Exhibit 10.33
SEPARATION AND RELEASE AGREEMENT
THIS AGREEMENT is effective the 29th day of May, 1998, by and between Graco
Inc., a Minnesota corporation ("Graco"), with its principal offices at 4050
Olson Memorial Highway, Golden Valley, Minnesota 55422 and Charles M. Osborne,
an individual, residing at One Red Pine Road, North Oaks, Minnesota 55127 ("Mr.
Osborne").
WHEREAS, Mr. Osborne is now employed by Graco; and
WHEREAS, The parties have agreed that Mr. Osborne will resign as an officer
and employee of Graco effective May 31, 1998, and will terminate his employment
relationship with Graco in accordance with the terms of this Agreement.
NOW, THEREFORE, It is hereby mutually agreed by and between the parties for
good and valuable consideration as follows:
1. Separation Payment
On or before June 5, 1998, Graco will pay to Mr. Osborne in a lump sum
as a separation payment the amount of three hundred fifty thousand
dollars ($350,000) dollars, subject to tax withholding and deductions
required by law. This payment is made in lieu of any other payment of
salary, severance, bonus, or other compensatory amount to which Mr.
Osborne is or may be entitled.
2. Annual Bonus Plan
Mr. Osborne shall not be entitled to any payment under the 1998
Corporate and Business Unit Annual Bonus Plan.
3. Benefits
Mr. Osborne's entitlement to, continuation or cessation of employee
benefits following the termination of his employment is described in a
letter from the Graco Benefits Department to Mr. Osborne's attention,
attached hereto as Exhibit A and incorporated herein by reference.
4. Cooperation
Mr. Osborne shall render all reasonable cooperation to Graco in
connection with the prosecution or defense of any lawsuit or other
judicial or administrative action, including participating as a source
of information or witness in any such action. Graco shall reimburse
Mr. Osborne for any reasonable out-of-pocket expenses (including
attorneys' fees, if necessary) incurred by him in connection with
rendering such cooperation.
5. Confidentiality
a. Mr. Osborne hereby agrees that, for a period of three (3) years
after May 31, 1998, he will not, directly or indirectly, disclose
any Confidential Information, as defined in subsection (b) below,
to any other party, and will not in any way use such Confidential
Information in the course of his employment.
b. As used herein, the term "Confidential Information" shall mean
all information which is treated as confidential or proprietary
by Graco in the normal course of its business, including, without
limitation, documents so marked, or is a trade secret of Graco,
which has been disclosed by Graco to Mr. Osborne including,
without limitation, information relating to Graco products,
processes, product development or research, equipment, machinery,
apparatus, business operations, financial results or condition,
strategic plans or projections, customers, suppliers, marketing,
sales, management practices, technical information, drawings,
specifications, material, and the like, and any knowledge or
information developed by Mr. Osborne relating to the same,
provided, however, that Confidential Information shall not
include information which is at the time of disclosure, or
thereafter becomes, a part of the public domain through no act or
omission by Mr. Osborne or information which Mr. Osborne is
required to disclose in a court or other judicial proceeding or
is otherwise legally required to disclose.
c. The provisions of this Section 5 are in addition to, and not in
lieu of, the fiduciary and other duties and obligations of Mr.
Osborne as an employee, officer and director of Graco, and this
Section 5 does not limit said obligations in any way, by time or
otherwise.
6. Release
a. Except with respect to the provisions of this Agreement and the
provisions of the letter from the Benefits Department, attached
hereto as Exhibit A, Mr. Osborne hereby releases and forever
discharges Graco and its officers, employees, agents, successors,
and assigns from any and all claims, causes of action, demands,
damages, liability and responsibility whatsoever, arising prior
to the date of this Agreement, including without limitation, any
rights or claims for further compensation, or any rights to
participate in any Company-sponsored program relating to the
purchase or acquisition of any Graco common stock, preferred
stock, or other equity in Graco or any subsidiary thereof, except
as specifically provided in this Agreement, including the Exhibit
hereto, or any right or claim Mr. Osborne may have or assert
under the common law or any state, municipal, federal, or other
statute or regulation regarding the rights of employees generally
or based on discrimination on the basis of race, creed, gender,
age, or other protected status. This Section 6 shall not affect
Mr. Osborne's rights to indemnification as an officer, director,
and employee of Graco under Graco's by-laws and applicable
Minnesota law nor any rights which he has accrued by
participating in any Graco benefit plan, subject to the
provisions of this Agreement and the terms and conditions set
forth in such plan as of his resignation date.
b. Mr. Osborne certifies, represents and agrees that:
(i) this Agreement is written in a manner that he understands;
(ii) he understands that this Section 6 specifically waives any
rights or claims he may have arising under federal, state,
and local laws prohibiting employment discrimination, such
as the Age Discrimination in Employment Act, the Minnesota
Human Rights Act, Title VII of the Civil Rights Act of 1964,
the Rehabilitation Act of 1973, the Americans with
Disabilities Act and/or any claims for damages or for
injuries based on common law theories of contract,
quasi-contract or tort;
(iii) the waiver herein of rights or claims are to those which
may have arisen prior to the execution date of this
Agreement;
(iv) a portion of the consideration set out in this Agreement is
in addition to compensation that he may already have been
entitled to;
(v) he has been specifically advised in writing to consult with
an attorney prior to executing this Agreement;
(vi) he has been informed that he has a period of at least
twenty-one (21) calendar days within which to consider this
Agreement;
(vii) he specifically understands that he may revoke this
Agreement for a period of at least fifteen (15) calendar
days following his execution of this Agreement, and that
this Agreement is not effective or enforceable until the
fifteen (15) day revocation period has expired;
(viii) if he decides to revoke this Agreement within said fifteen
(15) day period, he should provide written notice to the
Vice President, General Counsel and Secretary, delivered in
person or by mail. If his revocation is sent by mail, it
must be postmarked on or before June 15, 1998, properly
addressed to Robert M. Mattison, Vice President, General
Counsel and Secretary, Graco Inc., P.O. Box 1441,
Minneapolis, MN. 55440, and sent by certified mail, return
receipt requested. Mr. Osborne understands that Graco will
have no obligation to pay him anything under this Agreement
if he revokes his acceptance within the time limit
specified, and that he will be obligated to immediately
refund to Graco all sums paid to him by Graco pursuant
hereto.
(ix) Mr. Osborne expressly agrees that the waiver of his rights
pursuant to the Agreement is knowing and voluntary on his
part.
7. Continuation as Director
As of June 1, 1998, Mr. Osborne shall be compensated for his
services as a member of the board of directors in accordance with
the compensation practice of Graco for non-employee directors.
All stock option grants made to Mr. Osborne solely because of his
position as a member of the board of directors prior to him
becoming an employee of Graco shall not be affected in any way by
this Agreement.
8. Applicable Law
Except to the extent governed by federal law, this Agreement and
any controversies between the parties shall be governed by and
construed in accordance with the laws of the State of Minnesota.
9. Entire Agreement
This Agreement, including Exhibit A hereto, constitutes the
entire agreement and understanding between the parties with
respect to the subject matter hereof, and, except as otherwise
specifically provided herein or in Exhibit A, specifically
supersedes and replaces any and all prior written or oral
agreements or understandings. This Agreement may not be amended
except in a writing signed by authorized representatives of both
parties.
10. Headings
The headings of the paragraphs herein are included solely for the
convenience of reference and shall not control the meaning or
interpretation of any provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals on the day and year first above written.
GRACO INC.
/s/George Aristides
- -------------------
George Aristides
Chief Executive Officer
CHARLES M. OSBORNE
/s/Charles M. Osborne
Exhibit A
May 7, 1998
Mr. Charles Osborne
1 Red Pine Road
North Oaks, MN 55127
Dear Chuck:
This letter will review the status of your Graco benefit programs following your
termination of employment with the Company, and advise you of decisions that
need to be made concerning these programs. In summarizing the benefits in this
letter, May 30, 1998 was used as your last day of employment.
Health Coverage
Your group Health Care coverage through Medica would normally end May 31, 1998.
However, you do have the option to retain family coverage until you are eligible
for coverage through a new employer or for a period of 18 months, whichever is
shorter. Coverage can be extended from June, 1998 through November, 1999. You
may choose to continue coverage for three months at the employee premium rate of
$67.44 per month. You may then continue coverage for an additional 15 months by
paying the full $458.51 monthly premium. Premium rates and benefit levels are
subject to future changes.
To continue your Health Care coverage, it will be your responsibility to pay the
monthly premium to Graco. We in turn will transmit payment to the health care
provider. Your check or money order should be made payable to Graco Inc., and
sent to the Payroll Department by the first day of each month. To guarantee
uninterrupted medical coverage, the first payment should be submitted on or
before June 15, 1998. However, you do have until July 30, 1998, to request
reinstatement of your coverage. Along with your request, you will need to submit
retroactive premium payments back to the time your coverage as an employee
ceased. Also, any medical expenses you incur for this period of retroactive
coverage, will be delayed in processing until your coverage is reinstated.
Failure to make timely payment will result in the automatic termination of
coverage. There are no statements or reminders sent out. Please indicate on the
enclosed form whether you wish to continue your Health coverage. Please note the
following attachment on 1996 changes to continuation coverage rules applicable
to group health plans under the Consolidated Omnibus Budget Reconciliation Act
of 1985 (COBRA), as amended.
Dental Coverage
Your Dental coverage through Prudential would normally end May 31, 1998.
However, you do have the option to retain family coverage until you are eligible
for coverage through a new employer or for a period of 18 months, whichever is
shorter. Your coverage can be extended from June, 1998 through November, 1999,
by paying the full $59.65 monthly premium. Premium rates and benefit levels are
subject to future changes. Payment is handled in the same manner as for Health
Care. Please indicate on the enclosed form whether you wish to continue your
Dental coverage.
Executive Disability Benefit
Your Long Term Disability coverage will continue through May 31, 1998. At that
time, the $12,167 group LTD coverage will terminate, but you hve the option to
continue the $4,000 individual policy if you are interested. We will have the
agent, Mr. Bob Westenberg, contact you to discuss the program.
Life Coverage
Your Executive Basic and Supplemental Life coverage would normally terminate on
May 31, 1998. You have the option of extending your $200,000 Executive Basic
Life coverage as well as your $400,000 Supplemental Life coverage until you are
eligible for coverage through a new employer, or for a period of 18 months,
whichever is shorter. Coverage can be extended from June, 1998 through November,
1999, by paying the following monthly premium:
o Basic Life Coverage $ 54.00
o Supplemental Life Coverage 144.00
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Total 198.00 Per Month
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Premium rates are subject to future changes. Payment is handled in the same
manner as Health coverage. Please indicate on the enclosed form whether you wish
to continue your Life coverage through our 18 month extension.
Conversion to a private policy is available either when your coverage as an
employee ends or after you complete the full 18 month extension. You may convert
any increment of $1,000 from a minimum of $5,000 up to a maximum of your total
coverage through Graco. If you convert now, conversion is to a whole life policy
with the rate set for the life of the policy. Payments can be established on a
quarterly, semi-annual or annual basis. If you convert after your 18 month
extension, conversion is to a three year renewable term policy. This means that
every three years your premium will be adjusted to reflect your new age.
Premiums are paid on an annual basis only. If you wish to convert to a private
policy, it is your responsibility to contact us for a conversion form. You have
31 days from the date your coverage would normally end to make this conversion.
Personal Accident Coverage
Your $250,000 24-Hour Personal Accident Insurance benefit would normally
terminate on May 31, 1998. You have the option of converting your family
coverage to an individual policy by making written application to our insurance
carrier within 30 days of your coverage termination date. If you are interested
in converting your coverage, simply indicate by checking the box on the enclosed
form.
Expense Reimbursement Account
You are currently enrolled in Graco's healthcare expense reimbursement account.
Claims on expenses incurred prior to leaving Graco may be filed between now and
calendar year-end. To receive reimbursement on expenses incurred after leaving
Graco, you will be required to submit ongoing monthly after-tax contributions
between now and the end of the year. A check made out to Graco in the amount of
$200.00 should be sent to my attention by the first of each month. Please let me
know if you wish to do this.
Graco Employee Investment Plan
You are eligible for a distribution from your Employee Investment Plan account.
As of May 7, 1998, your account balances are as follows:
Pre-Tax Account $13,839.62
Employer Account 6,925.38
Rollover Account 10,589.42
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Total EIP Account $31,354.42
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You may elect one of the following distribution options:
o Single lump sum.
o Installment payments paid annually, quarterly, or monthly.
o Defer distribution until the close of the calendar year in which you
reach age 70 1/2. (Note: Maximum age to which distribution can be
deferred. Distribution may be deferred to earlier date.)
o Rollover of Pre-Tax and Employer contributions and investment earnings
to Individual Retirement Account (IRA) or new employer plan. Rollover
may be made directly to your IRA or new employer plan, without
withholding taxes being applicable. Rollovers may be distributed to
you for transmission to a new plan, but 20% withholding will apply.*
To receive a distribution of your Employee Investment Plan assets, please
telephone the Benefits Advantage Hotline at (888) 319-9451. In Minneapolis/St.
Paul, dial 316-1355. The Hotline will give you directions for accessing a total
distribution in either a single lump sum cash amount or to be rolled over to
another plan or qualified IRA. If you wish to collect installment payments,
please contact me. If you decide to defer distribution of your account, you do
not need to take any action at this time.
You have not paid taxes on any of these funds, and the entire account balance
will be taxable to you when funds are distributed. You should note that the
taxable portion of your account balance is subject to federal income tax. If you
receive any payment before you reach age 59 1/2, an additional 10% income tax
will apply to all taxable amounts. These include your Pre-Tax contributions,
Employer contributions, your Profit Sharing Account (if you were employed with
Graco prior to 1968) and earnings on all accounts.
*Note: You will want to review the enclosed information concerning a lump sum
distribution from the Employee Investment Plan, and the procedure for direct or
other rollover of your distribution to an IRA or other employer plan. Rules are
detailed in the enclosure.
After you have contacted the Hotline and requested a complete withdrawal or
rollover, you will receive a form in the mail from Norwest. This form should be
completed by you and returned to Norwest no earlier than 30 days following your
termination. An application received before that point in time cannot be
processed by Norwest.
Graco Employee Stock Purchase Plan
Since only Graco employees can buy stock through the Employee Stock Purchase
Plan at the end of the purchase period, you will receive a lump sum distribution
of your account approximately 6-8 weeks after your employment termination date.
The distribution will include all of your contributions to the Plan, as well as
the 5.70% interest your money has earned, calculated on a simple interest basis.
Graco Employee Retirement Plan
The Employee Retirement Plan provides a vested benefit at retirement age for
employees who have completed five years of service with the Company. Since your
period of service with Graco was less than five years, you are not entitled to a
retirement benefit.
Please complete and return the enclosed paperwork as soon as possible. If you
have any questions concerning your benefits, please feel free to contact me at
(612) 623-6630. I wish you the very best as you move on from Graco and explore
other options that are available to you.
Sincerely,
Karen Chapin
Director of Benefits and Risk Management
CERTIFICATE OF GROUP HEALTH PLAN COVERAGE
* IMPORTANT - This certificate provides evidence of your prior health coverage.
You may need to furnish this certificate if you become eligible under a group
health plan that excludes coverage for certain medical conditions that you have
before you enroll. This certificate may need to be provided if medical advice,
diagnosis, care, or treatment was recommended or received for the condition
within the 6-month period prior to your enrollment in the new plan. If you
become covered under another group health plan, check with the plan
administrator to see if you need to provide this certificate. You may also need
this certificate to buy, for yourself or your family, an insurance policy that
does not exclude for medical conditions that are present before you enroll.
1. Date of this certificate: May 7, 1998
2. Name of group health plan: Medica
3. Name of participant: Charles Osborne
4. Social Security Number of participant: ###-##-####
5. Name of any dependents to whom this certificate applies: Victoria Osborne,
Marc Osborne, Maria Osborne, Catherine Osborne, Daniel Osborne, John
Osborne
6. Name, address, and telephone number of plan administrator or Issuer
responsible for providing this certificate:
Graco, Inc.
P.O. Box 1441
Minneapolis, MN 55440
7. For further information, call: (612) 623-6628
8. If the individual(s) identified in line 3 and line 5 has at least 18 months
of creditable coverage (disregarding periods of coverage before a 63-day
break), check here and skip lines 9 and 10.
9. Date waiting period or affiliation period (if any) began: April 28, 1997
10. Date coverage began: May 1, 1997
11. Date coverage ended: May 31, 1998
Note: separate certificates will be furnished if information is not identical
for the participant and each beneficiary.