EMPLOYEE MATTERS AGREEMENT
BETWEEN
CRANE CO.
AND
HUTTIG BUILDING PRODUCTS, INC.
DATED AS OF _______________, 1999
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................1
1.1 Adverse Change.............................................................................................1
1.2 Affected Pension Plan Participants.........................................................................1
1.3 Agreement..................................................................................................1
1.4 ASO Contract...............................................................................................1
1.5 Award .....................................................................................................2
1.6 Benefit Liabilities........................................................................................2
1.7 Close of the Distribution Date.............................................................................2
1.8 COBRA .....................................................................................................2
1.9 Code ......................................................................................................2
1.10 Crane Entity..............................................................................................2
1.11 Crane Hourly Pension Plan.................................................................................2
1.12 Crane Restricted Stock Plan...............................................................................2
1.13 Crane Salaried Pension Plan...............................................................................2
1.14 Crane Savings Plan........................................................................................2
1.15 Crane Stock Option Plan...................................................................................2
1.16 Crane Stock Value.........................................................................................2
1.17 Distribution Agreement....................................................................................3
1.18 ERISA ....................................................................................................3
1.19 EVA Plan..................................................................................................3
1.20 Group Insurance Policies..................................................................................3
1.21 Group Life Program........................................................................................3
1.22 Health and Welfare Plans..................................................................................3
1.23 Huttig Employee Stock Purchase Plan.......................................................................3
1.24 Huttig Entity.............................................................................................3
1.25 Huttig Individual.........................................................................................3
1.26 Huttig Savings & Profit Sharing Plan......................................................................3
1.28 Huttig Stock Incentive Plan...............................................................................4
1.29 Huttig Stock Value........................................................................................4
1.30 Immediately After the Distribution Date...................................................................4
1.31 IRS ......................................................................................................4
1.32 Option ...................................................................................................4
1.32 Option Ratio..............................................................................................4
1.33 Plan .....................................................................................................4
1.34 Ratio ....................................................................................................4
ARTICLE II GENERAL PRINCIPLES.....................................................................................4
2.1 Assumption of Liabilities..................................................................................4
2.2 Establishment of Huttig Plans and Related Trusts...........................................................5
2.3 Terms of Participation by Huttig Individuals in Huttig Plans...............................................5
ARTICLE III DEFINED BENEFIT PLANS.................................................................................5
3.1 Freezing of Pension Plan Benefits..........................................................................5
3.2 Vesting and Crediting Service Under Crane's Pension Plans..................................................6
ARTICLE IV DEFINED CONTRIBUTION PLANS.............................................................................6
4.1 Savings and Profit Sharing Plan............................................................................6
4.2 Other Defined Contribution Plans...........................................................................7
ARTICLE V HEALTH AND WELFARE PLANS................................................................................7
5.1 General Provisions.........................................................................................7
5.2 Vendor Contracts...........................................................................................8
5.3 Procedures for Amendments to Plans, Plan Designs, Administrative Practices, and Vendor
Contracts.........................................................................................9
5.4 COBRA ....................................................................................................10
5.5 Post-Distribution-Transitional Arrangements...............................................................10
ARTICLE VI STOCK AND INCENTIVE COMPENSATION BENEFITS AND EXECUTIVE BENEFITS......................................11
6.1 Crane Stock-Based Plans...................................................................................11
6.2 Crane EVA Plan............................................................................................12
6.3 Employee Stock Purchase Plan..............................................................................12
ARTICLE VII GENERAL AND ADMINISTRATIVE...........................................................................12
7.1 Non-Termination of Employment, No Third-Party Beneficiaries...............................................12
7.2 Beneficiary Designations..................................................................................13
7.3 Collective Bargaining.....................................................................................13
7.4 Consent of Third Parties..................................................................................13
7.5 Sharing of Participant Information........................................................................13
ARTICLE VIII MISCELLANEOUS.......................................................................................13
8.1 Effect if Distribution Does Not Occur.....................................................................13
8.2 Relationship of Parties...................................................................................13
8.3 Affiliates................................................................................................14
8.4 Governing Law.............................................................................................14
8.5 Entire Agreement, Construction............................................................................14
8.6 Expenses..................................................................................................14
8.7 Notices ..................................................................................................14
8.8 Consent to Jurisdiction...................................................................................15
8.9 Amendments................................................................................................15
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8.10 Assignment...............................................................................................15
8.11 Captions.................................................................................................16
8.12 Severability.............................................................................................16
8.13 Parties in Interest......................................................................................16
8.14 Schedules................................................................................................16
8.15 Waivers; Remedies........................................................................................16
8.16 Further Assurances.......................................................................................16
8.17 Counterparts.............................................................................................17
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EMPLOYEE MATTERS AGREEMENT
___________________, 1999
The parties to this Employee Matters Agreement, dated as of the date
written above, are Crane Co., a Delaware corporation ("Crane"), and Huttig
Building Products, Inc., a Delaware corporation and, as of the date hereof, an
indirect wholly-owned subsidiary of Crane ("Huttig"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings assigned to
them in Article I hereof or as assigned to them in the Distribution Agreement
(as defined below).
WHEREAS, the Board of Directors of Crane has determined that it is in
the best interests of Crane and its stockholders to separate Crane and its
subsidiary, Huttig, such that Huttig will be an independent business entity;
WHEREAS, in furtherance of the foregoing, Crane and Huttig have entered
into a Distribution Agreement, dated as of the date hereof (the "Distribution
Agreement"), and certain other agreements that will govern certain matters
relating to the Distribution and the relationship of Crane and Huttig, and their
respective Subsidiaries following the Distribution; and
WHEREAS, pursuant to the Distribution Agreement, Crane and Huttig have
agreed to enter into this agreement allocating between them the assets,
liabilities and responsibilities with respect to certain employee compensation
and benefit plans and programs.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement the following terms shall have the
following meanings:
1.1 Adverse Change is defined in Section 5.3(a).
1.2 Affected Pension Plan Participants is defined in Section 3.1.
1.3 Agreement means this Employee Matters Agreement, including all the
Schedules hereto.
1.4 ASO Contract is defined in Section 5.2(a)(i).
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1.5 Award means an award under the Crane Stock Option Plan, the Crane
Restricted Stock Plan, the EVA Plan or the Huttig Stock Incentive Plan. When
immediately preceded by "Crane," the term Award means an award under the
applicable Plan described in this Section 1.5 as established or maintained by
Crane. When immediately preceded by "Huttig," the term Award means an award
under the applicable Plan established or maintained by Huttig.
1.6 Benefit Liabilities means any Liabilities (as defined in the
Distribution Agreement) relating to any contributions, compensation or other
benefits accrued or payable under any profit sharing, pension, savings, deferred
compensation, fringe benefit, insurance, medical, medical reimbursement, life,
disability, accident, post-retirement health or welfare benefit, stock option,
stock purchase, sick pay, vacation, employment, severance, termination or other
compensation or benefit plan, agreement, contract, policy, trust fund or
arrangement.
1.7 Close of the Distribution Date means 11:59:59 P.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the Distribution Date.
1.8 COBRA means the continuation coverage requirements for "group
health plans" under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and as codified in Code Section 4980B and ERISA
Sections 601 through 608.
1.9 Code means the Internal Revenue Code of 1986, as amended, or any
successor federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary, or final regulation in force under that
provision.
1.10 Crane Entity means any entity that is, at the relevant time, an
Affiliate of Crane, except that, for periods beginning Immediately After the
Distribution Date, the term "Crane Entity" shall not include Huttig or a Huttig
Entity.
1.11 Crane Hourly Pension Plan means the Crane Co. Master Pension Plan
for Hourly and Certain Non-Bargaining Employees (Plan C), effective December 31,
1987, as amended further effective January 1, 1994.
1.12 Crane Restricted Stock Plan means the Crane Co. Restricted Stock
Award Plan.
1.13 Crane Salaried Pension Plan means the Crane Co. Pension Plan for
Non-Bargaining Employees, effective December 31, 1987, as amended further
effective January 1, 1994.
1.14 Crane Savings Plan means the Crane Co. Savings and Investment
Plan, effective January 1, 1989, as amended further effective June 1, 1997.
1.15 Crane Stock Option Plan means the Crane Co. Stock Option Plan.
1.16 Crane Stock Value means the average of the high and low per-share
prices of the Crane Common Stock, regular way, as reported on the New York Stock
Exchange - Composite Transactions Tape on the trading day immediately prior to
the Distribution Date.
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1.17 Distribution Agreement is defined in the third paragraph of the
preamble of this Agreement.
1.18 ERISA means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary, or final regulation in force under that provision.
1.19 EVA Plan, when immediately preceded by "Crane," means the Crane
Co. Economic Value Added Incentive Compensation Plan for Executive Officers.
When immediately preceded by "Huttig," EVA Plan means the Economic Value Added
Incentive Compensation Plan to be established by Huttig pursuant to Section 2.2.
1.20 Group Insurance Policies is defined in Section 5.2(b)(i).
1.21 Group Life Program, when immediately preceded by "Crane," means
the Crane Co. group life programs, policies and arrangements. When immediately
preceded by "Huttig," Group Life Program means the life insurance programs,
policies and arrangements to be established by Huttig pursuant to Section 2.2
that correspond to the respective Crane Group Life Programs.
1.22 Health and Welfare Plans, when immediately preceded by "Crane,"
means the health and welfare plans listed on Schedule 1.22 established and
maintained by Crane for the benefit of employees and retirees of Crane and
certain Crane Entities, and such other welfare plans or programs as may apply to
such employees and retirees as of the Distribution Date. When immediately
preceded by "Huttig," Health and Welfare Plans means the health and welfare
plans to be established by Huttig pursuant to Section 2.2 that correspond to the
respective Crane Health and Welfare Plans.
1.23 Huttig Employee Stock Purchase Plan means the employee stock
purchase plan to be established by Huttig pursuant to Section 2.2.
1.24 Huttig Entity means any Person that is, at the relevant time, a
Subsidiary of Huttig or is otherwise controlled, directly or indirectly, by
Huttig.
1.25 Huttig Individual means any individual (i) who, Immediately After
the Distribution Date, is either actively employed by or on leave of absence
from Huttig or a Huttig Entity, or (ii) whose last employment within the
Pre-Distribution Group (as defined in the Distribution Agreement) was with
Huttig or a Huttig Entity.
1.26 Huttig Savings & Profit Sharing Plan means the defined
contribution plan established by Huttig pursuant to Section 2.2 and Article IV.
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1.27 Huttig Stock Incentive Plan means the plan or program established
by Huttig pursuant to Section 2.2 consisting of a stock option plan that
corresponds to the Crane Stock Option Plan and a restricted stock award plan
that corresponds to the Crane Restricted Stock Plan.
1.28 Huttig Stock Value means the average of the high and low per-share
prices of the Huttig Common Stock as reported on the New York Stock Exchange on
the first trading day after the Distribution Date.
1.29 Immediately After the Distribution Date means 12:00 A.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the day after the Distribution Date.
1.30 IRS means the Internal Revenue Service.
1.31 Option, when immediately preceded by "Crane," means an option to
purchase Crane Common Stock pursuant to the Crane Stock Option Plan. When
immediately preceded by "Huttig," Option means an option to purchase Huttig
Common Stock pursuant to the Huttig Stock Incentive Plan.
1.32 Option Ratio means the amount obtained by dividing the Crane Stock
Value by the average of the high and low sales prices of the Crane Common Stock
on the first trading day after the Distribution Date.
1.33 Plan, when immediately preceded by "Crane" or "Huttig," means any
plan, policy, program, payroll practice, on-going arrangement, contract, trust,
insurance policy or other agreement or funding vehicle providing benefits to
employees or former employees of Crane or a Crane Entity, or Huttig or a Huttig
Entity, as applicable.
1.34 Ratio means the amount obtained by dividing the Crane Stock Value
by the Huttig Stock Value.
ARTICLE II
GENERAL PRINCIPLES
2.1 Assumption of Liabilities. Except as otherwise expressly provided
in Article III, Huttig hereby assumes and agrees to pay, perform, fulfill and
discharge, in accordance with their respective terms, all of the following
(regardless of when or where such Benefit Liabilities arose or arise or were or
are incurred): (i) all Benefit Liabilities to or relating to Huttig Individuals,
and their respective dependents and beneficiaries, in each case relating to,
arising out of or resulting from employment by Crane, a Crane Entity, Huttig or
a Huttig Entity before the Distribution Date (including Benefit Liabilities
under Crane Plans and Huttig Plans); (ii) all other Benefit Liabilities to or
relating to Huttig Individuals, and their respective dependents and
beneficiaries, to the extent relating to, arising out of or resulting from
future, present or former employment
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with Huttig or a Huttig Entity (including Benefit Liabilities under Crane
Plans and Huttig Plans);
(iii) all Benefit Liabilities relating to, arising out of or resulting from any
other actual or alleged employment relationship with Huttig or a Huttig Entity;
(iv) all Benefit Liabilities relating to, arising out of or resulting from the
imposition of withdrawal liability under Subtitle E of Title IV of ERISA as a
result of a complete or partial withdrawal of any Crane Entity from a
"multiemployer plan" within the meaning of ERISA Section 4021 which occurs
solely as a result of the Distribution; and (v) all other Benefit Liabilities
relating to, arising out of or resulting from obligations, liabilities and
responsibilities expressly assumed or retained by Huttig, a Huttig Entity, or a
Huttig Plan pursuant to this Agreement.
2.2 Establishment of Huttig Plans and Related Trusts. Effective prior
to or Immediately After the Distribution Date, Huttig shall adopt, or cause to
be adopted, the Huttig Savings and Profit Sharing Plan and its related trust,
the Huttig Employee Stock Purchase Plan, the Huttig Stock Incentive Plan, the
Huttig EVA Plan and the Huttig Health and Welfare Plans for the benefit of the
Huttig Individuals and other current and future employees of Huttig and the
Huttig Entities. Subject to the provisions of Section 4.1 regarding the Huttig
Savings and Profit Sharing Plan, Section 6.2 regarding the Huttig EVA Plan,
Section 6.3 regarding the Huttig Employee Stock Purchase Plan and Section 5.1(b)
regarding the Huttig Health and Welfare Plans, the foregoing Huttig Plans as in
effect Immediately After the Distribution Date shall be substantially identical
in all material respects to the corresponding Crane Plans as in effect as of the
Distribution Date.
2.3 Terms of Participation by Huttig Individuals in Huttig Plans. The
Huttig Plans shall be, with respect to Huttig Individuals, in all respects the
successors in interest to, and shall not provide benefits that duplicate
benefits provided by, the corresponding Crane Plans. Crane and Huttig shall
agree on methods and procedures, including amending the respective Plan
documents and/or requesting approvals or consents of Huttig Individuals where
the parties deem appropriate, to prevent Huttig Individuals from receiving
duplicative benefits from the Crane Plans and the Huttig Plans. With respect to
Huttig Individuals, each Huttig Plan shall provide that all service, all
compensation and all other benefit-affecting determinations that, as of the
Close of the Distribution Date, were recognized under the corresponding Crane
Plan shall, as of Immediately After the Distribution Date, receive full
recognition, credit, and validity and be taken into account under such Huttig
Plan to the same extent as if such items occurred under such Huttig Plan, except
to the extent that duplication of benefits would result.
ARTICLE III
DEFINED BENEFIT PLANS
3.1 Freezing of Pension Plan Benefits. Effective Immediately After the
Distribution Date, the accrued benefits with respect to Huttig Individuals who,
as of the Distribution Date, were participants under the Crane Salaried Pension
Plan or the Crane Hourly Pension Plan (collectively, the "Affected Pension Plan
Participants") shall be frozen and the Affected Pension Plan Participants shall
not accrue any additional benefits from and after the Distribution Date
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under the Crane Salaried Pension Plan or the Crane Hourly Pension Plan, as the
case may be. The assets and Benefit Liabilities with respect to the Affected
Pension Plan Participants, determined as of the Distribution Date, shall be
retained by the applicable Crane Plan and its related trust and paid therefrom
when due under the terms of the applicable Crane Plan.
3.2 Vesting and Crediting Service Under Crane's Pension Plans.
Effective Immediately After the Distribution Date, notwithstanding anything
contained in the Crane Salaried Pension Plan or the Crane Hourly Pension Plan to
the contrary, the Affected Pension Plan Participants shall be fully vested in
their respective accrued benefits under the Crane Salaried Pension Plan or the
Crane Hourly Pension Plan, as the case may be. Affected Pension Plan
Participants shall continue to receive service credit for retirement benefit
eligibility purposes under the applicable Crane Plan for service with Huttig
after the Distribution Date.
ARTICLE IV
DEFINED CONTRIBUTION PLANS
4.1 Savings and Profit Sharing Plan.
(a) Establishment of Savings and Profit Sharing Plan and Trust. The
Huttig Savings and Profit Sharing Plan, established by Huttig pursuant to
Section 2.2, (i) shall be a qualified defined contribution plan within the
meaning of Code Section 401(a), (ii) except as provided under Section 4.1(c),
shall contain provisions, terms and conditions substantially similar to the
provisions, terms and conditions of the Crane Savings Plan, and (iii) shall
provide coverage from and after the Distribution Date with respect to Huttig
Individuals. The trust related to the Huttig Savings and Profit Sharing Plan,
established by Huttig pursuant to Section 2.2, shall be exempt from taxation
under Code Section 501(a).
(b) Assumption of Liabilities and Transfer of Assets.
(i) Effective Immediately After the Distribution Date:
(A) the Huttig Savings and Profit Sharing Plan shall assume and be solely
responsible for all Benefit Liabilities to or relating to Huttig Individuals
under the Crane Savings Plan, and (B) Crane shall cause an amount equal to the
aggregate account balances of the Huttig Individuals participating under the
Crane Savings Plan, whether such amounts are vested or unvested under the terms
of the Crane Savings Plan, which are held by the related trust as of the Close
of the Distribution Date to be transferred to the Huttig Savings and Profit
Sharing Plan, and its related trust, or such other qualified plan and trust
designated by Huttig, and Huttig shall cause such transferred accounts to be
accepted by such plan and trust. In Crane's sole and absolute discretion, the
amount so transferred may be in cash or in kind or a combination thereof;
provided, however, that the following shall be transferred in kind: (A) shares
of Crane Common Stock and shares of Huttig Common Stock allocated to
participants' accounts as a result of the Distribution; and (B) all promissory
notes reflecting participant loans to Huttig Individuals under the Crane Savings
Plan outstanding as of the Distribution Date.
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(ii) If any benefit with respect to a Huttig Individual under the
Crane Savings Plan is subject to a qualified domestic relations order at the
time of transfer, all documentation concerning such qualified domestic
relations order shall be assigned to the Huttig Savings and Profit Sharing
Plan.
(c) Retirement Benefit Feature of Savings and Profit Sharing Plan. The
Huttig Savings and Profit Sharing Plan shall contain provisions regarding
employer profit sharing contributions that, in the sole discretion of Huttig,
are appropriate retirement benefit provisions with respect to Huttig
Individuals.
(d) Vesting. Effective Immediately After the Distribution Date,
participants in the Huttig Savings and Profit Sharing Plan shall be fully vested
in any amounts transferred with respect to such participants from the Crane
Savings Plan and its related trust under Section 4.1(b).
4.2 Other Defined Contribution Plans. Effective Immediately After the
Distribution Date, Huttig shall retain sole responsibility for sponsorship and
administration of the Huttig Sash & Door Company Compensation and Investment
Plan (formerly known as the Palmer G. Lewis 401(k) Plan) (the "Lewis 401(k)
Plan"), the Huttig Sash & Door Company Tax-Sheltered Investment Plan (formerly
known as the American Pine Products 401(k) Profit Sharing Plan) (the "Prineville
401(k) Plan") and the Whittier-Ruhle Millwork Company's Employees' Savings and
Investment Plan (the "Whittier-Ruhle Plan"), including all Benefit Liabilities
arising under those plans prior to or after the Distribution Date, and Crane
shall have no responsibility or liability with respect to the Lewis 401(k) Plan,
the Prineville 401(k) Plan or the Whittier-Ruhle Plan.
ARTICLE V
HEALTH AND WELFARE PLANS
5.1 General Provisions.
(a) Assumption of Health and Welfare Plan Liabilities. Immediately
After the Distribution Date, all Benefit Liabilities to or relating to Huttig
Individuals under the Crane Health and Welfare Plans shall cease to be Benefit
Liabilities of the Crane Health and Welfare Plans and shall be assumed by the
corresponding Huttig Health and Welfare Plans.
(b) Postretirement Medical and Life Insurance Benefits.
(i) Effective Immediately After the Distribution Date,
Huttig may, but shall not be required to, alter or amend the postretirement
medical and life insurance benefits offered, or the manner in which such
benefits are offered, to Huttig Individuals as follows (subject to all terms
and conditions of the applicable Huttig Plan): (A) Huttig shall continue to
contribute 50% of the applicable premium or cost of coverage for postretirement
medical benefits for Huttig Individuals who are currently retired and
participating in such coverage as of the Distribution Date, such contribution
to continue in each case only until such Huttig Individual attains age 65;
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(B) Huttig shall make no contribution regarding the premium or other cost of
coverage for postretirement life insurance benefits for Huttig Individuals who
are currently retired and participating in such coverage as of the Distribution
Date; (C) Huttig shall make no contribution regarding the premium or other cost
of coverage for postretirement medical or life insurance benefits for Huttig
Individuals who are active employees of Huttig or a Huttig Entity Immediately
After the Distribution Date and who commenced employment with Huttig or a Huttig
Entity prior to 1992; and (C) Huttig shall not offer postretirement medical or
life insurance benefits to Huttig Individuals who are active employees of Huttig
or a Huttig Entity Immediately After the Distribution Date and who commenced
employment with Huttig or a Huttig Entity after 1991.
(ii) Crane agrees and acknowledges that any alteration or
amendment by Huttig of the postretirement medical and life insurance benefits
offered under one or more of the Huttig Health and Welfare Plans as described in
Section 5.1(b)(i) shall not be considered or otherwise deemed to be an Adverse
Change as defined under Section 5.3(a). Notwithstanding the foregoing, Huttig
acknowledges that any decision or action with respect to postretirement medical
or life insurance benefits offered under any Huttig Plan after the Distribution
Date shall be in the sole discretion of Huttig and Huttig shall be solely
responsible for such decision or action. Furthermore, Huttig acknowledges that
Crane shall in no way be considered or deemed to have consented to, agreed to or
otherwise to have been involved in, such decision or action of Huttig.
5.2 Vendor Contracts.
(a) Third-Party ASO Contracts.
(i) Crane shall use its reasonable efforts to amend each
administrative services only contract with a third-party administrator that
relates to any of the Crane Health and Welfare Plans (an "ASO Contract") in
existence as of the date of this Agreement to permit Huttig to participate in
the terms and conditions of such ASO Contract from Immediately After the
Distribution Date until the expiration of the financial fee guarantees in effect
under such ASO Contract as of the Close of the Distribution Date. Crane shall
use its reasonable efforts to cause all ASO Contracts into which Crane enters
after the date of this Agreement but before the Close of the Distribution Date
to allow Huttig to participate in the terms and conditions thereof effective
Immediately After the Distribution Date on the same basis as Crane.
(ii) Crane shall have the right to determine, and shall
promptly notify Huttig of, the manner in which Huttig's participation in the
terms and conditions of ASO Contracts as set forth above shall be effectuated.
The permissible ways in which Huttig's participation may be effectuated include
automatically making Huttig a party to the ASO Contracts or obligating the third
party to enter into a separate ASO Contract with Huttig providing for the same
terms and conditions as are contained in the ASO Contracts to which Crane is a
party. Such terms and conditions shall include the financial and termination
provisions, performance standards, methodology, auditing policies, quality
measures, reporting requirements and target claims. Huttig hereby authorizes
Crane to act on its behalf to extend to Huttig the terms and conditions of the
ASO Contracts. Huttig shall fully cooperate with Crane in such efforts, and
Huttig shall
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not perform any act, including discussing any alternative arrangements with
any third party, that would prejudice Crane's efforts.
(b) Group Insurance Policies.
(i) This Section 5.2(b) applies to group insurance
policies not subject to allocation or transfer pursuant to the foregoing
provisions of this Article V ("Group Insurance Policies").
(ii) Crane shall use its reasonable efforts to amend each
Group Insurance Policy in existence as of the date of this Agreement for the
provision or administration of benefits under the Crane Health and Welfare Plans
to permit Huttig to participate in the terms and conditions of such policy from
Immediately After the Distribution Date until the expiration of the financial
fee and rate guarantees in effect under such Group Insurance Policy as of the
Close of the Distribution Date. Crane shall use its reasonable efforts to cause
all Group Insurance Policies into which Crane enters or which Crane renews after
the date of this Agreement but before the Close of the Distribution Date to
allow Huttig to participate in the terms and conditions thereof effective
Immediately After the Distribution Date on the same basis as Crane.
(iii) Huttig's participation in the terms and conditions of
each such Group Insurance Policy shall be effectuated by obligating the
insurance company that issued such insurance policy to Crane to issue one or
more separate policies to Huttig. Such terms and conditions shall include the
financial and termination provisions, performance standards and target claims.
Huttig hereby unconditionally and irrevocably authorizes Crane to act on its
behalf to extend to Huttig the terms and conditions of such Group Insurance
Policies. Huttig shall fully cooperate with Crane in such efforts, and Huttig
shall not perform any act, including discussing any alternative arrangements
with third parties, that would prejudice Crane's efforts.
(c) Effect of Change in Rates. Crane and Huttig shall use their
reasonable efforts to cause each of the insurance companies, point-of-service
vendors and third-party administrators providing services and benefits under the
Crane Health and Welfare Plans and the Huttig Health and Welfare Plans to
maintain the premium and/or administrative rates based on the aggregate number
of participants in both the Crane Health and Welfare Plans and the Huttig Health
and Welfare Plans through the expiration of the financial fee or rate guarantees
in effect as of the Close of the Distribution Date under the respective ASO
Contracts and Group Insurance Policies. To the extent they are not successful in
such efforts, Crane and Huttig shall each bear the revised premium or
administrative rates attributable to the individuals covered by their respective
Health and Welfare Plans.
5.3 Procedures for Amendments to Plans, Plan Designs, Administrative
Practices, and Vendor Contracts.
(a) Changes in Vendor Contracts, Group Insurance Policies, Plan Design,
and Administration Practices and Procedures. From Immediately After the
Distribution Date through the expiration of the respective financial fee or rate
guarantees in effect as of the Close of the
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Distribution Date under the applicable ASO Contract or Group Insurance Policy,
any party must comply with Section 5.3(b) if that party seeks to materially
amend, modify, alter or take other action which would have a material effect
on, any of the following items that, in the reasonable opinion of the other
party, shall have a material adverse impact on one or more of the other party's
Health and Welfare Plans (each such modification, an "Adverse Change"): (i) the
termination date, administration, or operation of (A) an ASO contract between
Crane or Huttig and a third-party administrator, or (B) a Group Insurance
Policy issued to Crane or Huttig, in each case, the material terms and
conditions of which contracts and policies are extended to Huttig or to which
Huttig becomes a party pursuant to Section 5.2; (ii) the design of either a
Crane Health and Welfare Plan or a Huttig Health and Welfare Plan; or (iii) the
financing, operation, administration or delivery of benefits under either a
Crane Health and Welfare Plan or a Huttig Health and Welfare Plan.
(b) Procedure for Implementing Changes. Unless the other party consents
in writing, neither Crane nor Huttig shall make any Adverse Change unless the
party intending to make the Adverse Change has: (i) given the other party
written notice of the intention to make the Adverse Change, accompanied by a
written description of the Adverse Change, at least 30 days in advance of the
proposed effective date of the Adverse Change; (ii) agreed to bear all of the
costs of implementing the Adverse Change which are incurred by all third-party
administrators, insurance companies and other vendors and passed through to one
or both of the parties; and (iii) certified to the other party, and provided to
the other party the written concurrence of each third-party administrator,
insurance company or other vendor associated with or performing services in
connection with the Health and Welfare Plan affected by the Adverse Change, that
(after taking into account the effect of clause (ii)) the proposed Adverse
Change will have no material adverse impact (financial, administrative or
otherwise) on the corresponding Health and Welfare Plan sponsored by the other
party.
5.4 COBRA. Effective Immediately After the Distribution Date, Huttig
shall solely be responsible for administering compliance with the health care
continuation coverage requirements of COBRA with respect to Huttig Individuals
under the Huttig Health and Welfare Plans.
5.5 Post-Distribution-Transitional Arrangements.
(a) Continuance of Elections, Co-Payments and Maximum Benefits.
(i) Huttig shall cause the Huttig Health and Welfare
Plans to recognize and maintain all coverage and contribution elections made by
Huttig Individuals under the Crane Health and Welfare Plans and apply such
elections under the Huttig Health and Welfare Plans for the remainder of the
period or periods for which such elections are by their terms applicable. The
transfer or other movement of employment from Crane to Huttig at any time before
the Close of the Distribution Date shall neither constitute nor be treated as a
"status change" under the Crane Health and Welfare Plans or the Huttig Health
and Welfare Plans.
(ii) Huttig shall cause the Huttig Health and Welfare
Plans to recognize and give credit for (A) all amounts applied to deductibles,
out-of-pocket maximums, and other
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applicable benefit coverage limits with respect to which such expenses have
been incurred by Huttig Individuals under the Crane Health and Welfare Plans
for the remainder of the year in which the Distribution occurs, and (B) all
benefits paid to Huttig Individuals under the CraneHealth and Welfare Plans for
purposes of determining when such persons have reached their lifetime maximum
benefits under the Huttig Health and Welfare Plans.
(iii) Huttig shall use reasonable efforts to (A) provide
coverage to Huttig Individuals under the Huttig Group Life Program without the
need to undergo a physical examination or otherwise provide evidence of
insurability, and (B) recognize and maintain all irrevocable assignments and
accelerated benefit option elections made by Huttig Individuals under the Crane
Group Life Program.
(b) Health and Welfare Plans Subrogation Recovery. After the Close of
the Distribution Date, Crane shall pay to Huttig any amounts Crane recovers from
time to time through subrogation or otherwise for claims incurred by or
reimbursed to any Huttig Individual. If Huttig recovers any amounts through
subrogation or otherwise for claims incurred by or reimbursed to employees and
former employees of Crane or a Crane Entity and their respective beneficiaries
and dependents (other than Huttig Individuals), Huttig shall pay such amounts to
Crane.
ARTICLE VI
STOCK AND INCENTIVE COMPENSATION BENEFITS
AND EXECUTIVE BENEFITS
6.1 Crane Stock-Based Plans.
(a) Stock Options. Effective as soon as practicable after the
Distribution Date, Crane shall cause each Crane Option that is outstanding as of
the Close of the Distribution Date and is held by a Huttig Individual to be
adjusted to reflect the effect of the Distribution (each such Option shall be
called an "Adjusted Option"). Each Adjusted Option shall provide for the option
to purchase a number of shares of Crane Common Stock equal to the number of
shares of Crane Common Stock subject to the original Crane Option as of the
Close of the Distribution Date, multiplied by the Option Ratio, and then rounded
to the nearest whole share. The per-share exercise price of such Adjusted Option
shall equal the per-share exercise price of the original Crane Option as of the
Close of the Distribution Date divided by the Option Ratio. Each Adjusted Option
shall otherwise have the same terms and conditions as were applicable to the
original Crane Option as of the Close of the Distribution Date. Solely for
purposes of this Section 6.1(a), any Huttig Individual holding a Crane Option
(or an Adjusted Option) shall be considered to have incurred a termination of
employment with Crane for a reason other than (i) retirement, death or
disability or (ii) after a change in control for purposes of the Crane Stock
Option Plan and any option agreement or other contract evidencing the grant or
award of a Crane Option to such Individual. Such Crane Option (or Adjusted
Option) shall be exercisable and subject to termination as provided in such
agreement or contract.
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(b) Restricted Stock. Effective as soon as administratively practicable
after the Distribution Date, Huttig shall cause the Restricted Stock Award held
by Mr. Barry Kulpa under the Crane Restricted Stock Plan as of the Distribution
Date, to the extent that vesting of shares granted under that Award is not
dependent upon any performance or market value criteria (i.e. time-based
restrictions), to be converted to a Restricted Stock Award under the Huttig
Stock Incentive Plan by multiplying the number of shares of Crane Restricted
Stock by the Ratio, and then rounding the product to the nearest whole share.
Such Huttig Restricted Stock Award shall have the same terms and conditions as
were applicable to the corresponding Crane Restricted Stock Award. Crane shall
use reasonable efforts to cancel any certificate in Mr. Kulpa's name with
respect to restricted shares of Crane Common Stock. To the extent that Mr.
Kulpa's Restricted Stock Award is not subject to conversion under the prior
provisions of this Section 6.1(b) (i.e. performance-based restrictions), such
Restricted Stock Award shall be canceled.
6.2 Crane EVA Plan. Effective Immediately After the Distribution Date,
Huttig shall assume all Benefit Liabilities to or relating to Huttig Individuals
under the Crane EVA Plan. The Huttig EVA Plan shall reflect appropriate
adjustments, as determined by Huttig in its sole discretion, of the cost of
capital and other factors that shall be applicable to the benefits under the
Huttig EVA Plan after the Distribution Date.
6.3 Employee Stock Purchase Plan. The Huttig Employee Stock Purchase
Plan, established pursuant to Section 2.2, shall provide employees of Huttig or
a Huttig Entity after the Distribution Date with an opportunity to purchase
Huttig Common Stock at current market prices.
ARTICLE VII
GENERAL AND ADMINISTRATIVE
7.1 Non-Termination of Employment, No Third-Party Beneficiaries. No
provision of this Agreement or the Distribution Agreement shall be construed to
create any right, or accelerate entitlement, to any compensation or benefit
whatsoever on the part of any Huttig Individual or other future, present or
former employee of Crane, a Crane Entity, Huttig, or a Huttig Entity under any
Crane Plan or Huttig Plan or otherwise. Without limiting the generality of the
foregoing: (i) except as expressly provided in Section 6.1(a), the Distribution
shall not cause any employee to be deemed to have incurred a termination of
employment which entitles such individual to the commencement of benefits under
any of the Crane Plans, any of the Huttig Plans, or any individual agreements;
and (ii) except as expressly provided in this Agreement, nothing in this
Agreement shall preclude Huttig, at any time after the Close of the Distribution
Date, from amending, merging, modifying, terminating, eliminating, reducing, or
otherwise altering in any respect any Huttig Plan, any
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benefit under any Plan or any trust, insurance policy or funding vehicle
related to any Huttig Plan.
7.2 Beneficiary Designations. All beneficiary designations made by
Huttig Individuals for Crane Plans shall be transferred to and be in full force
and effect under the corresponding Huttig Plans until such beneficiary
designations are replaced or revoked by the Huttig Individual who made the
beneficiary designation.
7.3 Collective Bargaining. To the extent any provision of this
Agreement is contrary to the provisions of any collective bargaining agreement
to which Crane or any Affiliate of Crane is a party, the terms of such
collective bargaining agreement shall prevail. Should any provisions of this
Agreement be deemed to relate to a topic determined by an appropriate authority
to be a mandatory subject of collective bargaining, Crane or Huttig may be
obligated to bargain with the union representing affected employees concerning
those subjects.
7.4 Consent of Third Parties. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor or a union) and
such consent is withheld, Crane and Huttig shall use their reasonable efforts to
implement the applicable provisions of this Agreement to the full extent
practicable. If any provision of this Agreement cannot be implemented due to the
failure of such third party to consent, Crane and Huttig shall negotiate in good
faith to implement the provision in a mutually satisfactory manner. The phrase
"reasonable efforts" as used herein shall not be construed to require the
incurrence of any non-routine or unreasonable expense or liability or the waiver
of any right.
7.5 Sharing of Participant Information. Crane and Huttig shall share,
Crane shall cause each applicable Crane Entity to share, and Huttig shall cause
each applicable Huttig Entity to share, with each other and their respective
agents and vendors (without obtaining releases) all participant information
necessary for the efficient and accurate administration of each of the Crane
Plans and the Huttig Plans. Crane and Huttig and their respective authorized
agents shall, subject to applicable laws on confidentiality, be given reasonable
and timely access to, and may make copies of, all information relating to the
subjects of this Agreement in the custody of the other party, to the extent
necessary for such administration. Until December 31, 2000, or such other date
as the parties may mutually agree, all participant information shall be provided
in a manner and medium that is compatible with the data processing systems of
Crane as in effect on the Close of the Distribution Date, unless otherwise
agreed to by Crane and Huttig.
ARTICLE VIII
MISCELLANEOUS
8.1 Effect if Distribution Does Not Occur. If the Distribution does not
occur, then all actions and events that are, under this Agreement, to be taken
or occur effective as of the Close of the Distribution Date, Immediately After
the Distribution Date, or otherwise in connection with the Distribution, shall
not be taken or occur except to the extent specifically agreed by Huttig and
Crane.
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8.2 Relationship of Parties. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it
being understood and agreed that no provision contained herein, and no act of
the parties, shall be deemed to create any relationship between the parties
other than the relationship set forth herein.
8.3 Affiliates. Each of Crane and Huttig shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by a Crane Entity or a
Huttig Entity, respectively.
8.4 Governing Law. To the extent not preempted by applicable federal
law, this Agreement shall be governed by, construed and interpreted in
accordance with the laws of the State of Delaware, irrespective of the choice of
laws principles of the state of Delaware, as to all matters, including matters
of validity, construction, effect, performance and remedies.
8.5 Entire Agreement, Construction. This Agreement and the Ancillary
Agreements, including, without limitation, any annexes, schedules and exhibits
hereto or thereto, and other agreements and documents referred to herein and
therein, will together constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and will supersede all prior
negotiations, agreements and understandings of the parties of any nature,
whether oral or written, with respect to such subject matter. In the event and
to the extent that there is a conflict between the provisions of this Agreement
and the provisions of the Distribution Agreement, the Transition Services
Agreement or the Tax Allocation Agreement, the provisions of this Agreement
shall control.
8.6 Expenses. Except as expressly set forth in this Agreement, all
costs and expenses incurred through the Close of the Distribution Date with
respect to any employee matters described herein shall be charged to and paid by
Crane. Except as otherwise set forth in this Agreement, all costs and expenses
incurred following the Distribution Date with respect to any employee matters
described herein shall be charged to and paid by the party for whose benefit the
expenses are incurred, with any expenses that cannot be allocated on such basis
to be split equally between the parties.
8.7 Notices. All notices, requests, claims, demands and other
communications required or permitted to be given hereunder will be in writing
and will be delivered by hand or telecopied or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
will be deemed given when so delivered by hand or telecopied, or three business
days after being so mailed (one business day in the case of express mail or
overnight courier service). All such notices, requests, claims, demands and
other communications will be addressed as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
(a) If to Crane:
Crane Co.
100 First Stamford Place
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Stamford, CT 06902
Attention: Augustus I. duPont
Telecopy: (203) 363-7350
with a copy to:
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222-2312
Attention: Janice C. Hartman
Telecopy: (412) 355-6501
(b) If to Huttig:
Huttig Building Products, Inc.
14500 South Outer Forty Road
Suite 400
Chesterfield, MO 63017
Attention:
Telecopy: (314) 216-2601
8.8 Consent to Jurisdiction. Each of Crane and Huttig irrevocably
submits to the exclusive jurisdiction of (i) the Court of Chancery in and for
the State of Delaware and the Superior Court in and for the State of Delaware
and (ii) the United States District Court for the District of Delaware, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated thereby (and agrees not to commence any action,
suit or proceeding relating thereto except in such courts). Each of Crane and
Huttig further agrees that service of any process, summons, notice or document
hand delivered or sent by U.S. registered mail to such party's respective
address set forth in Section 8.6 will be effective service of process for any
action, suit or proceeding in Delaware with respect to any matters to which it
has submitted to jurisdiction as set forth in the immediately preceding
sentence. Each of Crane and Huttig irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement in (i) the Court of Chancery in and for the State of Delaware
and the Superior Court in and for the State of Delaware or (ii) the United
States District Court for the District of Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
8.9 Amendments. This Agreement cannot be amended, modified or
supplemented except by a written agreement executed by Crane and Huttig.
8.10 Assignment. Neither party to this Agreement will convey, assign or
otherwise transfer any of its rights or obligations under this Agreement without
the prior written consent of the other party in its sole and absolute
discretion, except that other than as expressly provided herein any party may
(without obtaining any consent) assign any of its rights hereunder to a
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successor to all or any part of its business. Any such conveyance, assignment
or transfer requiring the prior written consent of another party which is made
without such consent will be void ab initio. No assignment of this Agreement
will relieve the assigning party of its obligations hereunder.
8.11 Captions. The article, section and paragraph captions herein and
the table of contents hereto are for convenience of reference only, do not
constitute part of this Agreement and will not be deemed to limit or otherwise
affect any of the provisions hereof. Unless otherwise specified, all references
herein to numbered articles or sections are to articles and sections of this
Agreement and all references herein to annexes or schedules are to annexes and
schedules to this Agreement.
8.12 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and will in no way be
affected, impaired or invalidated thereby. If the economic or legal substance of
the matters contemplated hereby is affected in any manner adverse to any party
as a result thereof, the parties will negotiate in good faith in an effort to
agree upon a suitable and equitable substitute provision to effect the original
intent of the parties.
8.13 Parties in Interest. This Agreement is binding upon and is for the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not made for the benefit of any Person not a party
hereto, and no Person other than the parties hereto or their respective
successors and permitted assigns will acquire or have any benefit, right, remedy
or claim under or by reason of this Agreement.
8.14 Schedules. All annexes and schedules attached hereto are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Capitalized terms used in the schedules hereto but not otherwise defined
therein will have the respective meanings assigned to such terms in this
Agreement.
8.15 Waivers; Remedies. No failure or delay on the part of either Crane
or Huttig in exercising any right, power or privilege hereunder will operate as
a waiver thereof, nor will any waiver on the part of either Crane or Huttig of
any right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor will any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies which the parties may otherwise have at law or in equity.
8.16 Further Assurances. As and when requested by either party hereto,
the other party shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such actions as the requesting party may reasonably request with
respect to the matters described herein.
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8.17 Counterparts. This Agreement may be executed in separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement.
IN WITNESS WHEREOF, the parties have caused this Employee Matters
Agreement to be duly executed as of the day and year first above written.
CRANE CO.
By:
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Title:
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HUTTIG BUILDING PRODUCTS, INC.
By:
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Title:
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