this Agreement. Each member of the ▇▇▇▇▇▇▇ International Group and each member of the ▇▇▇▇▇▇▇ Electronics Group shall take any and all reasonable action as shall be necessary or appropriate so that active participation in the ▇▇▇▇▇▇▇ International Benefit Plans by all ▇▇▇▇▇▇▇ Electronics Group Employees and Former ▇▇▇▇▇▇▇ Electronics Group Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of the Effective Time).
(a)Except as otherwise provided in this Agreement, effective as of the Effective Time, one or more members of the ▇▇▇▇▇▇▇ Electronics Group (as determined by ▇▇▇▇▇▇▇ Electronics) shall assume, or continue the sponsorship of, and no member of the ▇▇▇▇▇▇▇ International Group shall have any further Liability with respect to, or under, and ▇▇▇▇▇▇▇ Electronics shall indemnify each member of the ▇▇▇▇▇▇▇ International Group, and the officers, directors, and employees of each member of the ▇▇▇▇▇▇▇ International Group, and hold them harmless with respect to any and all:
(i)individual agreements entered into between any member of the ▇▇▇▇▇▇▇ International Group and any ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee;
(ii)agreements entered into between any member of the ▇▇▇▇▇▇▇ International Group and any individual who is an independent contractor, or leasing organization, providing services primarily for the business activities of the ▇▇▇▇▇▇▇ Electronics Group;
(iii)Collective Bargaining Agreements, collective agreements, trade union or works council agreements entered into between any member of the ▇▇▇▇▇▇▇ International Group and any union, works council or other body representing only ▇▇▇▇▇▇▇ Electronics Group Employees;
(iv)wages, salaries, incentive compensation (as the same may be modified by this Agreement), commissions, bonuses, and any other employee compensation or benefits payable to or on behalf of any ▇▇▇▇▇▇▇ Electronics Group Employees or Former ▇▇▇▇▇▇▇ Electronics Group Employees after the Effective Time, without regard to when such wages, salaries, incentive
8
compensation, commissions, bonuses, or other employee compensation or benefits are or may have been earned;
(v)moving expenses and obligations related to relocation, repatriation, transfers or similar items incurred by or owed to any ▇▇▇▇▇▇▇ Electronics Group Employees or Former ▇▇▇▇▇▇▇ Electronics Group Employees that have not been paid prior to the Effective Time;
(vi)immigration-related, visa, work application or similar rights, obligations and Liabilities related to any ▇▇▇▇▇▇▇ Electronics Group Employees or Former ▇▇▇▇▇▇▇ Electronics Group Employees;
(vii)Liabilities under any ▇▇▇▇▇▇▇ Electronics Benefit Plan; and
(viii)Liabilities and obligations whatsoever with respect to claims made by, or with respect to any ▇▇▇▇▇▇▇ Electronics Group Employees or Former ▇▇▇▇▇▇▇ Electronics Group Employees, in connection with any ▇▇▇▇▇▇▇ International Benefit Plan, including but not limited to, such Liabilities relating to actions or omissions of or by any member of the ▇▇▇▇▇▇▇ Electronics Group or any officer, director, employee or agent thereof on or prior to the Effective Time.
(b)Except as otherwise provided in this Agreement, effective as of the Effective Time, no member of the ▇▇▇▇▇▇▇ Electronics Group shall have any further Liability for, and ▇▇▇▇▇▇▇ International shall indemnify each member of the ▇▇▇▇▇▇▇ Electronics Group, and the officers, directors, and employees of each member of the ▇▇▇▇▇▇▇ Electronics Group, and hold them harmless with respect to any and all Liabilities and obligations whatsoever with respect to, claims made by or with respect to any ▇▇▇▇▇▇▇ International Group Employees or Former ▇▇▇▇▇▇▇ International Group Employees in connection with any ▇▇▇▇▇▇▇ International Benefit Plan (other than with respect to Liabilities relating to ▇▇▇▇▇▇▇ Electronics Group Employees or Former ▇▇▇▇▇▇▇ Electronics Group Employees), including such Liabilities relating to actions or omissions of or by any member of the ▇▇▇▇▇▇▇ International Group or any officer, director, employee or agent thereof prior to, on or after the Effective Time.
Section 2.2 Service Credit.
(a) Service for Eligibility, Vesting, and Benefit Purposes. Except as otherwise provided in any other provision of this Agreement, the ▇▇▇▇▇▇▇ Electronics Benefit Plans shall, and ▇▇▇▇▇▇▇ Electronics shall cause each member of the ▇▇▇▇▇▇▇ Electronics Group to, recognize each ▇▇▇▇▇▇▇ Electronics Group Employee’s full service history with the ▇▇▇▇▇▇▇ International Group for purposes of eligibility, vesting, determination of level of benefits and, to the extent applicable and subject to Section 2.4, benefit accruals under any ▇▇▇▇▇▇▇ Electronics Benefit Plan for such ▇▇▇▇▇▇▇ Electronics Group Employee’s service with any member of the ▇▇▇▇▇▇▇ International Group on or prior to the Effective Time to the same extent such service would be credited under the ▇▇▇▇▇▇▇ International Benefit Plans, as applicable. Notwithstanding anything to the contrary, in connection with any Employee’s break in service, any determination as to service credit shall be made under and in accordance with the applicable ▇▇▇▇▇▇▇ Electronics Benefit Plan document, the terms of which shall control in the case of any conflict with this Section 2.2.
(b) Evidence of Prior Service. Notwithstanding anything to the contrary, but subject to applicable Law, upon reasonable request by one Party to the other Party, the first Party will provide to the other Party copies of any records reasonably available to the first Party to document such service, plan participation and membership of such Employees and reasonably cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any Employee.
9
Section 2.3 Plan Administration.
(a) Transition Services. The Parties acknowledge that the ▇▇▇▇▇▇▇ International Group or the ▇▇▇▇▇▇▇ Electronics Group may provide administrative services for certain of the other Party’s benefit programs for a transitional period under the terms of the Transition Services Agreement. The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement.
(b) Participant Elections and Beneficiary Designations. Prior to the Effective Time, each participant in a ▇▇▇▇▇▇▇ Electronics Benefit Plan shall execute such elections and beneficiary designations as are promulgated by the administrator of each ▇▇▇▇▇▇▇ Electronics Benefit Plan. Notwithstanding the foregoing, if and to the extent a ▇▇▇▇▇▇▇ Electronics Benefit Plan participant has failed to execute and file an updated election and/or designation, the participant elections and beneficiary designations made under any corresponding ▇▇▇▇▇▇▇ International Benefit Plan prior to the Effective Time with respect to which Assets or Liabilities are transferred or allocated to ▇▇▇▇▇▇▇ Electronics Benefit Plans in accordance with this Agreement shall continue in effect under the applicable ▇▇▇▇▇▇▇ Electronics Benefit Plan, including, without limitation, deferral, investment and payment form elections, coverage options and levels, beneficiary designations and the rights of alternate payees under qualified domestic relations orders, in each case, to the extent allowed by applicable Law.
Section 2.4 No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement or the Distribution Agreement, no participant in the ▇▇▇▇▇▇▇ Electronics Benefit Plans shall receive benefits that duplicate benefits provided by the corresponding ▇▇▇▇▇▇▇ International Benefit Plan. Furthermore, unless expressly provided for in this Agreement or the Distribution Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerate vesting, distribution of benefits or entitlements to any compensation or under any Benefit Plan on the part of any ▇▇▇▇▇▇▇ International Group Employee, Former ▇▇▇▇▇▇▇ International Group Employee, ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee.
Section 2.5 No Expansion of Participation. Unless otherwise expressly provided in this Agreement, as otherwise determined or agreed to by ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics, as required by applicable Law, or as explicitly set forth in a ▇▇▇▇▇▇▇ Electronics Benefit Plan, a ▇▇▇▇▇▇▇ Electronics Group Employee shall be entitled to participate in the ▇▇▇▇▇▇▇ Electronics Benefit Plans only to the extent that such Employee was entitled to participate in the corresponding ▇▇▇▇▇▇▇ International Benefit Plan as in effect immediately prior to the Effective Time, with it being the intent of the Parties that this Agreement does not result in any expansion of the number of ▇▇▇▇▇▇▇ Electronics Group Employees participating or the participation rights therein that they had prior to the Effective Time.
Section 2.6 Special Provisions. Notwithstanding any other provision in this Agreement to the contrary, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Vice President of Organizational Effectiveness of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President of Human Resources of ▇▇▇▇▇▇▇ Electronics shall have the discretion, power and authority to adopt and implement special provisions, rules or procedures applicable to the employment, compensation and benefit arrangements of one or more individuals as are deemed equitable, necessary or advisable to give effect to the intentions of this Agreement, including without limitation, special provisions relating to (i) different equitable adjustments than as set forth in Article IV, in the case of a grantee who has outstanding awards granted under the ▇▇▇▇▇▇▇ International Equity Plan or any incentive plan, where such grantee’s circumstances warrant a different treatment (including, but not limited to, grantees in jurisdictions outside of the U.S.) to the extent that such Vice President of Organizational Effectiveness of ▇▇▇▇▇▇▇ International and the Vice President of Human Resources of ▇▇▇▇▇▇▇ Electronics deem such different treatment to be equitable, necessary or advisable, based on the advice of counsel; (ii) the good faith
10
determination of the employer or former employer, as applicable, of each Employee; (iii) errors in the timing of employment transfers; (iv) issues pertaining to immigration Law requirements; and (v) any other decisions regarding the employment, compensation and benefit arrangements of one or more individuals as are deemed equitable, necessary or advisable that are not otherwise contemplated by this Agreement.
ARTICLE III
TRANSFER/ASSIGNMENT OF EMPLOYEES
Section 3.1Active Employees.
(a)▇▇▇▇▇▇▇ Electronics Group Employees. Except as otherwise set forth in this Agreement, effective not later than immediately preceding the Effective Time, the employment of each ▇▇▇▇▇▇▇ Electronics Group Employee shall be continued by a member of the ▇▇▇▇▇▇▇ Electronics Group or shall be assigned and transferred to a member of the ▇▇▇▇▇▇▇ Electronics Group (in each case, with such member as determined by ▇▇▇▇▇▇▇ Electronics). Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation, if any, as may be necessary to reflect such assignments and transfers of employment and comply with Section 5.1 of the Distribution Agreement (No Solicit; No Hire).
(b)▇▇▇▇▇▇▇ International Group Employees. Except as otherwise set forth in this Agreement, effective not later than immediately preceding the Effective Time, the employment of each ▇▇▇▇▇▇▇ International Group Employee shall be continued by a member of the ▇▇▇▇▇▇▇ International Group or shall be assigned and transferred to a member of the ▇▇▇▇▇▇▇ International Group (in each case as determined by ▇▇▇▇▇▇▇ International). Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation, if any, as may be necessary to reflect such assignments and transfers of employment and comply with Section 5.1 of the Distribution Agreement (No Solicit; No Hire).
(c)At-Will Status. Notwithstanding the above or any other provision of this Agreement, nothing in this Agreement shall create any obligation on the part of any member of the ▇▇▇▇▇▇▇ International Group or any member of the ▇▇▇▇▇▇▇ Electronics Group to (i) continue the employment of any Employee or permit the return from a leave of absence for any period following the date of this Agreement or the Effective Time (except as required by applicable Law) or (ii) change the employment status of any Employee from “at will,” to the extent such Employee is an “at will” employee under applicable Law.
(d)Severance. The Parties acknowledge and agree that the Distribution and the assignment, transfer or continuation of the employment of Employees as contemplated by this Section 3.1 shall not be deemed a severance of employment of any Employee for purposes of this Agreement or any Benefit Plan or policy of any member of the ▇▇▇▇▇▇▇ International Group or any member of the ▇▇▇▇▇▇▇ Electronics Group.
(e)Not a Change of Control/Change in Control. The Parties acknowledge and agree that neither the consummation of the Distribution nor any transaction in connection with the Distribution shall be deemed a “change of control,” “change in control,” or term of similar import for purposes of any ▇▇▇▇▇▇▇ International Benefit Plan, ▇▇▇▇▇▇▇ Electronics Benefit Plan, ▇▇▇▇▇▇▇ International Equity Plan or ▇▇▇▇▇▇▇ Electronics Equity Plan, or any ▇▇▇▇▇▇▇ International or ▇▇▇▇▇▇▇ Electronics policy or agreement.
(f)Payroll and Related Taxes. With respect to the portion of the tax year occurring prior to the day immediately following the Effective Time, ▇▇▇▇▇▇▇ International will (i) be responsible for all payroll obligations, tax withholding and reporting obligations and (ii) furnish a Form W-2 or similar earnings statement to all ▇▇▇▇▇▇▇ Electronics Group Employees for such period. With respect to the remaining portion of such tax year, ▇▇▇▇▇▇▇ Electronics will (i) be responsible for all payroll obligations, tax withholding, and reporting obligations regarding ▇▇▇▇▇▇▇ Electronics Group Employees and (ii) furnish a Form W-2 or similar
11
earnings statement to all ▇▇▇▇▇▇▇ Electronics Group Employees. Following the Effective Time, ▇▇▇▇▇▇▇ International will, to the extent provided in the Transition Services Agreement, provide payroll obligations, tax withholding and reporting obligations in accordance with the terms of the Transition Services Agreement. With respect to each ▇▇▇▇▇▇▇ Electronics Group Employee, ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics shall, and shall cause their respective Affiliates to (to the extent permitted by applicable Law and practicable) (a) treat ▇▇▇▇▇▇▇ Electronics (or the applicable ▇▇▇▇▇▇▇ Electronics Entity) as a “successor employer” and ▇▇▇▇▇▇▇ International (or the applicable ▇▇▇▇▇▇▇ International Entity) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, to the extent appropriate, for purposes of Taxes imposed under the United States Federal Insurance Contributions Act, as amended (“FICA”), or the United States Federal Unemployment Tax Act, as amended (“FUTA”) and (b) file tax returns, exchange wage payment information, and report wage payments made by the respective predecessor and successor employer on separate IRS Forms W-2 or similar earnings statements to each such ▇▇▇▇▇▇▇ Electronics Group Employee for the tax year in which the Effective Time occurs, in a manner provided in Section 4.02(l) of Revenue Procedure 2004-53. Except to the extent otherwise administratively practicable, the collection of payroll taxes under FICA and FUTA will restart upon or following the Effective Time with respect to each ▇▇▇▇▇▇▇ Electronics Group Employee for the tax year during which the Effective Time occurs.
(g)Employment Agreements; Expatriate Obligations. ▇▇▇▇▇▇▇ shall assign, and ▇▇▇▇▇▇▇ Electronics will assume and honor, or will cause a ▇▇▇▇▇▇▇ Electronics Entity to assume and honor, and as otherwise required by applicable Law, any agreements to which any ▇▇▇▇▇▇▇ Electronics Group Employee is party with either any ▇▇▇▇▇▇▇ International Entity or any joint venture with a ▇▇▇▇▇▇▇ International Entity, including any (i) executive employment contract, (ii) retention, severance, or change in control agreement or (iii) expatriate (including any international assignee) contract or arrangement (including agreements and obligations regarding repatriation, relocation, equalization of Taxes and living standards in the host country). The ▇▇▇▇▇▇▇ Electronics Group Employees with such agreements under this Section 3.1(g) are set forth on Schedule 3.1(g). To the extent that assignment of such agreements is not permitted, effective as of the Effective Time, each member of the ▇▇▇▇▇▇▇ Electronics Group shall be considered to be a successor to each member of the ▇▇▇▇▇▇▇ International Group for purposes of, and a third-party beneficiary with respect to, all such agreements.
Section 3.2 Employment Law Obligations.
(a) WARN. After the Effective Time, (i) ▇▇▇▇▇▇▇ International shall be responsible for providing any necessary WARN notice (and meeting any similar state Law notice requirements) with respect to any termination of employment of any ▇▇▇▇▇▇▇ International Group Employee and (ii) ▇▇▇▇▇▇▇ Electronics shall be responsible for providing any necessary WARN notice (and meeting any similar state Law notice requirements) with respect to any termination of employment of any ▇▇▇▇▇▇▇ Electronics Group Employee. The parties acknowledge that the contemplated transactions will not result or trigger any WARN notice.
(b) Compliance with Employment Laws. On and after the Effective Time, (i) each member of the ▇▇▇▇▇▇▇ International Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related Laws and requirements relating to the employment of ▇▇▇▇▇▇▇ International Group Employees and the treatment of any applicable Former ▇▇▇▇▇▇▇ International Group Employees in respect of their former employment, and (ii) each member of the ▇▇▇▇▇▇▇ Electronics Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related Laws and requirements relating to the employment of ▇▇▇▇▇▇▇ Electronics Group Employees and the treatment of any Former ▇▇▇▇▇▇▇ Electronics Group Employees in respect of their former employment.
12
Section 3.3 Employee Records.
(a) Sharing of Information. Subject to any limitations imposed by applicable Law, ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics (acting directly or through members of the ▇▇▇▇▇▇▇ International Group or the ▇▇▇▇▇▇▇ Electronics Group, respectively) shall provide to the other and their respective agents and vendors all information necessary for the Parties to perform their respective duties under this Agreement. The Parties also hereby agree to enter into any business associate arrangements that may be required for the sharing of any information pursuant to this Agreement to comply with the requirements of HIPAA.
(b) Transfer of Personnel Records and Authorization. Subject to any limitation imposed by applicable Law, as of the Effective Time or as soon as administratively practicable thereafter, ▇▇▇▇▇▇▇ International shall transfer and assign to ▇▇▇▇▇▇▇ Electronics all personnel records, all immigration documents, including I-9 forms and work authorizations, all payroll deduction authorizations and elections, whether voluntary or mandated by Law, including but not limited to W-4 forms and deductions for benefits under the applicable ▇▇▇▇▇▇▇ Electronics Benefit Plan and all absence management records, Family and Medical Leave Act records, insurance beneficiary designations, flexible spending account enrollment confirmations, attendance, and return to work information relating to or maintained for ▇▇▇▇▇▇▇ Electronics Group Employees, and for any Former ▇▇▇▇▇▇▇ Electronics Group Employees who participate in ▇▇▇▇▇▇▇ Electronics Benefit Plans (“Benefit Management Records”). Subject to any limitations imposed by applicable Law, ▇▇▇▇▇▇▇ International, however, may retain originals of, copies of, or access to personnel records, immigration records, payroll forms and Benefit Management Records as long as necessary to provide services to ▇▇▇▇▇▇▇ Electronics (acting on its behalf pursuant to the Transition Services Agreement between the Parties entered into as of the date of this Agreement) or otherwise as required by applicable Law. ▇▇▇▇▇▇▇ Electronics will use personnel records, payroll forms and Benefit Management Records for lawful purposes only. It is understood that following the Effective Time, ▇▇▇▇▇▇▇ International records so transferred and assigned may be maintained by ▇▇▇▇▇▇▇ Electronics (acting directly or through one of its Subsidiaries) pursuant to ▇▇▇▇▇▇▇ Electronics’ applicable records retention policy.
(c) Access to Records. To the extent not inconsistent with this Agreement and any applicable privacy protection Laws or regulations or Privacy Contracts, reasonable access to Employee-related records after the Effective Time will be provided to members of the ▇▇▇▇▇▇▇ International Group and members of the ▇▇▇▇▇▇▇ Electronics Group pursuant to the terms and conditions of Section 7.3 of the Distribution Agreement. In addition, notwithstanding anything to the contrary, ▇▇▇▇▇▇▇ Electronics shall provide ▇▇▇▇▇▇▇ International with reasonable access to those records necessary for its administration of any Benefit Plans or programs, or employment and compensation matters, on behalf of ▇▇▇▇▇▇▇ International Group Employees and Former ▇▇▇▇▇▇▇ International Group Employees after the Effective Time as permitted by any applicable privacy protection Laws or regulations or Privacy Contracts. ▇▇▇▇▇▇▇ International shall also be permitted to retain copies of all restrictive covenant agreements with any ▇▇▇▇▇▇▇ Electronics Group Employee in which any member of the ▇▇▇▇▇▇▇ International Group has a valid business interest. In addition, ▇▇▇▇▇▇▇ International shall provide ▇▇▇▇▇▇▇ Electronics with reasonable access to those records necessary for its administration of any Benefit Plans or programs, or employment and compensation matters, on behalf of ▇▇▇▇▇▇▇ Electronics Group Employees or Former ▇▇▇▇▇▇▇ Electronics Group Employees after the Effective Time as permitted by any applicable privacy protection Laws or regulations or Privacy Contracts. ▇▇▇▇▇▇▇ Electronics shall also be permitted to retain copies of all restrictive covenant agreements with any ▇▇▇▇▇▇▇ International Group Employee or Former ▇▇▇▇▇▇▇ International Group Employee in which any member of the ▇▇▇▇▇▇▇ Electronics Group has a valid business interest.
(d) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and
13
hold harmless each other from and against any and all Liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations, Privacy Contracts and internal policies applicable to such information.
(e) Confidentiality. Except as otherwise set forth in this Agreement, all records and data relating to Employees shall, in each case, be subject to the confidentiality provisions of the Distribution Agreement and any other applicable agreement and applicable Law, and the provisions of this Section 3.3 shall be in addition to, and not in derogation of, the provisions of the Distribution Agreement governing confidential information, including Section 7.6 of the Distribution Agreement.
(f) Cooperation. Each Party shall use commercially reasonable efforts to cooperate to share, retain, and maintain data and records that are necessary or appropriate to further the purposes of this Section 3.3 and for each Party to administer its respective Benefit Plans to the extent consistent with this Agreement and applicable Law, and each Party agrees to cooperate as long as is reasonably necessary to further the purposes of this Section 3.3. No Party shall charge another Party a fee for such cooperation.
(g) Labor Relations. To the extent required by applicable Law or any agreement with a labor union, works council or similar employee organization, ▇▇▇▇▇▇▇ Electronics shall provide notice, engage in consultation and take any similar action which may be required on its part in connection with the Distribution and shall fully indemnify ▇▇▇▇▇▇▇ International against any Liabilities arising from its failure to comply with such requirements.
ARTICLE IV
EQUITY AND EQUITY-BASED COMPENSATION
Section 4.1General Principles.
(a)▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics shall take any and all reasonable actions as shall be necessary and appropriate to further the provisions of this Article IV, including, to the extent practicable, providing written notice or similar communication to each Employee who holds one or more awards granted under the ▇▇▇▇▇▇▇ International Equity Plan informing such Employee of (i) the actions contemplated by this Article IV with respect to such awards and (ii) whether (and during what time period) any “blackout” period shall be imposed upon holders of awards granted under the ▇▇▇▇▇▇▇ International Equity Plan during which time awards may not be exercised or settled, as the case may be.
(b)Following the Effective Time, a grantee who has outstanding equity-based awards under the ▇▇▇▇▇▇▇ International Equity Plan and/or replacement equity-based awards under the ▇▇▇▇▇▇▇ Electronics Equity Plan shall be considered to have been employed by the applicable plan sponsor before and after the Effective Time for purposes of (i) vesting and (ii) determining the date of termination of employment as it applies to any such award; provided, that this Section 4.1(b) shall not govern adjustments made to the ▇▇▇▇▇▇▇ International PSAs under Section 4.2 hereof.
(c)No award described in this Article IV, whether outstanding or to be issued, adjusted, substituted or cancelled by reason of or in connection with the Distribution, shall be adjusted, settled, cancelled, or exercisable, until in the judgment of the administrator of the applicable plan or program such action is consistent with all applicable Laws, including federal securities Laws. Any period of exercisability will not be extended on account of a period during which such an award is not exercisable pursuant to the preceding sentence.
14
(d)The adjustment or conversion of ▇▇▇▇▇▇▇ International PSAs shall be effected in a manner that is intended to avoid the imposition of any accelerated, additional, penalty or other Taxes on the holders thereof pursuant to Section 409A of the Code.
Section 4.2 Performance Share Awards. The number of ▇▇▇▇▇▇▇ International Common Shares underlying each ▇▇▇▇▇▇▇ International PSA held by a ▇▇▇▇▇▇▇ International Group Employee or Former ▇▇▇▇▇▇▇ International Group Employee immediately prior to the Effective Time shall remain a ▇▇▇▇▇▇▇ International PSA and be adjusted as of the Distribution Date by dividing such shares by the ▇▇▇▇▇▇▇ International Ratio, with the result rounded up to the extent it includes a fractional share; and the number of ▇▇▇▇▇▇▇ International Common Shares underlying each ▇▇▇▇▇▇▇ International PSA held by a ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee immediately prior to the Effective Time shall be converted as of the Distribution Date into a ▇▇▇▇▇▇▇ Electronics PSA and adjusted by dividing such shares by the ▇▇▇▇▇▇▇ Electronics Ratio, with the result rounded up to the extent it includes a fractional share. . The terms and conditions to which the (i) ▇▇▇▇▇▇▇ International PSAs are subject shall be substantially the same terms and conditions before and after the Effective Time; and (ii) ▇▇▇▇▇▇▇ Electronics PSAs are subject shall be substantially similar to the terms and conditions applicable to the corresponding ▇▇▇▇▇▇▇ International PSA immediately prior to the Effective Time; provided, however, that the calculations of performance will be adjusted to appropriately reflect the Transaction. Exhibit A attached hereto contains the methodology applicable to such calculations and adjustments.
Section 4.3 Section 16(b) of the Exchange Act. By approving the adoption of this Agreement, the respective Boards of Directors of each of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics intend to exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b-3 thereunder, all acquisitions and dispositions of equity awards by directors and officers of each of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics.
Section 4.4 Liabilities for Settlement of Awards.
(a) Settlement of Outstanding ▇▇▇▇▇▇▇ International PSAs. ▇▇▇▇▇▇▇ International shall be responsible for all Liabilities associated with ▇▇▇▇▇▇▇ International PSAs, including any share delivery, registration or other obligations related to the settlement of the ▇▇▇▇▇▇▇ International PSAs.
(b) Settlement of Outstanding ▇▇▇▇▇▇▇ Electronics PSAs. ▇▇▇▇▇▇▇ Electronics shall be responsible for all Liabilities associated with ▇▇▇▇▇▇▇ Electronics PSAs including any share delivery, registration or other obligations related to the settlement of the ▇▇▇▇▇▇▇ Electronics PSAs.
Section 4.5 Form S-8. As soon as reasonably practicable and subject to applicable Law, ▇▇▇▇▇▇▇ Electronics shall prepare and file with the Securities Exchange Commission a registration statement on Form S-8 (or another appropriate form) registering under the Securities Act the offering of a number of ▇▇▇▇▇▇▇ Electronics Common Shares at a minimum equal to the number of shares subject to the ▇▇▇▇▇▇▇ Electronics 401(k) Plan, ▇▇▇▇▇▇▇ Electronics PSAs and the ▇▇▇▇▇▇▇ International 401(k) Plan. ▇▇▇▇▇▇▇ Electronics shall use commercially reasonable efforts to cause any such registration statement to be kept effective (and the current status of the prospectus or prospectuses required thereby to be maintained).
Section 4.6 Tax Reporting and Withholding for Equity-Based Awards. Unless otherwise required by applicable Law, ▇▇▇▇▇▇▇ International (or one of its Subsidiaries) will be responsible for all income, payroll, fringe benefit, payment on account or other tax reporting related to income of or otherwise owed by ▇▇▇▇▇▇▇ International Group Employees or Former ▇▇▇▇▇▇▇ International Group Employees from equity-based awards, and ▇▇▇▇▇▇▇ Electronics (or one of its Subsidiaries) will be responsible for all income, payroll, fringe benefit, payment on account or other tax reporting related to or otherwise owed on income of ▇▇▇▇▇▇▇
15
Electronics Group Employees from equity-based awards. Similarly, ▇▇▇▇▇▇▇ International will be responsible for all income, payroll, fringe benefit, payment on account or other tax reporting related to or otherwise owed on income of its non-employee directors from equity-based awards, and ▇▇▇▇▇▇▇ Electronics will be responsible for any income, payroll, fringe benefit, payment on account or other tax reporting related to income of or otherwise owed by its non-employee directors from equity-based awards. Further, ▇▇▇▇▇▇▇ International (or one of its Subsidiaries) shall be responsible for remitting applicable tax withholdings and related payments for ▇▇▇▇▇▇▇ International Group Employees to each applicable taxing authority, and ▇▇▇▇▇▇▇ Electronics (or one of its Subsidiaries) shall be responsible for remitting applicable tax withholdings and related payments for ▇▇▇▇▇▇▇ Electronics Group Employees to each applicable taxing authority; provided, however, that to the extent necessary (and permissible) to effectuate the foregoing, either ▇▇▇▇▇▇▇ International or ▇▇▇▇▇▇▇ Electronics may act as agent for the other company by remitting amounts withheld in the form of shares or in conjunction with an exercise transaction and related payments to an appropriate taxing authority.
Section 4.7 Cooperation. Each Party acknowledges and agrees to use commercially reasonable efforts to cooperate with each other and with third-party providers to effect withholding and remittance of Taxes, as well as required tax reporting, in a timely, efficient and appropriate manner to further the purposes of this Article IV and to administer all employee equity awards that are outstanding immediately following the Effective Time (including all such equity awards that are adjusted in accordance with this Article IV) to the extent consistent with this Agreement and applicable Law, for as long as is reasonably necessary to further the purposes of this Article IV. No Party shall charge another Party a fee for such cooperation.
ARTICLE V
BONUSES FOR ▇▇▇▇▇▇▇ ELECTRONICS GROUP EMPLOYEES
Section 5.1▇▇▇▇▇▇▇ International Bonus Plan Participation. As of the Effective Time, each ▇▇▇▇▇▇▇ Electronics Group Employee shall cease to participate in any ▇▇▇▇▇▇▇ International Benefit Plan (including, without limitation, the ▇▇▇▇▇▇▇ International Incentive Bonus Plan) that provides cash bonus or similar cash incentive opportunities (the “▇▇▇▇▇▇▇ International Bonus Plans”), and from and after the Effective Time, the ▇▇▇▇▇▇▇ Electronics Group shall be solely responsible for providing cash bonus or similar cash incentive opportunities to ▇▇▇▇▇▇▇ Electronics Group Employees, in accordance with this Article V.
Section 5.2 Bonus Determination.
(a)With respect to any performance period under ▇▇▇▇▇▇▇ International Bonus Plans that has not been completed on or prior to the Effective Time, the ▇▇▇▇▇▇▇ Electronics Group shall provide each ▇▇▇▇▇▇▇ Electronics Group Employee with a cash bonus or similar cash incentive opportunity that is equivalent to the cash bonus or similar cash incentive opportunity which could have been earned under the applicable ▇▇▇▇▇▇▇ International Bonus Plan for such incomplete performance period. As soon as practicable following the Effective Time, ▇▇▇▇▇▇▇ International shall transfer to ▇▇▇▇▇▇▇ Electronics and ▇▇▇▇▇▇▇ Electronics shall assume, the accrued Liability related to the ▇▇▇▇▇▇▇ International Bonus Plans for each ▇▇▇▇▇▇▇ Electronics Group Employee for the portion of the applicable performance period beginning on the first day of the applicable performance period and ending on the Effective Time. For purposes of determining the amount of the accrued Liability to be transferred to and assumed by ▇▇▇▇▇▇▇ Electronics, the applicable performance criteria shall be measured by ▇▇▇▇▇▇▇ International in accordance with the terms of the applicable ▇▇▇▇▇▇▇ International Bonus Plans for the portion of the applicable performance period up to the Effective Time and based on the fiscal year 2015 year-to-date ▇▇▇▇▇▇▇ International financial results as of the Effective Time.
(b)The ▇▇▇▇▇▇▇ Electronics Group shall determine individual ▇▇▇▇▇▇▇ Electronics Group Employee bonus or similar cash incentive amounts, by allocating any applicable aggregate bonus pool as if
16
such bonus pool were being paid under the terms of the applicable ▇▇▇▇▇▇▇ International Bonus Plan, taking into account individual performance criteria as determined by the ▇▇▇▇▇▇▇ Electronics Group in its reasonable discretion. Following such determination, the ▇▇▇▇▇▇▇ Electronics Group shall pay each ▇▇▇▇▇▇▇ Electronics Group Employee the applicable bonus amounts in the same form and on the same timing that each ▇▇▇▇▇▇▇ Electronics Group Employee would have received such bonus or similar short-term cash incentive amount under the terms of the ▇▇▇▇▇▇▇ International Bonus Plans had the Distribution not occurred.
ARTICLE VI
U.S. TAX-QUALIFIED DEFINED CONTRIBUTION PLAN
Section 6.1Establishment of the ▇▇▇▇▇▇▇ Electronics 401(k) Plan. No later than the Effective Time, ▇▇▇▇▇▇▇ Electronics shall have established a defined contribution plan that is intended to meet the requirements of Sections 401(a) and 401(k) of the Code and a related trust that is intended to meet the requirements of Section 501(a) of the Code for the benefit of ▇▇▇▇▇▇▇ Electronics Group Employees (but not Former ▇▇▇▇▇▇▇ Electronics Group Employees, who will continue to be participants in the ▇▇▇▇▇▇▇ International 401(k) Plan) who prior to the Effective Time participated in the ▇▇▇▇▇▇▇ International 401(k) Plan (“▇▇▇▇▇▇▇ Electronics 401(k) Plan”). ▇▇▇▇▇▇▇ Electronics shall be responsible for taking all necessary, reasonable, and appropriate action to establish, maintain, and administer the ▇▇▇▇▇▇▇ Electronics 401(k) Plan so that it is qualified under Sections 401(a) and 401(k) of the Code and that the related trust thereunder is exempt under Section 501(a) of the Code. ▇▇▇▇▇▇▇ Electronics (acting directly or through its Affiliates) shall be responsible for any and all Liabilities and other obligations with respect to the ▇▇▇▇▇▇▇ Electronics 401(k) Plan.
Section 6.2 Transfer of ▇▇▇▇▇▇▇ International 401(k) Plan Assets. Not later than sixty (60) days following the Effective Time (or such later time as mutually agreed by the Parties), ▇▇▇▇▇▇▇ International shall cause the accounts (including any outstanding loan balances) in the ▇▇▇▇▇▇▇ International 401(k) Plan attributable only to ▇▇▇▇▇▇▇ Electronics Group Employees (the “▇▇▇▇▇▇▇ Electronics 401(k) Plan Participants”) and all of the assets in the ▇▇▇▇▇▇▇ International 401(k) Plan related thereto to be transferred to the ▇▇▇▇▇▇▇ Electronics 401(k) Plan, and ▇▇▇▇▇▇▇ Electronics shall cause the ▇▇▇▇▇▇▇ Electronics 401(k) Plan to accept such transfer of accounts and underlying assets and, commencing as of the date of such transfer, to assume and to fully perform, pay, and discharge, all obligations of the ▇▇▇▇▇▇▇ International 401(k) Plan relating to the accounts of the ▇▇▇▇▇▇▇ Electronics 401(k) Plan Participants (to the extent the assets related to those accounts are actually transferred from the ▇▇▇▇▇▇▇ International 401(k) Plan to the ▇▇▇▇▇▇▇ Electronics 401(k) Plan). Assets invested in the ▇▇▇▇▇▇▇ International 401(k) Plan in investment funds that will be replicated in the ▇▇▇▇▇▇▇ Electronics 401(k) Plan shall, unless otherwise agreed by the Parties, be transferred in kind, and assets invested in investment funds that will not be replicated in the ▇▇▇▇▇▇▇ Electronics 401(k) Plan shall be mapped into new investment funds that will be established for such purpose. The foregoing transfer of assets and liabilities from the ▇▇▇▇▇▇▇ International 401(k) Plan to the ▇▇▇▇▇▇▇ Electronics 401(k) Plan shall be conducted in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA.
Section 6.3 Treatment of ▇▇▇▇▇▇▇ Electronics Common Shares and ▇▇▇▇▇▇▇ International Common Shares.
(a)▇▇▇▇▇▇▇ Electronics Common Share Fund; ▇▇▇▇▇▇▇ Electronics Common Shares Held in ▇▇▇▇▇▇▇ International 401(k) Plan Accounts. The ▇▇▇▇▇▇▇ Electronics 401(k) Plan will provide, effective as of the Effective Time: (i) for the establishment of a ▇▇▇▇▇▇▇ Electronics Common Share Fund; (ii) that such ▇▇▇▇▇▇▇ Electronics Stock Fund shall receive a transfer of and hold all ▇▇▇▇▇▇▇ Electronics Common Shares distributed in connection with the Distribution in respect of ▇▇▇▇▇▇▇ International Common Shares held in ▇▇▇▇▇▇▇ International 401(k) Plan accounts of ▇▇▇▇▇▇▇ Electronics 401(k) Plan Participants;
17
and (iii) that, following the Effective Time, contributions made by or on behalf of such ▇▇▇▇▇▇▇ Electronics 401(k) Plan Participants may be allocated to the ▇▇▇▇▇▇▇ Electronics Common Share Fund. ▇▇▇▇▇▇▇ Electronics Common Shares distributed in connection with the Distribution in respect of ▇▇▇▇▇▇▇ International Common Shares held in ▇▇▇▇▇▇▇ International 401(k) Plan accounts of ▇▇▇▇▇▇▇ International Group Employees, Former ▇▇▇▇▇▇▇ International Group Employees, or Former ▇▇▇▇▇▇▇ Electronics Group Employees who participate in the ▇▇▇▇▇▇▇ International 401(k) Plan (the “▇▇▇▇▇▇▇ International 401(k) Plan Participants”) shall be deposited in a ▇▇▇▇▇▇▇ Electronics Common Share Fund under the ▇▇▇▇▇▇▇ International 401(k) Plan, and ▇▇▇▇▇▇▇ International 401(k) Plan Participants will be prohibited from increasing their holdings in such ▇▇▇▇▇▇▇ Electronics Common Share Fund under the ▇▇▇▇▇▇▇ International 401(k) Plan and may elect to liquidate their holdings in such ▇▇▇▇▇▇▇ Electronics Common Share Fund and invest those monies in any other investment fund offered under the ▇▇▇▇▇▇▇ International 401(k) Plan. Any ▇▇▇▇▇▇▇ Electronics Common Shares held in ▇▇▇▇▇▇▇ International 401(k) Plan accounts of ▇▇▇▇▇▇▇ Electronics Group Employees shall be transferred in kind to the trust underlying the ▇▇▇▇▇▇▇ Electronics 401(k) Plan pursuant to Section 6.2 of this Agreement.
(b)▇▇▇▇▇▇▇ International Common Shares in ▇▇▇▇▇▇▇ International 401(k) Plan Accounts. Without limiting the generality of the provisions of Section 6.2, ▇▇▇▇▇▇▇ International Common Shares held in ▇▇▇▇▇▇▇ International 401(k) Plan accounts of ▇▇▇▇▇▇▇ International 401(k) Plan Participants prior to the Effective Time shall be transferred in kind to a ▇▇▇▇▇▇▇ International Common Share Fund under the ▇▇▇▇▇▇▇ Electronics 401(k) Plan pursuant to Section 6.2 of this Agreement. ▇▇▇▇▇▇▇ Electronics 401(k) Plan Participants will be prohibited from increasing their holdings in ▇▇▇▇▇▇▇ International Common Shares under such ▇▇▇▇▇▇▇ International Common Share Fund and may elect to liquidate their holdings in such ▇▇▇▇▇▇▇ International Common Share Fund and invest those monies in any other investment fund offered under the ▇▇▇▇▇▇▇ Electronics 401(k) Plan.
Section 6.4 Tax Qualified Status. ▇▇▇▇▇▇▇ Electronics will take all steps and make any necessary filings with the IRS to establish and maintain the ▇▇▇▇▇▇▇ Electronics 401(k) Plan so that such plan is qualified under Sections 401(a) and 401(k) of the Code and the related trust is tax-exempt under Section 501(a) of the Code, including applying for and obtaining a favorable determination letter from the IRS as to such qualification. Furthermore, prior to the Section 6.2 transfer of ▇▇▇▇▇▇▇ International 401(k) Plan assets, ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics (each acting directly or through their respective Affiliates) shall, as and to the extent required, file IRS Form 5310‑A regarding the transfer of assets and liabilities from the ▇▇▇▇▇▇▇ International 401(k) Plan to the ▇▇▇▇▇▇▇ Electronics 401(k) Plan as contemplated by this Article VI.
ARTICLE VII
U.S. SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
Section 7.1▇▇▇▇▇▇▇ Electronics SERP.
(a)Establishing ▇▇▇▇▇▇▇ Electronics SERP. As of the Transferred Group Adoption Date, ▇▇▇▇▇▇▇ Electronics shall have established and adopted a supplemental employee retirement plan for its key employees (collectively, the “▇▇▇▇▇▇▇ Electronics SERP”) to provide each ▇▇▇▇▇▇▇ Electronics Group Employee who was a participant in the ▇▇▇▇▇▇▇ International SERP as of immediately prior to the Effective Time (each, an “▇▇▇▇▇▇▇ Electronics SERP Participant”) benefits following the Effective Time substantially similar to those provided with respect to such person under the ▇▇▇▇▇▇▇ International SERP as of immediately prior to the Effective Time. As of the Effective Time, the ▇▇▇▇▇▇▇ Electronics Group Employees shall no longer participate in the ▇▇▇▇▇▇▇ International SERP; however, Former ▇▇▇▇▇▇▇ Electronics Group Employees will continue to participate in the ▇▇▇▇▇▇▇ International SERP. The Parties agree that for purposes of the ▇▇▇▇▇▇▇ International SERP, a ▇▇▇▇▇▇▇ Electronics SERP Participant shall not
18
be considered to have incurred a separation of service as determined under the general rules of Section 409A of the Code as a result of the Distribution or the transfer of employment or service from ▇▇▇▇▇▇▇ International (or a ▇▇▇▇▇▇▇ International Entity) to ▇▇▇▇▇▇▇ Electronics (or a ▇▇▇▇▇▇▇ Electronics Entity), and such employment or service shall only be considered to terminate for purposes of the ▇▇▇▇▇▇▇ Electronics SERP when the employment or service of such ▇▇▇▇▇▇▇ Electronics SERP Participant with the ▇▇▇▇▇▇▇ Electronics Group terminates in accordance with the terms of the ▇▇▇▇▇▇▇ Electronics SERP and applicable Laws (including, without limitation Section 409A of the Code).
(b)Liability and Responsibility. The Liabilities in respect of ▇▇▇▇▇▇▇ Electronics SERP Participants under the ▇▇▇▇▇▇▇ International SERP shall be assumed by ▇▇▇▇▇▇▇ Electronics as sponsor of the ▇▇▇▇▇▇▇ Electronics SERP, effective as of the Effective Time. ▇▇▇▇▇▇▇ Electronics shall have sole responsibility for the administration of the ▇▇▇▇▇▇▇ Electronics SERP and the payment of benefits thereunder to or on behalf of ▇▇▇▇▇▇▇ Electronics Group Employees, and no member of the ▇▇▇▇▇▇▇ International Group shall have any liability or responsibility therefor. ▇▇▇▇▇▇▇ International shall have sole responsibility for the administration of the ▇▇▇▇▇▇▇ International SERP and the payment of benefits thereunder to or on behalf of ▇▇▇▇▇▇▇ International Group Employees, Former ▇▇▇▇▇▇▇ International Group Employees, and Former ▇▇▇▇▇▇▇ Electronics Group Employees, and no member of the ▇▇▇▇▇▇▇ Electronics Group shall have any liability or responsibility therefor.
ARTICLE VIII
U.S. WELFARE PLAN
Section 8.1Establishment of ▇▇▇▇▇▇▇ Electronics Welfare Plan. Following the Effective Time and prior to the ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date, ▇▇▇▇▇▇▇ Electronics shall establish and adopt the ▇▇▇▇▇▇▇ Electronics Welfare Plan that will provide welfare benefits, effective as of January 1, 2015, (the “▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date”), to each ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee who is a participant in the ▇▇▇▇▇▇▇ International Welfare Plan (and their eligible spouses and dependents, as the case may be) (collectively, the “▇▇▇▇▇▇▇ Electronics Welfare Plan Participants”) under terms and conditions that are similar to the ▇▇▇▇▇▇▇ International U.S. Welfare Plan. The Parties may accelerate the ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date. Coverage and benefits under the ▇▇▇▇▇▇▇ Electronics Welfare Plan shall then be provided to the ▇▇▇▇▇▇▇ Electronics Welfare Plan Participants on an uninterrupted basis under the newly established ▇▇▇▇▇▇▇ Electronics Welfare Plan which shall contain similar benefit provisions as in effect under the corresponding ▇▇▇▇▇▇▇ International Welfare Plan immediately prior to the Effective Time. ▇▇▇▇▇▇▇ Electronics Welfare Plan Participants shall cease to be eligible for coverage under the ▇▇▇▇▇▇▇ International Welfare Plan on the ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date with respect to the ▇▇▇▇▇▇▇ International Welfare Plan affected on such date. For the avoidance of doubt, ▇▇▇▇▇▇▇ Electronics Welfare Plan Participants shall not participate in any ▇▇▇▇▇▇▇ International Welfare Plan after the time set forth in the immediately preceding sentence, and ▇▇▇▇▇▇▇ International Group Employees and Former ▇▇▇▇▇▇▇ International Group Employees shall not participate in the ▇▇▇▇▇▇▇ Electronics Welfare Plan at any time.
Section 8.2 Transitional Matters Under ▇▇▇▇▇▇▇ Electronics Welfare Plans; Treatment of Claims Incurred.
(a)Liability for Claims. With respect to unpaid covered claims that are either incurred but not processed or that are incurred but unreported prior to the Effective Time by any ▇▇▇▇▇▇▇ Electronics Welfare Plan Participant under the ▇▇▇▇▇▇▇ International Welfare Plan, including claims that are self-insured and claims that are fully insured through third-party insurance, ▇▇▇▇▇▇▇ Electronics shall assume and be responsible for the payment for such claims or shall cause such ▇▇▇▇▇▇▇ Electronics Welfare Plan to fully
19
perform, pay and discharge all such claims, as the case may be. No ▇▇▇▇▇▇▇ International Entity shall be responsible for any Liability with respect to any such claims.
(i)Claims Incurred. For purposes of this Section 8.2(a), a claim or expense is deemed to be incurred (A) with respect to medical (including continuous hospitalization), dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or expense; (B) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or expense; and (C) with respect to long-term disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or expense.
(b)Credit for Deductibles and Other Limits. With respect to each ▇▇▇▇▇▇▇ Electronics Welfare Plan Participant, ▇▇▇▇▇▇▇ Electronics and ▇▇▇▇▇▇▇ International shall use reasonable efforts to agree that the ▇▇▇▇▇▇▇ Electronics Welfare Plans will give credit for the plan year in which the Effective Time occurs for any amount paid, number of services obtained or provider visits by such ▇▇▇▇▇▇▇ Electronics Welfare Plan Participant toward deductibles, out-of-pocket maximums, limits on number of services or visits, or other similar limitations to the extent such amounts are taken into account under the comparable ▇▇▇▇▇▇▇ International Welfare Plan. For purposes of any life-time maximum benefit limit payable to a ▇▇▇▇▇▇▇ Electronics Welfare Plan Participant under any ▇▇▇▇▇▇▇ Electronics Welfare Plan, the ▇▇▇▇▇▇▇ Electronics Welfare Plan will recognize any expenses paid or reimbursed by the ▇▇▇▇▇▇▇ International Welfare Plan with respect to such participant prior to the Effective Time to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under the ▇▇▇▇▇▇▇ International Welfare Plan.
(c)COBRA. ▇▇▇▇▇▇▇ International shall be responsible for administering compliance with the group health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA and the corresponding provisions of the ▇▇▇▇▇▇▇ International Welfare Plan with respect to ▇▇▇▇▇▇▇ Electronics Group Employees and Former ▇▇▇▇▇▇▇ Electronics Group Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the ▇▇▇▇▇▇▇ International Welfare Plan prior to the ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date, subject to ▇▇▇▇▇▇▇ Electronics’ obligation to reimburse ▇▇▇▇▇▇▇ International for the cost of such administration under the Transition Services Agreement and coverage under the ▇▇▇▇▇▇▇ International Welfare Plan. At and after the ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date, ▇▇▇▇▇▇▇ Electronics shall assume all requirements with respect to COBRA and the certificate of creditable coverage requirements under HIPAA with respect to all ▇▇▇▇▇▇▇ Electronics Group Employees and Former ▇▇▇▇▇▇▇ Electronics Group Employees.
(d)Employees on Leave. As of the Effective Time, ▇▇▇▇▇▇▇ Electronics shall assume and satisfy all Liabilities with respect to any ▇▇▇▇▇▇▇ Electronics Group Employee who is, as of the Effective Time, on vacation or other approved leave of absence, whether paid or unpaid (including leave under FMLA or corresponding state Law, disability, workers’ compensation leave, military leave and other approved leave, including Liabilities for salary continuation, paid leave or continuing Benefit Plans). Notwithstanding the foregoing, any individual residing in California who would have become a ▇▇▇▇▇▇▇ Electronics Group Employee as of the Effective Time but was on an approved leave of absence at the Effective Time shall become a ▇▇▇▇▇▇▇ Electronics Group Employee following the conclusion of his or her approved leave.
Section 8.3 Continuity of Benefits, Benefit Elections and Beneficiary Designations.
(a) Benefit Elections and Designations. As of the first day of the month after the month in which the Distribution occurs, or if later, the ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date (or such other date provided for under Section 8.3(b)), ▇▇▇▇▇▇▇ Electronics shall cause the ▇▇▇▇▇▇▇ Electronics Welfare
20
Plan to recognize and give effect to all elections and designations (including all coverage and contribution elections and beneficiary designations) made by each ▇▇▇▇▇▇▇ Electronics Welfare Plan Participant under, or with respect to, the annual enrollment conducted on behalf of the ▇▇▇▇▇▇▇ Electronics Welfare Plan by ▇▇▇▇▇▇▇ International. Notwithstanding the foregoing, nothing in this Section 8.3(a) will prohibit ▇▇▇▇▇▇▇ Electronics from soliciting or causing the solicitation of new election forms or beneficiary designations from ▇▇▇▇▇▇▇ Electronics Welfare Plan Participants to be effective under the ▇▇▇▇▇▇▇ Electronics Welfare Plan as of January 1, 2015.
(b) Employer Non-elective Contributions. As of immediately after the relevant ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date, ▇▇▇▇▇▇▇ Electronics shall cause any ▇▇▇▇▇▇▇ Electronics Welfare Plan that constitutes a “cafeteria plan” under Section 125 of the Code to recognize and give effect to all non-elective employer contributions credited toward coverage of a ▇▇▇▇▇▇▇ Electronics Welfare Plan Participant under the corresponding ▇▇▇▇▇▇▇ International Welfare Plan that is a cafeteria plan under Section 125 of the Code for the applicable plan year.
(c) Waiver of Conditions or Restrictions. Unless prohibited by applicable Law, the ▇▇▇▇▇▇▇ Electronics Welfare Plan will waive all limitations, exclusions, service conditions, waiting period limitations or evidence of insurability requirements that would otherwise be applicable to the ▇▇▇▇▇▇▇ Electronics Welfare Plan Participant following the Effective Time to the extent that such Employee had previously satisfied such limitation under the corresponding ▇▇▇▇▇▇▇ International Welfare Plan.
(d) Health Savings Accounts. Pursuant to Section 8.1, on or prior to the relevant ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date, ▇▇▇▇▇▇▇ Electronics shall, or shall cause another ▇▇▇▇▇▇▇ Electronics Entity to, establish and adopt the ▇▇▇▇▇▇▇ Electronics Welfare Plan and will coordinate with a health savings account custodian to make available a health savings account option for eligible ▇▇▇▇▇▇▇ Electronics Welfare Plan Participants which will provide health savings account benefits to eligible ▇▇▇▇▇▇▇ Electronics Welfare Plan Participants similar to the benefits provided to eligible participants in the health savings plan option of the ▇▇▇▇▇▇▇ International Welfare Plan. The health savings account made available in connection with the ▇▇▇▇▇▇▇ Electronics Welfare Plan shall, to the extent permissible under applicable IRS regulations, be effective as of the relevant ▇▇▇▇▇▇▇ Electronics Welfare Plan Implementation Date.
Section 8.4 Insurance Contracts. To the extent any ▇▇▇▇▇▇▇ International Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics will cooperate and use their commercially reasonable efforts to replicate such insurance contracts for ▇▇▇▇▇▇▇ Electronics (except to the extent changes are required under applicable state insurance Laws or filings by the respective insurers) and to maintain any pricing discounts or other preferential terms for both ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics for a reasonable term. Neither Party shall be liable for failure to obtain such insurance contracts, pricing discounts, or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 8.4.
ARTICLE IX
NON-U.S. BENEFIT PLANS
Section 9.1Non-U.S. Retirement Plans.
(a)With respect to any ▇▇▇▇▇▇▇ International Benefit Plan covering non-U.S. ▇▇▇▇▇▇▇ Electronics Group Employees or Former ▇▇▇▇▇▇▇ Electronics Group Employees and which is a defined benefit or defined contribution retirement or pension plan, ▇▇▇▇▇▇▇ Electronics shall cause each such ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee, as applicable, to become covered by a
21
corresponding ▇▇▇▇▇▇▇ Electronics Benefit Plan which is a defined benefit or defined contribution retirement or pension plan, effective as of the Effective Time or as soon as practicable thereafter. To the extent such coverage does not commence until following the Effective Time, ▇▇▇▇▇▇▇ Electronics shall indemnify ▇▇▇▇▇▇▇ International for any continued participation by such employee in the corresponding ▇▇▇▇▇▇▇ International Benefit Plan. ▇▇▇▇▇▇▇ International will reasonably cooperate with ▇▇▇▇▇▇▇ Electronics in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.1(a) a listing of those non-U.S. ▇▇▇▇▇▇▇ International retirement or pension plans in which ▇▇▇▇▇▇▇ Electronics Group Employees and Former ▇▇▇▇▇▇▇ Electronics Group Employees are known to participate. Schedule 9.1(a) may be updated by mutual written consent of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics at any time up to 60 days after the Effective Time.
(b)With respect to any ▇▇▇▇▇▇▇ Electronics Benefit Plan covering non-U.S. ▇▇▇▇▇▇▇ International Group Employees or Former ▇▇▇▇▇▇▇ International Group Employees and which is a defined benefit or defined contribution retirement or pension plan, ▇▇▇▇▇▇▇ International shall cause each such ▇▇▇▇▇▇▇ International Group Employee or Former ▇▇▇▇▇▇▇ International Group Employee, as applicable, to become covered by a corresponding ▇▇▇▇▇▇▇ International benefit plan which is a defined benefit or defined contribution retirement or pension plan, effective as of the Effective Time or as soon as practicable thereafter. To the extent such coverage does not commence until following the Effective Time, ▇▇▇▇▇▇▇ International shall indemnify ▇▇▇▇▇▇▇ Electronics for any continued participation by such employee in the corresponding ▇▇▇▇▇▇▇ Electronics Benefit Plan. ▇▇▇▇▇▇▇ Electronics will reasonably cooperate with ▇▇▇▇▇▇▇ International in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.1(b) a listing of those non-U.S. ▇▇▇▇▇▇▇ Electronics retirement or pension plans in which ▇▇▇▇▇▇▇ International Group Employees and Former ▇▇▇▇▇▇▇ International Group Employees are known to participate. Schedule 9.1(b) may be updated by mutual written consent of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics at any time up to 60 days after the Effective Time.
Section 9.2 Non-U.S. Welfare Plans.
(a) Effective as of the Effective Time (or as soon as practicable thereafter), ▇▇▇▇▇▇▇ Electronics shall, or shall cause another ▇▇▇▇▇▇▇ Electronics Entity to, establish and adopt ▇▇▇▇▇▇▇ Electronics Welfare Plans for the benefit of each ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee who resides or works outside the United States that are substantially identical (to the extent practicable) to the welfare benefits that such ▇▇▇▇▇▇▇ Electronics Group Employee or Former ▇▇▇▇▇▇▇ Electronics Group Employee participated in immediately prior to the Effective Time. To the extent such coverage does not commence until following the Effective Time, ▇▇▇▇▇▇▇ Electronics shall indemnify ▇▇▇▇▇▇▇ International for any continued participation by such employee in the corresponding ▇▇▇▇▇▇▇ International Welfare Plan. ▇▇▇▇▇▇▇ International will reasonably cooperate with ▇▇▇▇▇▇▇ Electronics in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.2(a) a listing of non-U.S. ▇▇▇▇▇▇▇ International welfare plans in which ▇▇▇▇▇▇▇ Electronics Group Employees are known to participate (“Non-U.S. ▇▇▇▇▇▇▇ International Welfare Plans”). Schedule 9.2(a) may be updated by mutual written consent of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics at any time up to 60 days after the Effective Time.
(b) Effective as of the Effective Time (or as soon as practicable thereafter), ▇▇▇▇▇▇▇ International shall, or shall cause another ▇▇▇▇▇▇▇ International Entity to, establish and adopt ▇▇▇▇▇▇▇ International welfare plans for the benefit of each ▇▇▇▇▇▇▇ International Group Employee or Former ▇▇▇▇▇▇▇ International Group Employee who resides or works outside the United States that are substantially identical (to the extent practicable) to the welfare benefits that such ▇▇▇▇▇▇▇ International Group Employee or Former ▇▇▇▇▇▇▇ International Group Employee participated in immediately prior to the Effective Time. To the extent such coverage does not commence until following the Effective Time, ▇▇▇▇▇▇▇ International shall indemnify ▇▇▇▇▇▇▇ Electronics for any continued participation by such employee in the corresponding ▇▇▇▇▇▇▇
22
Electronics Welfare Plan. ▇▇▇▇▇▇▇ Electronics will reasonably cooperate with ▇▇▇▇▇▇▇ International in complying with the immediately preceding sentence. The Parties have set forth on Schedule 9.2(b) a listing of non-U.S. ▇▇▇▇▇▇▇ Electronics Welfare Plans in which ▇▇▇▇▇▇▇ International Group Employees are known to participate (“Non-U.S. ▇▇▇▇▇▇▇ Electronics Welfare Plans”). Schedule 9.2(b) may be updated by mutual written consent of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics at any time up to 60 days after the Effective Time.
ARTICLE X
WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION
Section 10.1▇▇▇▇▇▇▇ Electronics Workers’ and Unemployment Compensation. Effective as of the Effective Time, the ▇▇▇▇▇▇▇ Electronics Entity employing each ▇▇▇▇▇▇▇ Electronics Group Employee shall have (and, to the extent it has not previously had such obligations, such ▇▇▇▇▇▇▇ Electronics Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation and unemployment compensation benefits for all ▇▇▇▇▇▇▇ Electronics Group Employees employed by that ▇▇▇▇▇▇▇ Electronics Entity and for Former ▇▇▇▇▇▇▇ Electronics Group Employees relating to that ▇▇▇▇▇▇▇ Electronics Entity. Effective as of the Effective Time, ▇▇▇▇▇▇▇ Electronics, acting through the ▇▇▇▇▇▇▇ Electronics Group Entity employing each ▇▇▇▇▇▇▇ Electronics Group Employee, will be responsible for (a) obtaining and maintaining workers’ compensation insurance, including providing all collateral required by the insurance carriers or state workers’ compensation bodies and (b) if not already in place establishing new or transferred unemployment insurance employer accounts, policies and claims handling contracts with the applicable government agencies.
Section 10.2 ▇▇▇▇▇▇▇ International Workers’ and Unemployment Compensation. Effective as of the Effective Time, the ▇▇▇▇▇▇▇ International Entity employing each ▇▇▇▇▇▇▇ International Group Employee shall have (and, to the extent it has not previously had such obligations, such ▇▇▇▇▇▇▇ International Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation and unemployment compensation benefits for all ▇▇▇▇▇▇▇ International Group Employees and Former ▇▇▇▇▇▇▇ International Group Employees. Effective as of the Effective Time, the ▇▇▇▇▇▇▇ International Entity formerly employing each ▇▇▇▇▇▇▇ International Group Employee shall have (and, to the extent it has not previously had such obligations, such ▇▇▇▇▇▇▇ International Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation and unemployment compensation benefits for all Former ▇▇▇▇▇▇▇ International Group Employees.
Section 10.3 Assignment of Contribution Rights. ▇▇▇▇▇▇▇ International will transfer and assign (or cause another member of the ▇▇▇▇▇▇▇ International Group to transfer and assign) to a member of the ▇▇▇▇▇▇▇ Electronics Group all rights to seek contribution or damages from any applicable third party (such as a third party who aggravates an injury to a worker who makes a workers’ compensation claim) with respect to any workers’ compensation claim for which ▇▇▇▇▇▇▇ Electronics is responsible pursuant to this Article ▇. ▇▇▇▇▇▇▇ Electronics will transfer and assign (or cause another member of the ▇▇▇▇▇▇▇ Electronics Group to transfer and assign) to a member of the ▇▇▇▇▇▇▇ International Group all rights to seek contribution or damages from any applicable third party (such as a third party who aggravates an injury to a worker who makes a workers’ compensation claim) with respect to any workers’ compensation claim for which ▇▇▇▇▇▇▇ International is responsible pursuant to this Article X.
Section 10.4 Collateral. On and after the Effective Time, ▇▇▇▇▇▇▇ Electronics (acting directly or through a member of the ▇▇▇▇▇▇▇ Electronics Group) shall be responsible for providing all collateral required by insurance carriers or state workers’ compensation bodies in connection with workers’ compensation insurance or claims for which Liability is allocated to the ▇▇▇▇▇▇▇ Electronics Group under this Article ▇. ▇▇▇▇▇▇▇ International (acting directly or through a member of the ▇▇▇▇▇▇▇ International Group) shall be responsible
23
for providing all collateral required by insurance carriers or state workers’ compensation bodies in connection with workers’ compensation insurance or claims for which Liability is allocated to the ▇▇▇▇▇▇▇ International Group under this Article X.
Section 10.5 Cooperation. ▇▇▇▇▇▇▇ Electronics and ▇▇▇▇▇▇▇ International shall use commercially reasonable efforts to provide that workers’ compensation and unemployment insurance costs are not adversely affected for either of them by reason of the Distribution.
ARTICLE XI
SEVERANCE
Section 11.1Severance Arrangements, Plans, Policies and Guidelines. Effective as of the Transferred Group Adoption Date, a Transferred Group Entity shall establish severance arrangements, plans, policies or guidelines to be effective as of the Effective Time (“▇▇▇▇▇▇▇ Electronics Severance Arrangements”) under which ▇▇▇▇▇▇▇ Electronics Group Employees who, immediately prior to the Effective Time, are participants in any ▇▇▇▇▇▇▇ International severance arrangement, plan, policy or guideline, shall be eligible to participate immediately following the Effective Time. Effective as of the Effective Time, either the Transferred Group Entity shall remain the plan sponsor of ▇▇▇▇▇▇▇ Electronics Severance Arrangements or ▇▇▇▇▇▇▇ Electronics shall or shall cause another ▇▇▇▇▇▇▇ Electronics Entity to assume the ▇▇▇▇▇▇▇ Electronics Severance Arrangements. Such ▇▇▇▇▇▇▇ Electronics Severance Arrangements will provide terms and conditions (including severance benefits) for ▇▇▇▇▇▇▇ Electronics Group Employees who are severed from the ▇▇▇▇▇▇▇ Electronics Group following the Effective Time or Transfer Date, as the case may be, that are substantially similar to the terms and conditions (including severance benefits) provided under the applicable ▇▇▇▇▇▇▇ International severance arrangements, plans, policies and guidelines (excluding any change in control severance plans or contained in employment agreements) in which such ▇▇▇▇▇▇▇ Electronics Group Employees participated immediately prior to the Effective Time or such Transfer Date for a period not less than one year. For the avoidance of doubt, the Distribution and the assignment, transfer or continuation of the employment of ▇▇▇▇▇▇▇ Electronics Group Employees contemplated by Section 3.1 shall not be deemed a severance of employment for purposes of this Agreement and any ▇▇▇▇▇▇▇ International severance arrangements, plans, policies or guidelines, and effective as of the Effective Time, ▇▇▇▇▇▇▇ Electronics Group Employees shall not be eligible to receive any severance or other benefits under any ▇▇▇▇▇▇▇ International severance plans or policies.
ARTICLE XII
BENEFIT ARRANGEMENTS AND OTHER MATTERS
Section 12.1Termination of Participation. Except as otherwise provided under this Agreement, effective as of immediately after the Effective Time, ▇▇▇▇▇▇▇ Electronics Group Employees shall not be eligible to participate in any ▇▇▇▇▇▇▇ International Benefit Plan.
Section 12.2 Accrued Time Off. ▇▇▇▇▇▇▇ Electronics shall recognize and assume all Liability for all unused vacation, holiday, sick leave, flex days, personal days and paid-time off and other time-off benefits with respect to ▇▇▇▇▇▇▇ Electronics Group Employees which accrued prior to the Effective Time and ▇▇▇▇▇▇▇ Electronics shall credit each ▇▇▇▇▇▇▇ Electronics Group Employee with such accrual; provided, however, all Liabilities shall be reduced, dollar for dollar, to the extent that ▇▇▇▇▇▇▇ International has made any payment related to any such unused vacation, holiday, sick leave, flex days, personal days and paid-time off and other time-off benefits with respect to ▇▇▇▇▇▇▇ Electronics Group Employees in accordance with applicable Law.
Section 12.3 Leaves of Absence. ▇▇▇▇▇▇▇ Electronics will continue to apply the same leave of absence policies applicable to inactive ▇▇▇▇▇▇▇ Electronics Group Employees who are on an approved leave of absence
24
as of the Effective Time. Leaves of absence taken by ▇▇▇▇▇▇▇ Electronics Group Employees prior to the Effective Time shall be deemed to have been taken as employees of a member of the ▇▇▇▇▇▇▇ Electronics Group.
Section 12.4 Employee Restrictive Covenants. To the fullest extent permitted by the agreements described in this Section 12.4 and applicable Law, ▇▇▇▇▇▇▇ International shall assign, or cause an applicable member of the ▇▇▇▇▇▇▇ International Group to assign, to ▇▇▇▇▇▇▇ Electronics or a member of the ▇▇▇▇▇▇▇ Electronics Group, as designated by ▇▇▇▇▇▇▇ Electronics, all restrictive covenants (including confidentiality, inventions, non-competition and non-solicitation provisions) between a member of the ▇▇▇▇▇▇▇ International Group and a ▇▇▇▇▇▇▇ Electronics Group Employee, with such assignment to be effective as of the Effective Time. To the extent that assignment of such agreements is not permitted, effective as of the Effective Time, each member of the ▇▇▇▇▇▇▇ Electronics Group shall be considered to be a successor to each member of the ▇▇▇▇▇▇▇ International Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality, inventions, non-competition and non-solicitation provisions) between a member of the ▇▇▇▇▇▇▇ International Group and a ▇▇▇▇▇▇▇ Electronics Group Employee, such that each member of the ▇▇▇▇▇▇▇ Electronics Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the ▇▇▇▇▇▇▇ Electronics Group; provided, however, that in no event shall ▇▇▇▇▇▇▇ International be permitted to enforce such restrictive covenant agreements against ▇▇▇▇▇▇▇ Electronics Group Employees for action taken in their capacity as employees of a member of the ▇▇▇▇▇▇▇ Electronics Group.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1Preservation of Rights to Amend. The rights of each member of the ▇▇▇▇▇▇▇ International Group and each member of the ▇▇▇▇▇▇▇ Electronics Group to amend, waive, or terminate any Benefit Plan shall not be limited in any way by this Agreement.
Section 13.2 Confidentiality. Each Party agrees that any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith that is not otherwise public through no fault of such Party is confidential and is subject to the terms of the confidentiality provisions set forth herein and in the Distribution Agreement, including Section 3.3(e) of this Agreement and Section 7.6 of the Distribution Agreement.
Section 13.3 Administrative Complaints/Litigation. Except as otherwise provided in this Agreement, on and after the Effective Time, ▇▇▇▇▇▇▇ Electronics shall assume, and be solely liable for, the handling, administration, investigation, and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights, and unemployment compensation claims asserted at any time against ▇▇▇▇▇▇▇ International or any member of the ▇▇▇▇▇▇▇ International Group by any ▇▇▇▇▇▇▇ Electronics Group Employee (including any dependent or beneficiary of any such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant, or otherwise) to or with respect to the business activities of any member of the ▇▇▇▇▇▇▇ Electronics Group after the Effective Time. To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both ▇▇▇▇▇▇▇ International Group Employees (or Former ▇▇▇▇▇▇▇ International Group Employees) and ▇▇▇▇▇▇▇ Electronics Group Employees (or Former ▇▇▇▇▇▇▇ Electronics Group Employees) and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Employees included in or represented by the putative or certified plaintiff class. The procedures contained in the indemnification and related litigation cooperation
25
provisions of the Distribution Agreement shall apply with respect to each Party’s indemnification obligations under this Section 13.3.
Section 13.4 Reimbursement and Indemnification. Each Party agrees to reimburse the other Party, within 30 days of receipt from the other Party of reasonable verification or except as otherwise provided in the Transition Services Agreement, for all costs and expenses which the other Party may incur on its behalf as a result of any of the respective ▇▇▇▇▇▇▇ International Benefit Plans and ▇▇▇▇▇▇▇ Electronics Benefit Plans as contemplated by this Agreement. All Liabilities retained, assumed, or indemnified against by ▇▇▇▇▇▇▇ Electronics pursuant to this Agreement, and all Liabilities retained, assumed, or indemnified against by ▇▇▇▇▇▇▇ International pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the Distribution Agreement. Notwithstanding anything to the contrary, (i) no provision of this Agreement shall require any member of the ▇▇▇▇▇▇▇ Electronics Group to pay or reimburse to any member of the ▇▇▇▇▇▇▇ International Group any benefit-related cost item that a member of the ▇▇▇▇▇▇▇ Electronics Group has paid or reimbursed to any member of the ▇▇▇▇▇▇▇ International Group prior to the Effective Time; and (ii) no provision of this Agreement shall require any member of the ▇▇▇▇▇▇▇ International Group to pay or reimburse to any member of the ▇▇▇▇▇▇▇ Electronics Group any benefit-related cost item that a member of the ▇▇▇▇▇▇▇ International Group has paid or reimbursed to any member of the ▇▇▇▇▇▇▇ Electronics Group prior to the Effective Time.
Section 13.5 Costs of Compliance with Agreement. Except as otherwise provided in this Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement.
Section 13.6 Fiduciary Matters. ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.
Section 13.7 Entire Agreement. This Agreement, together with the documents referenced herein (including the Distribution Agreement and the Benefit Plans), constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Distribution Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof.
Section 13.8 Binding Effect; No Third-Party Beneficiaries; Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as otherwise expressly provided in this Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon any third parties any remedy, claim, Liability, reimbursement, cause of action, or other right in excess of those existing without reference to this Agreement. Except as otherwise specified herein, nothing in this Agreement is intended to amend any Benefit Plan or affect the applicable plan sponsor’s right to amend or terminate any Benefit Plan pursuant to the terms of such plan. The provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director, or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned by any Party, except with the prior written consent of the other Parties.
26
Section 13.9 Amendment; Waivers. No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of each of the Parties. Any Party may, at any time, (i) extend the time for the performance of any of the obligations or other acts of another Party, (ii) waive any inaccuracies in the representations and warranties of another Party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance by another Party with any of the agreements, covenants, or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by an authorized person of the Party to be bound thereby. No failure or delay on the part of any Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant, or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercises thereof or of any other right.
Section 13.10 Remedies Cumulative. All rights and remedies existing under this Agreement or the schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.
Section 13.11 Notices. All notices and other communications hereunder will be in writing and will be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or electronic transmission, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder will be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:
To ▇▇▇▇▇▇▇ International:
▇▇▇▇▇▇▇ International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
Email: ▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
To ▇▇▇▇▇▇▇ Electronics:
▇▇▇▇▇▇▇ Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel
Email: ▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Section 13.12 Counterparts. This Agreement, including the schedules hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.
Section 13.13 Severability. If any term or other provision of this Agreement or the schedules attached hereto is determined by a non-appealable decision by a court, administrative agency, or arbitrator to be invalid, illegal, or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the court, administrative agency, or arbitrator shall interpret this Agreement
27
so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
Section 13.14 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to any conflicts of law provision or rule thereof that would result in the application of the Laws of any other jurisdiction.
Section 13.15 Dispute Resolution. The procedures for negotiation and binding arbitration set forth in Article VIII of the Distribution Agreement shall apply to any dispute, controversy or claim (whether sounding in contract, tort or otherwise) that arises out of or relates to this Agreement, any breach or alleged breach hereof, the transactions contemplated hereby (including all actions taken in furtherance of the transactions contemplated hereby on or prior to the date hereof), or the construction, interpretation, enforceability, or validity hereof.
Section 13.16 Performance. Each of ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any member of the ▇▇▇▇▇▇▇ International Group and any member of the ▇▇▇▇▇▇▇ Electronics Group, respectively. The Parties each agree to take such further actions and to execute, acknowledge, and deliver, or to cause to be executed, acknowledged, and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement.
Section 13.17 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against any Party.
Section 13.18 Effect if Distribution Does Not Occur. Notwithstanding anything in this Agreement to the contrary, if the Distribution Agreement is terminated prior to the Effective Time, this Agreement shall be of no further force and effect and shall be void ab initio.
Section 13.19 Code Sections 162(m) and 409A. Notwithstanding anything in this Agreement to the contrary, ▇▇▇▇▇▇▇ International and ▇▇▇▇▇▇▇ Electronics agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure that (i) a federal income tax deduction for the payment of any award or other compensation is, to the extent prescribed under the terms of the applicable plan and award agreement, not limited by reason of Section 162(m) of the Code, and (ii) the treatment of any award or other compensation does not cause the imposition of a penalty tax under Section 409A of the Code.
Section 13.20 Settlor Prerogatives Regarding Plan Dispositions. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed to require ▇▇▇▇▇▇▇ Electronics to maintain a ▇▇▇▇▇▇▇ Electronics Benefit Plan for a specific period of time, or into perpetuity, and further, nothing herein shall be construed to inhibit or otherwise interfere with ▇▇▇▇▇▇▇ Electronics’ ability to terminate a ▇▇▇▇▇▇▇ Electronics Benefit Plan, so long as the termination of a ▇▇▇▇▇▇▇ Electronics Benefit Plan that is intended to be qualified under Section 401(a) of the Code does not jeopardize the tax-qualified status of the ▇▇▇▇▇▇▇ Electronics Benefit Plan.
[Signature Page to follow]
28
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a duly authorized officer as of the date first written above.
▇▇▇▇▇▇▇ INTERNATIONAL, INC. | |
By: | |
Name: | |
Title: | |
▇▇▇▇▇▇▇ ELECTRONICS, INC. | |
By: | |
Name: | |
Title: | |
29
EXHIBIT A
TO
Calculations and Adjustments Relating to Performance Share Awards
Effective as of the Distribution Date (upon which date the ▇▇▇▇▇▇▇ Electronics shares will be electronically distributed by Computershare to all ▇▇▇▇▇▇▇ International shareholders of record (both Class A and B) shareholders of ▇▇▇▇▇▇▇ International) the following adjustments shall be made:
• | All ▇▇▇▇▇▇▇ International Group Employees and ▇▇▇▇▇▇▇ Electronics Group Employees with outstanding ▇▇▇▇▇▇▇ International APSAs and ▇▇▇▇▇▇▇ International LTPSAs will have such outstanding awards “equitably” adjusted going forward, based upon the following formula and examples (assuming an October 31, 2014 Distribution Date): |
○ | Per share value of ▇▇▇▇▇▇▇ International Common Shares prior to the Distribution Date: the weighted average closing price per share of the ▇▇▇▇▇▇▇ International Common Shares on the last five (5) Trading Days prior to the Distribution Date- for example: |
Date | Volume | Closing Price | % of Total Trading Volume over 5 days | Weighted Average Price |
Oct. 27 | 2,000 | $15 | 20% | $3.00 |
Oct. 28 | 1,500 | $16 | 15% | $2.40 |
Oct. 29 | 2,500 | $17 | 25% | $4.25 |
Oct. 30 | 1,000 | $18.50 | 10% | $1.85 |
Oct. 31 | 3,000 | $20 | 30% | $6.00 |
Total | 10,000 | $17.50 |
○ | Per share value of ▇▇▇▇▇▇▇ International Common Shares after the Distribution Date: the weighted average closing price per share of the ▇▇▇▇▇▇▇ International Common Shares on the first five (5) Trading Days after the Distribution Date- for example: |
Date | Volume | Closing Price | % of Total Trading Volume over 5 days | Weighted Average Price |
Nov. 3 | 2,000 | $15 | 20% | $3.00 |
Nov. 4 | 1,500 | $14 | 15% | $2.10 |
Nov. 5 | 2,500 | $16 | 25% | $4.00 |
Nov. 6 | 1,000 | $17 | 10% | $1.70 |
Nov. 7 | 3,000 | $15 | 30% | $4.50 |
Total | 10,000 | $15.30 |
30
○ | Per share value of ▇▇▇▇▇▇▇ Electronics Common Shares after the Distribution Date: the weighted average closing price per share of the ▇▇▇▇▇▇▇ Electronics Common Shares on the first five (5) days of Trading Days after the Distribution Date - for example: |
Date | Volume | Closing Price | % of Total Trading Volume over 5 days | Weighted Average Price |
Nov. 3 | 2,000 | $10 | 20% | $2.00 |
Nov. 4 | 1,500 | $9 | 15% | $1.35 |
Nov. 5 | 2,500 | $11 | 25% | $2.75 |
Nov. 6 | 1,000 | $12 | 10% | $1.20 |
Nov. 7 | 3,000 | $10 | 30% | $3.00 |
Total | 10,000 | $10.30 |
• | ▇▇▇▇▇▇▇ Electronics employees would receive their remaining awards adjusted by approximately 1.70X ($17.50/$10.30) |
• | ▇▇▇▇▇▇▇ International employees would receive their remaining awards adjusted by 1.14X ($17.50/$15.30) |
▇▇▇▇▇▇▇ International PSA agreements and ▇▇▇▇▇▇▇ Electronics PSA agreements will be modified so that future ▇▇▇▇▇▇▇ Electronics PSA and ▇▇▇▇▇▇▇ International PSA payouts (after the awards are adjusted as described above) will be based upon ▇▇▇▇▇▇▇ Electronics (in the case of ▇▇▇▇▇▇▇ Electronics Group Employees) and ▇▇▇▇▇▇▇ International (in the case of ▇▇▇▇▇▇▇ International Group Employees)
respective profit sharing % attainment and be granted with their respective publicly-traded shares, such that any grants in August 2015 under the carried-over agreements would be based upon ▇▇▇▇▇▇▇ Electronics (in the case of ▇▇▇▇▇▇▇ Electronics Group Employees) and ▇▇▇▇▇▇▇ International (in the case of ▇▇▇▇▇▇▇ International Group Employees) profits solely.
31
SCHEDULE 3.1(g)
TO
Employment Agreements; Expatriate Obligations
Employment Agreement for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Employment Agreement for ▇▇▇▇ ▇. ▇▇▇▇▇
32
SCHEDULE 9.1(a)
TO
Non-U.S. Retirement Plans of ▇▇▇▇▇▇▇ International
In Which Non-U.S. ▇▇▇▇▇▇▇ Electronics Group Employees and
Former ▇▇▇▇▇▇▇ Electronics Group Employees Participate
None
33
SCHEDULE 9.1(b)
TO
Non-U.S. Retirement Plans of ▇▇▇▇▇▇▇ Electronics
In Which Non-U.S. ▇▇▇▇▇▇▇ International Group Employees and
Former ▇▇▇▇▇▇▇ International Group Employees Participate
None
34
SCHEDULE 9.2(a)
TO
Non-U.S. ▇▇▇▇▇▇▇ International Welfare Plans
In Which ▇▇▇▇▇▇▇ Electronics Group Employees and
Former ▇▇▇▇▇▇▇ Electronics Group Employees Participate
None
35
SCHEDULE 9.2(b)
TO
Non-U.S. ▇▇▇▇▇▇▇ Electronics Welfare Plans
In Which ▇▇▇▇▇▇▇ International Group Employees and
Former ▇▇▇▇▇▇▇ International Group Employees Participate
None
36