exv10w2



 




Exhibit 10.2




EMPLOYEE MATTERS AGREEMENT




BY AND BETWEEN




HILLENBRAND INDUSTRIES, INC.,




AND




BATESVILLE HOLDINGS, INC.




DATED AS OF MARCH 14, 2008




 









 







TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 1.

DEFINITIONS

	1.1

	 	General
	 	 	1	 
	1.2

	 	References; Interpretation
	 	 	8	 
	ARTICLE 2.

GENERAL PRINCIPLES

	2.1

	 	Assumption and Retention of Liabilities; Related Assets
	 	 	9	 
	2.2

	 	SpinCo Participation in RemainCo Benefit Plans
	 	 	10	 
	2.3

	 	Comparable Compensation and Benefits
	 	 	10	 
	2.4

	 	Service Recognition
	 	 	10	 
	2.5

	 	Approval by RemainCo As Sole Stockholder
	 	 	11	 
	2.6

	 	Transfer of Assets
	 	 	11	 
	ARTICLE 3.

QUALIFIED DEFINED BENEFIT PLANS

	3.1

	 	Establishment of SpinCo Pension Plan
	 	 	11	 
	3.2

	 	SpinCo Pension Plan Participants
	 	 	12	 
	ARTICLE 4.

QUALIFIED DEFINED CONTRIBUTION PLANS

	4.1

	 	RemainCo Savings Plan; SpinCo Savings Plan
	 	 	15	 
	4.2

	 	RemainCo Sales Executives Plan; SpinCo Sales Executives Plan
	 	 	16	 
	ARTICLE 5.

HEALTH AND WELFARE PLANS

	5.1

	 	Health And Welfare Plans
	 	 	17	 
	5.2

	 	Reimbursement Account Plan	 	 	20	 
	5.3

	 	Retiree Medical Coverage
	 	 	21	 
	5.4

	 	Time-Off Benefits	 	 	22	 
	ARTICLE 6.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

	6.1

	 	SpinCo Supplemental Pension Plan
	 	 	22	 
	6.2

	 	SpinCo Board of Directors’ Deferred Compensation Plan
	 	 	23	 
	6.3

	 	SpinCo Executive Deferred Compensation Program
	 	 	24	 






 









 





TABLE OF CONTENTS
 (continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 7.

LONG-TERM INCENTIVE AWARDS

	7.1

	 	Treatment of Outstanding RemainCo Options
	 	 	25	 
	7.2

	 	Treatment of Outstanding RemainCo Deferred Stock Awards
	 	 	28	 
	7.3

	 	Cooperation
	 	 	30	 
	7.4

	 	SEC Registration
	 	 	31	 
	7.5

	 	Savings Clause
	 	 	31	 
	ARTICLE 8.

ADDITIONAL COMPENSATION MATTERS; SEVERANCE

	8.1

	 	Annual Incentive Awards
	 	 	31	 
	8.2

	 	Individual Arrangements
	 	 	32	 
	8.3

	 	Severance Plans
	 	 	32	 
	8.4

	 	Workers’ Compensation Liabilities
	 	 	32	 
	8.5

	 	Sections 162(m)/409A
	 	 	33	 
	8.6

	 	Director Fees
	 	 	33	 
	ARTICLE 9.

INDEMNIFICATION

	9.1

	 	General Indemnification
	 	 	34	 
	ARTICLE 10.

GENERAL AND ADMINISTRATIVE

	10.1

	 	Separate Plans
	 	 	34	 
	10.2

	 	Sharing Of Information
	 	 	34	 
	10.3

	 	Reasonable Efforts/Cooperation
	 	 	34	 
	10.4

	 	Employer Rights
	 	 	35	 
	10.5

	 	Effect on Employment
	 	 	35	 
	10.6

	 	Consent Of Third Parties
	 	 	35	 
	10.7

	 	Access To Employees
	 	 	35	 
	10.8

	 	Beneficiary Designation/Release Of Information/Right To Reimbursement
	 	 	35	 
	10.9

	 	Not A Change In Control
	 	 	35	 
	ARTICLE 11.

MISCELLANEOUS

	11.1

	 	Effect If Distribution Does Not Occur
	 	 	35	 
	11.2

	 	Relationship Of Parties
	 	 	36	 






-ii-









 





TABLE OF CONTENTS
 (continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page
	11.3

	 	Affiliates
	 	 	36	 
	11.4

	 	Notices
	 	 	36	 
	11.5

	 	Entire Agreement
	 	 	36	 
	11.6

	 	Waivers
	 	 	37	 
	11.7

	 	Amendments
	 	 	37	 
	11.8

	 	Termination, Etc
	 	 	37	 
	11.9

	 	Governing Law
	 	 	37	 
	11.10

	 	Dispute Resolution
	 	 	37	 
	11.11

	 	Titles and Headings
	 	 	37	 
	11.12

	 	Counterparts
	 	 	38	 
	11.13

	 	Assignment
	 	 	38	 
	11.14

	 	Severability
	 	 	38	 
	11.15

	 	Successors and Assigns
	 	 	38	 
	11.16

	 	Exhibits
	 	 	38	 
	11.17

	 	Specific Performance
	 	 	38	 
	11.18

	 	Waiver of Jury Trial
	 	 	38	 
	11.19

	 	Force Majeure
	 	 	39	 
	11.20

	 	Authorization
	 	 	39	 
	11.21

	 	No Third-Party Beneficiaries
	 	 	39	 
	11.22

	 	Construction
	 	 	39	 






-iii-









 





EMPLOYEE MATTERS AGREEMENT 




     This EMPLOYEE MATTERS AGREEMENT (the “Agreement”) is entered into by and between
Hillenbrand Industries, Inc., an Indiana corporation (“RemainCo”), and Batesville Holdings,
Inc., an Indiana corporation (“SpinCo”), each a “Party” and together, the
“Parties.”



WITNESSETH:




     WHEREAS, the Board of Directors of RemainCo has determined that it is in the best interests of
RemainCo to distribute its entire ownership interest in SpinCo through a pro-rata distribution of
all of the outstanding shares of SpinCo common stock then owned by RemainCo to the holders of
RemainCo common stock (the “Distribution”); and



     WHEREAS, to effect the Distribution the Parties entered into that certain Distribution
Agreement dated as of March 14, 2008 (as amended or otherwise modified from time to time, the
“Distribution Agreement”); and



     WHEREAS, RemainCo and SpinCo desire to enter into this Agreement for the purpose of allocating
assets, liabilities and responsibilities with respect to certain employee compensation and benefit
plans and programs between them.



     NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants
hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:



ARTICLE 1.




DEFINITIONS




     1.1 General. Capitalized terms used, but not defined herein shall have the meanings
assigned to such terms in the Distribution Agreement and the following terms shall have the
following meanings:



     “Agreement” shall have the meaning ascribed thereto in the preamble to this Agreement.



     “Benefit Plan” shall mean, with respect to an entity, each plan, program, arrangement,
agreement or commitment that is an employment, consulting, non-competition or deferred compensation
agreement, or an executive compensation, incentive bonus or other bonus, employee pension,
profit-sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock
appreciation rights, restricted stock, other equity-based compensation, severance pay, salary
continuation, life, health, hospitalization, sick leave, vacation pay, disability or accident
insurance plan, workers compensation, corporate-owned or key-man life insurance or other employee
benefit plan, program, arrangement, agreement or commitment, including any “employee benefit plan”
(as defined in Section 3(3) of ERISA), sponsored or maintained by such entity (or to which such
entity contributes or is required to contribute).



 









 





     “COBRA” shall mean 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 Sections 601 through 608 of ERISA, together with all regulations
and proposed regulations promulgated thereunder.



     “Distribution Agreement” shall have the meaning ascribed thereto in the preamble to
this Agreement.



     “Distribution Date” shall have the meaning ascribed thereto in the Distribution
Agreement.



     “DOL” shall mean the U.S. Department of Labor.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.



     “ERISA Affiliate” shall mean with respect to any Person, each business or entity which
is a member of a “controlled group of corporations,” under “common control” or a member of an
“affiliated service group” with such Person within the meaning of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with such Person under Section 414(o) of the Code, or under
“common control” with such Person within the meaning of Section 4001(a)(14) of ERISA.



     “Estimated Pension Plan Transfer Amount” shall have the meaning ascribed thereto in
Section 3.2(b)(ii) of this Agreement.



     “Final Pension Plan Transfer Amount” shall have the meaning ascribed thereto in
Section 3.2(b)(iv) of this Agreement.



     “Final Transfer Date” shall have the meaning ascribed thereto in Section 3.2(b)(v) of
this Agreement.



     “Force Majeure” shall mean an act of God, civil or military authority, an act of
public enemy, war, accident, explosion, earthquake, flood, failure of transportation, strike or
other work interruption by either party’s employees, or any other similar cause beyond the
reasonable control of either party.



     “Former RemainCo Director” shall mean, as of the Distribution Date, any former
director of RemainCo.



     “Former RemainCo Employee” shall mean, as of the Distribution Date, any former
employee of RemainCo or a Subsidiary of RemainCo, including individuals to whom long-term
disability benefits are being paid under a RemainCo Benefit Plan and retired, deferred vested,
nonvested and other terminated individuals, whose active employment with RemainCo or a Subsidiary
of RemainCo has ended on or before the Distribution Date, and whose most recent active employment
with RemainCo or a Subsidiary of RemainCo was employment by Hill-Rom, Inc., a Subsidiary of
Hill-Rom, Inc. or another Subsidiary or former Subsidiary of RemainCo engaged in the RemainCo Core
Business (as defined in the Distribution Agreement).



-2-









 





     “Former SpinCo Employee” shall mean, as of the Distribution Date, any former employee
of RemainCo or a Subsidiary of RemainCo, including individuals to whom long-term disability
benefits are being paid under a RemainCo Benefit Plan and retired, deferred vested, nonvested and
other terminated individuals, whose active employment with RemainCo or a Subsidiary of RemainCo has
ended on or before the Distribution Date, other than a Former RemainCo Employee.



     “HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996, as
amended.



     “Initial Cash Transfer” shall have the meaning ascribed thereto in Section 3.2(b)(iii)
of this Agreement.



     “Initial Cash Transfer Date” shall have the meaning ascribed thereto in Section
3.2(b)(iii) of this Agreement.



     “Initial Transfer Amount” shall have the meaning ascribed thereto in Section
3.2(b)(iii) of this Agreement.



     “IRS” shall mean the U.S. Internal Revenue Service.



     “NYSE” shall mean the New York Stock Exchange, Inc.



     “Participating Company” shall mean RemainCo or any Person (other than an individual)
participating in a RemainCo Benefit Plan.



     “Parties” shall have the meaning ascribed thereto in the preamble to this Agreement.



     “Person” shall mean an individual, a limited or general partnership, a joint venture,
a corporation, a trust, a limited liability company, an unincorporated organization, or a
Governmental Authority.



     “Plan Assets” shall mean the assets of the RemainCo Pension Plan allocable to pay the
benefits accrued by SpinCo Pension Plan Participants as of the Distribution Date.



     “Post-Distribution RemainCo Option” shall have the meaning ascribed thereto in Section
7.1(c) of this Agreement.



     “RemainCo” shall have the meaning ascribed thereto in the preamble to this Agreement.



     “RemainCo 1996 Stock Plan” shall mean the Hillenbrand Industries, Inc. 1996 Stock
Option Plan.



     “RemainCo Actuary” shall mean an independent actuary selected by RemainCo.



     “RemainCo Benefit Plan” shall mean any Benefit Plan sponsored, maintained or
contributed to by any member of the RemainCo Group or any ERISA Affiliate thereof immediately
following the Distribution Date.



-3-









 





     “RemainCo Board of Directors’ Deferred Compensation Plan” shall mean the Hillenbrand
Industries, Inc. Board of Directors’ Deferred Compensation Plan.



     “RemainCo Deferred Share Account” shall mean the account established for an individual
in connection with RemainCo Deferred Shares.



     “RemainCo Deferred Shares” shall mean a general unsecured promise by RemainCo to
deliver shares of RemainCo common stock, other than a RemainCo Deferred Stock Award, as described
in Sections 6.2(c) and 6.3(b)(ii) of this Agreement.



     “RemainCo Deferred Stock” shall mean the number of shares in an individual’s RemainCo
Deferred Stock Account, representing the RemainCo common stock the individual would have a right to
receive in accordance with the terms of a RemainCo Deferred Stock Award.



     “RemainCo Deferred Stock Account” shall mean the account established for an individual
in connection with a RemainCo Deferred Stock Award.



     “RemainCo Deferred Stock Award” shall mean a deferred stock award (commonly referred
to as a restricted stock unit) granted by RemainCo pursuant to the RemainCo Stock Plan,
representing a general unsecured promise by RemainCo to deliver shares of RemainCo common stock.



     “RemainCo Employee” shall mean any individual who, immediately following the
Distribution Date, remains employed by or will be employed by RemainCo or any member of the
RemainCo Group, including active employees and employees on vacation and approved leave of absence
(including maternity, paternity, family, sick leave, qualified military service under the Uniformed
Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave
Act and other approved leaves).



     “RemainCo Executive Deferred Compensation Program” shall mean the Hillenbrand
Industries, Inc. Executive Deferred Compensation Program.



     “RemainCo Group” shall mean RemainCo and the Subsidiaries of RemainCo other than
members of the SpinCo Group.



     “RemainCo Option” shall mean an option to purchase shares of RemainCo common stock
granted pursuant to the RemainCo Stock Plan or the RemainCo 1996 Stock Plan.



     “RemainCo Participant” shall mean any individual who, immediately following the
Distribution Date, is a RemainCo Employee, a Former RemainCo Employee, or a beneficiary, dependent
or alternate payee of a RemainCo Employee or Former RemainCo Employee.



     “RemainCo Pension Plan” shall mean the Hillenbrand Industries Pension Plan.



     “RemainCo Pension Trust” shall mean the trust which is part of the RemainCo Pension
Plan.



-4-









 





     “RemainCo Post-Distribution Stock Value” shall mean the official NYSE closing price
per share of RemainCo common stock on the Distribution Date, if the Distribution is completed at
the end of the day, or the day preceding the Distribution Date, if the Distribution is completed at
the beginning of the day, with such common stock trading on an “ex-distribution” basis.



     “RemainCo Pre-Distribution Stock Value” shall mean the sum of the RemainCo
Post-Distribution Stock Value and the SpinCo Stock Value.



     “RemainCo Price Ratio” shall mean the quotient obtained by dividing the RemainCo
Post-Distribution Stock Value by the RemainCo Pre-Distribution Stock Value.



     “RemainCo Reimbursement Account Plan” shall have the meaning ascribed thereto in
Section 5.2 of this Agreement.



     “RemainCo Retained Claim” shall have the meaning ascribed thereto in Section 8.4(a) of
this Agreement.



     “RemainCo Retiree Medical Plan” shall have the meaning ascribed thereto in Section 5.3
of this Agreement.



     “RemainCo Sales Executives Plan” shall mean the Hillenbrand Industries, Inc. Sales
Executives’ Pension Plan.



     “RemainCo Sales Executives Trust” shall mean the trust which is part of the RemainCo
Sales Executives Plan.



     “RemainCo Savings Plan” shall mean the Hillenbrand Industries Savings Plan.



     “RemainCo Savings Trust” shall mean the trust which is part of the RemainCo Savings
Plan.



     “RemainCo SERP” shall mean the Hillenbrand Industries, Inc. Supplemental Executive
Retirement Plan.



     “RemainCo Severance Plan” shall mean the plan maintained by a member of the RemainCo
Group to provide severance benefits.



     “RemainCo Share Ratio” shall mean the quotient obtained by dividing the RemainCo
Pre-Distribution Stock Value by the RemainCo Post-Distribution Stock Value.



     “RemainCo Stock Plan” shall mean the Hillenbrand Industries, Inc. Stock Incentive
Plan.



     “RemainCo Welfare Plans” shall have the meaning ascribed thereto in Section 5.1(a) of
this Agreement.



     “Remaining RemainCo Option” shall have the meaning ascribed thereto in Section 7.1(a)
of this Agreement.



-5-









 





     “Revised Pension Plan Transfer Amount” shall have the meaning ascribed thereto in
Section 3.2(b)(iv) hereof.



     “SpinCo” shall have the meaning ascribed thereto in the preamble to this Agreement.



     “SpinCo Actuary” shall mean an independent actuary selected by SpinCo.



     “SpinCo Benefit Plan” shall mean any Benefit Plan sponsored, maintained or contributed
to by any member of the SpinCo Group or any ERISA Affiliate thereof immediately following the
Distribution Date.



     “SpinCo Board of Directors’ Deferred Compensation Plan” shall have the meaning
ascribed thereto in Section 6.2(a) of this Agreement.



     “SpinCo Committee” shall mean the committee or committees established by the board of
directors of SpinCo to administer its compensation plans.



     “SpinCo Deferred Shares” shall mean a general unsecured promise by SpinCo to deliver
shares of SpinCo common stock, which arises as part of the adjustment to RemainCo Deferred Shares
in connection with the Distribution as set forth in Sections 6.2(c) and 6.3(b)(ii) of this
Agreement.



     “SpinCo Deferred Stock Award” shall mean a deferred stock award (commonly referred to
as a restricted stock unit) granted by SpinCo pursuant to the SpinCo Stock Plan representing a
general unsecured promise by SpinCo to deliver shares of SpinCo common stock, which award is issued
as part of the adjustment to RemainCo Deferred Stock Awards in connection with the Distribution.



     “SpinCo Directors” shall have the meaning ascribed thereto in Section 6.2(a) of this
Agreement.



     “SpinCo Employee” shall mean any individual who, immediately following the
Distribution Date, is employed by or will be employed by SpinCo or any member of the SpinCo Group,
including active employees and employees on vacation and approved leave of absence (including
maternity, paternity, family, sick leave, qualified military service under the Uniformed Services
Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and
other approved leaves).



     “SpinCo Executive Deferred Compensation Program” shall have the meaning ascribed
thereto in Section 6.3(a) of this Agreement.



     “SpinCo Group” shall mean SpinCo and the Subsidiaries of SpinCo.



     “SpinCo Option” shall have the meaning ascribed thereto in Section 7.1(b) of this
Agreement.



-6-









 





     “SpinCo Participant” shall mean an individual who, immediately following the
Distribution Date, is a SpinCo Employee, a Former SpinCo Employee, or a beneficiary, dependent or
alternate payee of a SpinCo Employee or a Former SpinCo Employee.



     “SpinCo Pension Plan” shall have the meaning ascribed thereto in Section 3.1 of this
Agreement.



     “SpinCo Pension Plan Participants” shall have the meaning ascribed thereto in Section
3.1 of this Agreement.



     “SpinCo Pension Trust” shall mean the trust which is part of the SpinCo Pension Plan.



     “SpinCo Price Ratio” shall mean the quotient obtained by dividing the SpinCo Stock
Value by the RemainCo Pre-Distribution Stock Value.



     “SpinCo Reimbursement Account Plan” shall have the meaning ascribed thereto in Section
5.2 of this Agreement.



     “SpinCo Retiree Medical Plan” shall have the meaning ascribed thereto in Section 5.3
of this Agreement.



     “SpinCo Retiree Medical Plan Participants” shall have the meaning ascribed thereto in
Section 5.3 of this Agreement.



     “SpinCo Sales Executives Plan” shall have the meaning ascribed thereto in Section
4.2(a) of this Agreement.



     “SpinCo Sales Executives Plan Assets” shall have the meaning ascribed thereto in
Section 4.2(b) of this Agreement.



     “SpinCo Sales Executives Plan Participants” shall have the meaning ascribed thereto in
Section 4.2(a) of this Agreement.



     “SpinCo Sales Executives Trust” shall mean the trust which is part of the SpinCo Sales
Executives Plan.



     “SpinCo Savings Plan” shall have the meaning ascribed thereto in Section 4.1(a) of
this Agreement.



     “SpinCo Savings Plan Assets” shall have the meaning ascribed thereto in Section 4.1(b)
of this Agreement.



     “SpinCo Savings Plan Participants” shall have the meaning ascribed thereto in Section
4.1(a) of this Agreement.



     “SpinCo Savings Trust” shall mean the trust which is part of the SpinCo Savings Plan.



     “SpinCo SERP” shall have the meaning ascribed thereto in Section 6.1(a) of this
Agreement.



-7-









 





     “SpinCo Severance Plan” shall have the meaning ascribed thereto in Section 8.3(a) of
this Agreement.



     “SpinCo Share Ratio” shall mean the quotient obtained by dividing the RemainCo
Pre-Distribution Stock Value by the SpinCo Stock Value.



     “SpinCo Stock Plan” shall have the meaning ascribed thereto in Section 2.5 of this
Agreement.



     “SpinCo Stock Value” shall mean the official NYSE closing price per share of SpinCo
common stock on the Distribution Date, if the Distribution is completed at the end of the day, or
the day preceding the Distribution Date, if the Distribution is completed at the beginning of the
day, with such common stock trading on a “when issued” basis.



     “SpinCo Welfare Plans” shall have the meaning ascribed thereto in Section 5.1(a) of
this Agreement.



     “Subsidiary” shall mean, with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or
indirectly, more than 50% of the stock or other equity interest entitled to vote on the election of
members to the board of directors or similar governing body, in each case including its successors
or assigns; provided, however, that for purposes of this Agreement, no member of the SpinCo Group
shall be deemed to be a Subsidiary of any member of the RemainCo Group.



     “Transferred RemainCo Participant” shall have the meaning ascribed thereto in Section
5.1(b)(i) of this Agreement.



     “Transferred SpinCo Participant” shall have the meaning ascribed thereto in Section
5.1(b)(ii) of this Agreement.



     “True-Up Amount” shall have the meaning ascribed thereto in Section 3.2(b)(v) of this
Agreement.



     “U.S.” shall mean the United States of America.



     1.2 References; Interpretation. References in this Agreement to any gender include
references to all genders, and references to the singular include references to the plural and vice
versa. Unless the context otherwise requires, the words “include,” “includes” and “including” when
used in this Agreement shall be deemed to be followed by the phrase “without limitation.” Unless
the context otherwise requires, references in this Agreement to Articles, Sections and Exhibits
shall be deemed references to Articles and Sections of, and Exhibits to, this Agreement. Unless the
context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning
when used in this Agreement refer to this Agreement in its entirety and not to any particular
Article, Section or provision of this Agreement.



-8-









 





ARTICLE 2.




GENERAL PRINCIPLES




     2.1 Assumption and Retention of Liabilities; Related Assets.



          (a) As of the Distribution Date, except as otherwise expressly provided for in this Agreement,
RemainCo shall, or shall cause one or more members of the RemainCo Group to, assume or retain and
RemainCo hereby agrees to pay, perform, fulfill and discharge, in due course in full (i) all
liabilities under all RemainCo Benefit Plans, (ii) all liabilities (excluding liabilities incurred
under a Benefit Plan except as otherwise provided in this Agreement) with respect to the
employment, service, termination of employment or termination of service of all RemainCo Employees
and Former RemainCo Employees and their dependents and beneficiaries (and any alternate payees in
respect thereof) and other service providers (including any individual who is, or was, an
independent contractor, temporary employee, temporary service worker, consultant, freelancer,
agency employee, leased employee, on-call worker, incidental worker, or non-payroll worker of any
member of the RemainCo Group or in any other employment, non-employment, or retainer arrangement,
or relationship with any member of the RemainCo Group or whose employment or service is or was
otherwise primarily associated with the RemainCo Core Business (as defined in the Distribution
Agreement)), in each case to the extent arising in connection with or as a result of employment
with or the performance of services for any member of the RemainCo Group or SpinCo Group, and (iii)
any other liabilities or obligations expressly assigned to RemainCo or any of its affiliates under
this Agreement.




          (b) As of the Distribution Date, except as otherwise expressly provided for in this Agreement,
SpinCo shall, or shall cause one or more members of the SpinCo Group to, assume or retain and
SpinCo hereby agrees to pay, perform, fulfill and discharge, in due course in full (i) all
liabilities under all SpinCo Benefit Plans, (ii) all liabilities (excluding liabilities incurred
under a Benefit Plan except as otherwise provided in this Agreement) with respect to the
employment, service, termination of employment or termination of service of all SpinCo Employees
and Former SpinCo Employees and their dependents and beneficiaries (and any alternate payees in
respect thereof) and other service providers (including any individual who is, or was, an
independent contractor, temporary employee, temporary service worker, consultant, freelancer,
agency employee, leased employee, on-call worker, incidental worker, or non-payroll worker of any
member of the SpinCo Group or in any other employment, non-employment, or retainer arrangement, or
relationship with any member of the SpinCo Group or whose employment or service is or was otherwise
primarily associated with the SpinCo Core Business (as defined in the Distribution Agreement)), in
each case to the extent arising in connection with or as a result of employment with or the
performance of services for any member of the RemainCo Group or SpinCo Group, and (iii) any other
liabilities or obligations expressly assigned to SpinCo or any of its affiliates under this
Agreement.




          (c) From time to time after the Distribution, SpinCo shall promptly reimburse RemainCo, upon
RemainCo’s reasonable request and the presentation by RemainCo of such substantiating documentation
as SpinCo shall reasonably request, for the cost of any obligations or liabilities satisfied or
assumed by RemainCo or its affiliates that are, or that have been made pursuant to this Agreement,
the responsibility of SpinCo or any of its affiliates.




-9-









 







            (d) From time to time after the Distribution, RemainCo shall promptly reimburse SpinCo, upon
SpinCo’s reasonable request and the presentation by SpinCo of such substantiating documentation as
RemainCo shall reasonably request, for the cost of any obligations or liabilities satisfied or
assumed by SpinCo or its affiliates that are, or that have been made pursuant to this Agreement,
the responsibility of RemainCo or its affiliates.



     2.2 SpinCo Participation in RemainCo Benefit Plans. Except as otherwise expressly
provided for in this Agreement or as otherwise expressly agreed to in writing between the Parties,
(i) effective as of the Distribution Date, SpinCo and each member of the SpinCo Group shall cease
to be a Participating Company in any RemainCo Benefit Plan, and (ii) each SpinCo Participant and
any other service providers of SpinCo or any member of the SpinCo Group (including any individual
who is, or was, an independent contractor, temporary employee, temporary service worker,
consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or
nonpayroll worker of any member of the SpinCo Group or in any other employment, non-employment, or
retainer arrangement, or relationship with any member of the SpinCo Group), effective as of the
Distribution Date, shall cease to participate in, be covered by, accrue benefits under, be eligible
to contribute to or have any rights under any RemainCo Benefit Plan, and RemainCo and SpinCo shall
take all necessary action to effectuate each such cessation.



     2.3 Comparable Compensation and Benefits. Except as otherwise expressly provided for
in this Agreement or as agreed to by RemainCo, and subject to Section 10.4, SpinCo (acting directly
or through its affiliates) initially intends to provide SpinCo Employees with compensation
opportunities (including salary, wages, commissions and bonus opportunities) and employee benefits
that are generally comparable, in the aggregate, to the compensation opportunities and employee
benefits to which such SpinCo Employees were entitled to immediately prior to the Distribution
Date.



     2.4 Service Recognition. Except as provided below, (a) SpinCo shall give each SpinCo
Participant full credit for purposes of eligibility, vesting, determination of level of benefits,
and, to the extent applicable, benefit accruals under any SpinCo Benefit Plan for such SpinCo
Participant’s service prior to the Distribution Date to the same extent such service was recognized
by the applicable RemainCo Benefit Plans immediately prior to the Distribution Date, and (b)
RemainCo shall give each RemainCo Participant full credit for purposes of eligibility, vesting,
determination of level of benefits, and, to the extent applicable, benefit accruals under any
RemainCo Benefit Plan for such RemainCo Participant’s service prior to the Distribution Date to the
same extent such service was recognized by the applicable SpinCo Benefit Plans immediately prior to
the Distribution Date; provided, however, that such service shall not be recognized
to the extent that such recognition would result in the duplication of benefits under a RemainCo
Benefit Plan and a SpinCo Benefit Plan. Notwithstanding the foregoing, unless the Parties
otherwise agree in writing, (a) if a RemainCo Participant becomes employed by a member of the
SpinCo Group after the Distribution Date, then, except to the extent required by applicable law,
such individual’s service with the RemainCo Group will not be recognized for any purpose under any
SpinCo Benefit Plan, and (b) if a SpinCo Participant becomes employed by a member of the RemainCo
Group after the Distribution Date, then, except to the extent required by applicable law, such
individual’s service with the SpinCo Group will not be recognized for any purpose under any
RemainCo Benefit Plan. Nothing herein shall



-10-









 






limit RemainCo or SpinCo or their respective affiliates from recognizing service in addition
to the recognition of service required hereunder, but any such additional service shall not be
recognized for purposes of Section 2.6 of this Agreement.



     2.5 Approval by RemainCo As Sole Stockholder. Effective as of the Distribution Date,
SpinCo shall have (a) adopted (i) the Hillenbrand, Inc. Stock Incentive Plan (the “SpinCo Stock
Plan”) which shall permit the issuance of long-term equity-based incentive awards that have
material terms and conditions substantially similar to those long-term incentive awards issued
under the RemainCo Stock Plan that are to be substituted with SpinCo long-term incentive awards in
connection with the Distribution, (ii) the SpinCo Board of Directors’ Deferred Compensation Plan,
and (iii) the SpinCo Executive Deferred Compensation Program, and (b) filed and caused to be
effective any and all registration statements and other reports or filings required to register
shares for issuance under such plans, including, without limitation, by way of conversion or
substitution pursuant to Articles VI or VII of this Agreement. The SpinCo Stock Plan, the SpinCo
Board of Directors’ Deferred Compensation Plan, and the SpinCo Executive Deferred Compensation
Program shall be approved prior to the Distribution by RemainCo as SpinCo’s sole shareholder.



     2.6 Transfer of Assets. Assets, if any, attributable to the liabilities referenced in
the preceding provisions of this Article II shall be allocated (if applicable) as provided in the
remaining provisions of this Agreement.



ARTICLE 3.




QUALIFIED DEFINED BENEFIT PLANS




     3.1 Establishment of SpinCo Pension Plan. Effective as of the Distribution Date,
SpinCo shall, or shall have caused one or more members of the SpinCo Group to, establish a defined
benefit pension plan and related trust to provide retirement benefits to SpinCo Participants who
immediately prior to the Distribution Date were participants in, or entitled to present or future
benefits (except as provided in Section 3.2(d) of this Agreement, whether or not vested) under, the
RemainCo Pension Plan (such defined benefit pension plan, the “SpinCo Pension Plan” and
such SpinCo Participants, the “SpinCo Pension Plan Participants”). SpinCo shall be
responsible for taking all necessary, reasonable, and appropriate action to establish, maintain and
administer the SpinCo Pension Plan so that it is qualified under Section 401(a) of the Code and
that the related trust thereunder is exempt under Section 501(a) of the Code. Notwithstanding the
foregoing, until the Initial Cash Transfer Date, all benefits payable to SpinCo Pension Plan
Participants (including benefits that have accrued under the SpinCo Pension Plan following the
Distribution Date) shall be paid on behalf of the SpinCo Pension Plan from the RemainCo Pension
Trust, and following the Initial Cash Transfer Date, all benefits payable to SpinCo Pension Plan
Participants (including benefits that have accrued under the RemainCo Pension Plan) shall be paid
from the SpinCo Pension Trust. SpinCo (acting directly or through one or more members of the
SpinCo Group) shall be responsible for any and all liabilities (including liability for funding)
and other obligations with respect to the SpinCo Pension Plan.



-11-













 




     3.2 SpinCo Pension Plan Participants.



          (a) Assumption of RemainCo Pension Plan Liabilities. Subject to the Plan Asset
transfer described in Section 3.2(b), SpinCo (acting directly or through a member of the SpinCo
Group) hereby agrees to cause the SpinCo Pension Plan effective as of the Distribution Date to
assume, fully perform, pay and discharge, all liabilities under the RemainCo Pension Plan relating
to all SpinCo Pension Plan Participants as of the Distribution Date (inclusive of benefits paid by
the RemainCo Pension Plan to SpinCo Pension Plan Participants following the Distribution Date, but
prior to the date of the Initial Cash Transfer in accordance with Section 3.1).




          (b) Transfer of RemainCo Pension Plan Assets.





               (i) The Parties agree that the Plan Assets and any related earnings or losses shall be
determined and transferred to the SpinCo Pension Trust in accordance with Section 414(l) of
the Code, Treasury Regulation Section 1.414(l)-1, Section 208 of ERISA and the assumptions
and valuation methodology which the Pension Benefit Guaranty Corporation would have used
under Section 4044 of ERISA as of the Distribution Date as set forth in Exhibit A to
this Agreement. Any surplus assets under the RemainCo Pension Plan (i.e., any assets held
under the RemainCo Pension Plan that are in excess of the assets required to be allocated to
the RemainCo Pension Plan and the SpinCo Pension Plan in accordance with the preceding
sentence) shall be transferred to the SpinCo Pension Trust in the same proportion as the
other assets of the RemainCo Pension Trust are transferred to the SpinCo Pension Trust in
accordance with the succeeding provisions of this subsection (b)). No later than thirty (30)
days prior to the Initial Cash Transfer Date, RemainCo and SpinCo (acting directly or
through their respective affiliates) shall, to the extent necessary, file an IRS Form 5310-A
regarding the transfer of assets and liabilities from the RemainCo Pension Plan to the
SpinCo Pension Plan.




               (ii) Prior to the Distribution Date (or such later time as mutually agreed by the
Parties), RemainCo shall cause the RemainCo Actuary to determine the estimated value, as of
the Distribution Date, of the Plan Assets to be transferred pursuant to Section 3.2(b)(i) of
this Agreement to the SpinCo Pension Trust (the “Estimated Pension Plan Transfer
Amount”).




               (iii) Not later than ninety (90) Business Days following the Distribution Date (or such
later time as mutually agreed by the Parties), RemainCo and SpinCo (each acting directly or
through their respective affiliates) shall cooperate in good faith to cause an initial
transfer of Plan Assets (the date of such transfer, the “Initial Cash Transfer
Date”) from the RemainCo Pension Trust to the SpinCo Pension Trust in an amount equal to
ninety percent (90%) of the Estimated Pension Plan Transfer Amount (the “Initial Cash
Transfer,” and such amount, the “Initial Transfer Amount”). RemainCo shall
satisfy its obligation pursuant to this Section 3.2(b)(iii) by causing the RemainCo Pension
Trust to transfer Plan Assets in kind to the extent practicable equal to the Initial
Transfer Amount consisting of a pro rata percentage of all investments under the



-12-









 






RemainCo Pension Plan and to transfer the balance of the Initial Transfer Amount in
cash.




               (iv) Within one hundred eighty (180) days (or such later time as mutually agreed by the
Parties) following the Distribution Date, RemainCo shall cause the RemainCo Actuary to
provide SpinCo with a revised calculation of the value, as of the Distribution Date, of the
Plan Assets to be transferred to the SpinCo Pension Trust determined in accordance with the
assumptions and valuation methodology set forth on Exhibit A attached hereto (the
“Revised Pension Plan Transfer Amount”). Upon written notice to RemainCo, which must
be given within thirty (30) days after SpinCo receives the Revised Pension Plan Transfer
Amount from the RemainCo Actuary, SpinCo may submit, at its sole cost and expense, the
Revised Pension Plan Transfer Amount to the SpinCo Actuary for verification; provided, that
such verification process and any calculation performed by the SpinCo Actuary in connection
therewith shall be performed solely on the basis of the assumptions and valuation
methodology set forth on Exhibit A to this Agreement. In order to perform such
verification, upon request from SpinCo, the SpinCo Actuary will receive the data and
additional detailed methodology used to calculate the Initial Transfer Amount and the
Revised Pension Plan Transfer Amount (if reasonably needed) from the RemainCo Actuary.
SpinCo will be responsible for the cost and expense of the SpinCo Actuary and RemainCo will
be responsible for the cost and expense for the RemainCo Actuary for such data transfer. In
the event the SpinCo Actuary determines that the value, as of the Distribution Date, of the
Plan Assets to be transferred to the SpinCo Pension Plan differs from the Revised Pension
Plan Transfer Amount, the SpinCo Actuary shall identify in writing to the RemainCo Actuary
all objections to the determination within sixty (60) days (or such longer period as
mutually agreed by the Parties) following provision of the calculation of the Revised
Pension Plan Transfer Amount to SpinCo pursuant to the first sentence of this paragraph
(iv), and the SpinCo Actuary and RemainCo Actuary shall use good faith efforts to reconcile
any such difference. If the SpinCo Actuary and the RemainCo Actuary fail to reconcile such
difference, the SpinCo Actuary and the RemainCo Actuary shall jointly designate a third,
independent actuary whose calculation of the value, as of the Distribution Date, of the Plan
Assets to be transferred to the SpinCo Pension Trust shall be final and binding; provided,
that such calculation must be performed within sixty (60) days (or such longer period as
mutually agreed by the Parties) following designation of such third actuary and in
accordance with the assumptions and valuation methodology set forth on Exhibit A to
this Agreement; and provided, further, that such value shall be between the value determined
by the SpinCo Actuary and the Revised Pension Plan Transfer Amount or equal to either such
value. RemainCo and SpinCo shall each pay one-half of the costs incurred in connection with
the retention of such independent actuary. If (i) within thirty (30) days after SpinCo
receives the Revised Pension Plan Transfer Amount from the RemainCo Actuary, SpinCo has not
given RemainCo written notice that SpinCo is submitting the Revised Pension Plan Transfer
Amount to the SpinCo Actuary for verification, or (ii) the SpinCo Actuary does not identify
in writing to the RemainCo Actuary any objections to the determination of the Revised
Pension Plan Transfer Amount within the time period described above, the Revised Pension
Plan Transfer Amount shall be deemed to have been approved by SpinCo, and such amount shall
be deemed to be the Final Pension Plan Transfer Amount (as defined below) and to have



-13-









 






been determined as of the last day of the period during which the condition set forth
in (i) or (ii) above that has not been satisfied could have been satisfied. The final,
verified value, as of the Distribution Date, of the Plan Assets to be transferred to the
SpinCo Pension Trust as determined in accordance with this Section 3.2(b)(iv) shall be
referred to herein as the “Final Pension Plan Transfer Amount.”




               (v) Within forty-five (45) days (or such later time as mutually agreed by the Parties)
following the determination of the Final Pension Plan Transfer Amount, RemainCo shall cause
the RemainCo Pension Trust to transfer to the SpinCo Pension Trust (the date of such
transfer, the “Final Transfer Date”) an amount equal to (A) the Final Pension Plan
Transfer Amount minus (B) the Initial Transfer Amount minus (C) any amounts that the
RemainCo plan paid with respect to SpinCo participants after the Distribution Date and prior
to the Initial Cash Transfer as described in Article 3.1 (such difference, as adjusted to
reflect earnings or losses as described below, the “True-Up Amount”);
provided, that, in the event the True-Up Amount is negative, RemainCo shall
not be required to cause any such additional transfer and instead SpinCo shall be required
to cause a transfer of cash, cash-like securities or other cash equivalents (or, if
determined by RemainCo in its discretion, assets in kind) from the SpinCo Pension Trust to
the RemainCo Pension Trust in amount equal to the True-Up Amount. The Parties acknowledge
that the RemainCo Pension Trust’s transfer of the True-Up Amount to the SpinCo Pension Trust
shall be in full settlement and satisfaction of the obligations of RemainCo to cause the
transfer of, and the RemainCo Pension Trust to transfer, Plan Assets to the SpinCo Pension
Plan pursuant to this Section 3.2(b)(v). The True-Up Amount shall be paid from the RemainCo
Pension Trust to the SpinCo Pension Trust, as determined by RemainCo in its discretion in
kind, in cash, cash-like securities or other cash equivalents, and shall be adjusted to
reflect earnings or losses during the period from the Distribution Date to the Final
Transfer Date. Such earnings or losses shall be determined based on the actual rate of
return of the RemainCo Pension Plan for the period commencing on the Distribution Date and
ending on the last calendar day of the month ending immediately prior to the Final Transfer
Date. Earnings or losses for the period from such last day of the month to the Final
Transfer Date shall be based on the actual rate of return of the RemainCo Pension Plan
during the last calendar month ending immediately prior to the Final Transfer Date
determined as of the date that is as close as administratively practicable to the Final
Transfer Date. In the event that SpinCo is obligated to cause the SpinCo Pension Trust to
reimburse the RemainCo Pension Trust pursuant to this Section 3.2(b)(v), such reimbursement
shall be performed in accordance with the same principles set forth herein with respect to
the payment of the True-Up Amount. The Parties acknowledge that the SpinCo Pension Trust’s
transfer of such reimbursement amount to the RemainCo Pension Trust shall be in full
settlement and satisfaction of the obligations of SpinCo to cause the transfer of, and the
SpinCo Pension Trust to transfer, assets to the RemainCo Pension Trust pursuant to this
Section 3.2(b)(v).



          (c) Continuation of Elections. Effective as of the Distribution Date, SpinCo (acting
directly or through a member of the SpinCo Group) shall cause the SpinCo Pension Plan to recognize
and maintain all existing elections, including, but not limited to, beneficiary designations,
payment form elections and rights of alternate payees under qualified domestic




-14-









 




relations orders with respect to SpinCo Pension Plan Participants under the RemainCo Pension
Plan.




          (d) Terminated Non-Vested Employees. Notwithstanding anything herein to the contrary,
the RemainCo Pension Plan will retain all liabilities (if any) earned under the RemainCo Pension
Plan in respect of any Former RemainCo Employee, and the SpinCo Pension plan will assume and retain
all liabilities (if any) earned under the RemainCo Pension Plan in respect of any Former SpinCo
Employee.




ARTICLE 4.




QUALIFIED DEFINED CONTRIBUTION PLANS




     4.1 RemainCo Savings Plan; SpinCo Savings Plan.



          (a) Establishment of the SpinCo Savings Plan. Effective as of the Distribution Date,
SpinCo shall, or shall have caused one or more members of the SpinCo Group to, establish a defined
contribution plan and related trust for the benefit of SpinCo Participants who immediately prior to
the Distribution Date were participants in, or entitled to present or future benefits under, the
RemainCo Savings Plan (such defined contribution plan, the “SpinCo Savings Plan” and such
SpinCo Participants, the “SpinCo Savings Plan Participants”). SpinCo shall be responsible
for taking all necessary, reasonable and appropriate action to establish, maintain and administer
the SpinCo Savings Plan so that it is qualified under Section 401(a) of the Code and that the
related trust thereunder is exempt under Section 501(a) of the Code. SpinCo (acting directly or
through one or more members of the SpinCo Group) shall be responsible for any and all liabilities
and other obligations with respect to the SpinCo Savings Plan.




          (b) Transfer of RemainCo Savings Plan Assets. Not later than thirty (30) days
following the Distribution Date (or such later time as mutually agreed by the Parties), RemainCo
shall cause the trustee for the RemainCo Savings Trust to transfer in-kind the assets underlying
the account balances (including any unvested balances, outstanding loan balances and forfeitures)
held in the RemainCo Savings Trust for the SpinCo Savings Plan Participants (the “SpinCo
Savings Plan Assets”) to the SpinCo Savings Trust, and SpinCo shall cause the SpinCo Savings
Trust to accept the transfer of the SpinCo Savings Plan Assets. Effective as of the date of such
transfer, SpinCo shall assume and fully perform, pay and discharge, all obligations of the RemainCo
Savings Plan relating to the accounts of SpinCo Savings Plan Participants (to the extent the assets
related to those accounts are actually transferred from the RemainCo Savings Trust to the SpinCo
Savings Trust). The transfer of assets shall be conducted in accordance with Section 414(l) of the
Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA.




          (c) Continuation of Elections. Effective as of the Distribution Date, SpinCo (acting
directly or through one or more members of the SpinCo Group) shall cause the SpinCo Savings Plan to
recognize and maintain all existing elections, including, but not limited to, deferral, investment,
and payment form elections, beneficiary designations, and the rights of alternate payees under
qualified domestic relations orders with respect to SpinCo Savings Plan




-15-









 




Participants under the RemainCo Savings Plan, to the extent such election or designation is
available under the SpinCo Savings Plan.




          (d) Form 5310-A. No later than thirty (30) days prior to the date of the transfer of
assets as contemplated under Section 4.1(b), RemainCo and SpinCo (each acting directly or through
their respective affiliates) shall, to the extent necessary, file IRS Form 5310-A regarding the
transfer of assets and liabilities from the RemainCo Savings Plan to the SpinCo Savings Plan as
discussed in this Article IV.




          (e) Contributions as of the Distribution Date. All contributions payable to the
RemainCo Savings Plan with respect to employee and employer contributions for SpinCo Savings Plan
Participants through the Distribution Date, determined in accordance with the terms and provisions
of the RemainCo Savings Plan, ERISA and the Code, shall be paid to the RemainCo Savings Plan prior
to the date of the asset transfer described in Section 4.1(b) of this Agreement.




     4.2 RemainCo Sales Executives Plan; SpinCo Sales Executives Plan.



          (a) Establishment of the SpinCo Sales Executives Plan. Effective as of the
Distribution Date, SpinCo shall, or shall have caused one or more members of the SpinCo Group to,
establish a defined contribution plan and related trust for the benefit of SpinCo Participants who
immediately prior to the Distribution Date were participants in, or entitled to present or future
benefits under, the RemainCo Sales Executives Plan (such defined contribution plan, the “SpinCo
Sales Executives Plan” and such SpinCo Participants, the “SpinCo Sales Executives Plan
Participants”). SpinCo shall be responsible for taking all necessary, reasonable and
appropriate action to establish, maintain and administer the SpinCo Sales Executives Plan so that
it is qualified under Section 401(a) of the Code and that the related trust thereunder is exempt
under Section 501(a) of the Code. SpinCo (acting directly or through one or more members of the
SpinCo Group) shall be responsible for any and all liabilities and other obligations with respect
to the SpinCo Sales Executives Plan.




          (b) Transfer of RemainCo Sales Executives Plan Assets. Not later than thirty (30)
days following the Distribution Date (or such later time as mutually agreed by the Parties),
RemainCo shall cause the trustee for the RemainCo Sales Executives Trust to transfer in-kind the
assets underlying the account balances (including any unvested balances, outstanding loan balances
and forfeitures) held in the RemainCo Sales Executives Trust for the SpinCo Sales Executives Plan
Participants (the “SpinCo Sales Executives Plan Assets”) to the SpinCo Sales Executives
Trust, and SpinCo shall cause the SpinCo Sales Executives Trust to accept the transfer of the
SpinCo Sales Executives Plan Assets. Effective as of the date of such transfer, SpinCo shall
assume and fully perform, pay and discharge, all obligations of the RemainCo Sales Executives Plan
relating to the accounts of SpinCo Sales Executives Plan Participants (to the extent the assets
related to those accounts are actually transferred from the RemainCo Sales Executives Trust to the
SpinCo Sales Executives Trust). The transfer of assets shall be conducted in accordance with
Section 414(l) of the Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA.




-16-









 





          (c) Continuation of Elections. Effective as of the Distribution Date, SpinCo (acting
directly or through one or more members of the SpinCo Group) shall cause the SpinCo Sales
Executives Plan to recognize and maintain all existing elections, including, but not limited to,
investment and payment form elections, beneficiary designations, and the rights of alternate payees
under qualified domestic relations orders with respect to SpinCo Sales Executives Plan Participants
under the RemainCo Sales Executives Plan, to the extent such election or designation is available
under the SpinCo Sales Executives Plan.




          (d) Form 5310-A. No later than thirty (30) days prior to the date of the transfer of
assets as contemplated under Section 4.2(b), RemainCo and SpinCo (each acting directly or through
their respective affiliates) shall, to the extent necessary, file IRS Form 5310-A regarding the
transfer of assets and liabilities from the RemainCo Sales Executives Plan to the SpinCo Sales
Executives Plan as discussed in this Article IV.




ARTICLE 5.




HEALTH AND WELFARE PLANS




     5.1 Health And Welfare Plans.



          (a) Establishment of the SpinCo Welfare Plans. Prior to January 1, 2008, RemainCo
maintained each of the health and welfare plans set forth on Exhibit B attached hereto
(collectively, the “RemainCo Welfare Plans” and individually, a “RemainCo Welfare
Plan”) for the benefit of eligible RemainCo Participants and SpinCo Participants. Effective as
of January 1, 2008, SpinCo adopted, for the benefit of individuals who would have been SpinCo
Participants on such date if such date were the Distribution Date, health and welfare plans, the
terms of which are substantially comparable, in the aggregate, to the applicable terms of the
RemainCo Welfare Plans as in effect immediately prior to January 1, 2008 (collectively, the
“SpinCo Welfare Plans” and individually, a “SpinCo Welfare Plan”).




          (b) Terms of Participation in RemainCo Welfare Plans and SpinCo Welfare Plans.





               (i) RemainCo Welfare Plans. With respect to any individual who, on or after
January 1, 2008 and prior to the Distribution Date, transfers employment from the SpinCo
Group to the RemainCo Group and who is listed on Exhibit C, (each such individual a
“Transferred RemainCo Participant”), RemainCo (acting directly or through one or
more members of the RemainCo Group) shall cause all RemainCo Welfare Plans to (i) waive all
limitations as to preexisting conditions, exclusions, and service conditions with respect to
participation and coverage requirements applicable to such individuals, other than
limitations that were in effect with respect to such individuals as of the date of each such
individual’s transfer to the RemainCo Group under the analogous SpinCo Welfare Plans, (ii)
honor any deductibles, out-of-pocket maximums, and co-payments incurred by such individuals
under the SpinCo Welfare Plans in satisfying any applicable deductibles, out-of-pocket
maximums or co-payments under a RemainCo Welfare Plan during the same plan year in which
such deductibles, out-of-pocket maximums and co-payments were made, and (iii) waive any
waiting period limitation or evidence of



-17-









 






insurability requirement that would otherwise be applicable to such individuals
following the date of each such individual’s transfer to the RemainCo Group to the extent
such individual had satisfied any similar limitation under the analogous SpinCo Welfare
Plan.




               (ii) SpinCo Welfare Plans. With respect to any individual who, on or after
January 1, 2008 and prior to the Distribution Date, transfers employment from the RemainCo
Group to the SpinCo Group and who is listed on Exhibit D (each such individual a
“Transferred SpinCo Participant”), SpinCo (acting directly or through one or more
members of the SpinCo Group) shall cause all SpinCo Welfare Plans to (i) waive all
limitations as to preexisting conditions, exclusions, and service conditions with respect to
participation and coverage requirements applicable to such Transferred SpinCo Participants,
other than limitations that were in effect with respect to such Transferred SpinCo
Participants as of the date of each such Transferred SpinCo Participant’s transfer to the
SpinCo Group under the analogous RemainCo Welfare Plans, (ii) honor any deductibles,
out-of-pocket maximums, and co-payments incurred by such Transferred SpinCo Participants
under the RemainCo Welfare Plans in satisfying any applicable deductibles, out-of-pocket
maximums or co-payments under a SpinCo Welfare Plan during the same plan year in which such
deductibles, out-of-pocket maximums and co-payments were made, and (iii) waive any waiting
period limitation or evidence of insurability requirement that would otherwise be applicable
to such Transferred SpinCo Participants following the date of each such Transferred SpinCo
Participant’s transfer to the SpinCo Group to the extent such Transferred SpinCo Participant
had satisfied any similar limitation under the analogous RemainCo Welfare Plan.



          (c) Continuation of Elections.





               (i) Transferred RemainCo Participants. As of the date of each Transferred
RemainCo Participant’s transfer to the RemainCo Group, RemainCo (acting directly or through
a member of the RemainCo Group) shall cause the RemainCo Welfare Plans to recognize and
maintain all elections and designations (including all coverage and contribution elections
and beneficiary designations) made by such Transferred RemainCo Participant under, or with
respect to, the SpinCo Welfare Plans and apply such elections and designations under the
RemainCo Welfare Plans for the remainder of the period or periods for which such elections
or designations are by their original terms applicable, to the extent such election or
designation is available under the corresponding RemainCo Welfare Plan.




               (ii) Transferred SpinCo Participants. As of the date of each Transferred
SpinCo Participant’s transfer to the SpinCo Group, SpinCo (acting directly or through a
member of the SpinCo Group) shall cause the SpinCo Welfare Plans to recognize and maintain
all elections and designations (including all coverage and contribution elections and
beneficiary designations) made by such Transferred SpinCo Participant under, or with respect
to, the RemainCo Welfare Plans and apply such elections and designations under the SpinCo
Welfare Plans for the remainder of the period or periods for which such elections or
designations are by their original terms applicable, to the extent such election or
designation is available under the corresponding SpinCo Welfare Plan.



-18-









 





          (d) COBRA and HIPAA. Effective as of January 1, 2008, the SpinCo Welfare Plans
assumed responsibility for compliance with the health care continuation coverage requirements of
COBRA with respect to SpinCo Participants who, as of December 31, 2007, were covered under a
RemainCo Welfare Plan pursuant to COBRA or who had a COBRA qualifying event (as defined in Code
Section 4980B) prior to December 31, 2007. The Parties hereto agree that neither the Distribution
nor any transfers of employment that occur as of the Distribution Date or otherwise in connection
with the Distribution shall constitute a COBRA qualifying event for purposes of COBRA; provided,
that, in all events, (i) SpinCo (acting directly or through a member of the SpinCo Group) shall
assume, or shall have caused the SpinCo Welfare Plans to assume, responsibility for compliance with
the health care continuation coverage requirements of COBRA with respect to the Transferred SpinCo
Participants to the extent each such individual was, as of the day prior to his or her transfer of
employment, covered under a RemainCo Welfare Plan pursuant to COBRA or who had a COBRA qualifying
event (as defined in Code Section 4980B) prior to his or her transfer of employment, and (ii)
RemainCo (acting directly or through a member of the RemainCo Group) shall assume, or shall have
caused the RemainCo Welfare Plans to assume, responsibility for compliance with the health care
continuation coverage requirements of COBRA with respect to the Transferred RemainCo Participants
to the extent each such individual was, as of the day prior to his or her transfer of employment,
covered under a SpinCo Welfare Plan pursuant to COBRA or who had a COBRA qualifying event (as
defined in Code Section 4980B) prior to his or her transfer of employment. RemainCo (acting
directly or through a member of the RemainCo Group) shall be responsible for administering
compliance with any certificate of creditable coverage requirements of HIPAA or Medicare applicable
to the RemainCo Welfare Plans with respect to SpinCo Participants.




          (e) Liabilities.





               (i) Insured Benefits. With respect to employee welfare and fringe benefits
that are provided through the purchase of insurance, (A) RemainCo shall cause the RemainCo
Welfare Plans to fully perform, pay and discharge all claims of RemainCo Participants and
SpinCo Participants that are incurred prior to January 1, 2008; (B) RemainCo shall cause the
RemainCo Welfare Plans to fully perform, pay and discharge all claims that are incurred on
or after January 1, 2008 by RemainCo Participants; and (C) SpinCo shall cause the SpinCo
Welfare Plans to fully perform, pay and discharge all claims that are incurred on or after
January 1, 2008 by SpinCo Participants. Notwithstanding the foregoing, (i) with respect to
Transferred RemainCo Participants and their beneficiaries, dependents and alternate payees,
SpinCo shall cause the SpinCo Welfare Plans to fully perform, pay and discharge all claims
that are incurred on or after January 1, 2008 by such individuals to the extent that, at the
time a claim is incurred, the Transferred RemainCo Participant is an employee of a member of
the SpinCo Group, and (ii) with respect to Transferred SpinCo Participants and their
beneficiaries, dependents and alternate payees, RemainCo shall cause the RemainCo Welfare
Plans to fully perform, pay and discharge all claims that are incurred on or after January
1, 2008 by such individuals to the extent that, at the time a claim is incurred, the
Transferred SpinCo Participant is an employee of a member of the RemainCo Group.




               (ii) Self-Insured Benefits. With respect to employee welfare and fringe
benefits that are provided on a self-insured basis (other than short-term disability



-19-









 






benefits), (A) RemainCo shall cause the RemainCo Welfare Plans to fully perform, pay
and discharge all claims of RemainCo Participants and SpinCo Participants that are incurred
(but not reported) prior to January 1, 2008, provided, however, that SpinCo shall reimburse
RemainCo for all such claims paid by RemainCo with respect to an individual who, at the time
the claim was incurred, was an employee (or a beneficiary, dependent or alternate payee of
an employee) of a member of the SpinCo Group; (B) RemainCo shall cause the RemainCo Welfare
Plans to fully perform, pay and discharge all claims that are incurred on or after January
1, 2008 by RemainCo Participants; and (C) SpinCo shall cause the SpinCo Welfare Plans to
fully perform, pay and discharge all claims that are incurred on or after January 1, 2008 by
SpinCo Participants. Notwithstanding the foregoing, (i) with respect to Transferred
RemainCo Participants and their beneficiaries, dependents and alternate payees, SpinCo shall
cause the SpinCo Welfare Plans to fully perform, pay and discharge all claims that are
incurred on or after January 1, 2008 by such individuals to the extent that, at the time a
claim is incurred, the Transferred RemainCo Participant is an employee of a member of the
SpinCo Group, and (ii) with respect to Transferred SpinCo Participants and their
beneficiaries, dependents and alternate payees, RemainCo shall cause the RemainCo Welfare
Plans to fully perform, pay and discharge all claims that are incurred on or after January
1, 2008 by such individuals to the extent that, at the time a claim is incurred, the
Transferred SpinCo Participant is an employee of a member of the RemainCo Group.
Notwithstanding anything herein to the contrary, with respect to short-term disability
benefits, RemainCo shall cause the appropriate RemainCo Welfare Plan to fully perform, pay
and discharge all claims for benefits for RemainCo Participants who are eligible for such
benefits as of the Distribution Date, and SpinCo shall cause the appropriate SpinCo Welfare
Plan to fully perform, pay and discharge all claims for benefits for SpinCo Participants who
are eligible for such benefits as of the Distribution Date.




               (iii) Incurred Claim Definition. For purposes of this Section 5.1(e), a claim
or liability is deemed to be incurred (A) with respect to medical, dental, vision and/or
prescription drug benefits, upon the rendering of health services giving rise to such claim
or liability; (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 liability; (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 liability; and (D) with respect to a period of
continuous hospitalization, upon the date of admission to the hospital.



     5.2 Reimbursement Account Plan. Effective as of January 1, 2008, SpinCo established a
health, dependent care, and adoption reimbursement account plan (the “SpinCo Reimbursement
Account Plan”) with features that are comparable to those contained in the health, dependent
care, and adoption reimbursement account plan maintained by RemainCo immediately prior to January
1, 2008 (the “RemainCo Reimbursement Account Plan”). RemainCo shall cause the RemainCo
Reimbursement Account Plan to fully perform, pay and discharge all claims of RemainCo Participants
and SpinCo Participants that are incurred (but not reported) prior to January 1, 2008. Except as
provided below with respect to Transferred RemainCo Participants and Transferred SpinCo
Participants, RemainCo shall cause the RemainCo Reimbursement Account Plan to fully perform, pay
and discharge all claims that are



-20-









 






incurred on or after January 1, 2008 by each individual who, at the time the claim is
incurred, is an employee (or a beneficiary, dependent or alternate payee of an employee) of a
member of the RemainCo Group. Except as provided below with respect to Transferred RemainCo
Participants and Transferred SpinCo Participants, SpinCo shall cause the SpinCo Reimbursement
Account Plan to fully perform, pay and discharge all claims that are incurred on or after January
1, 2008 by each individual who, at the time the claim is incurred, is an employee (or a
beneficiary, dependent or alternate payee of an employee) of a member of the SpinCo Group. No more
than 45 days following the Distribution Date, RemainCo shall cause to be transferred to SpinCo an
amount in cash equal to (i) the sum of all contributions to the RemainCo Reimbursement Account Plan
made with respect to calendar year 2008 by or on behalf of all Transferred SpinCo Participants for
periods before the date of each such Transferred SpinCo Participant’s transfer to the SpinCo Group,
reduced by (ii) the sum of all claims incurred in calendar year 2008 and paid by the RemainCo
Reimbursement Account Plan with respect to all such Transferred SpinCo Participants, and the SpinCo
Reimbursement Account Plan shall fully perform, pay and discharge all claims submitted by
Transferred SpinCo Participants on or after the date of the cash transfer; provided, however, that
if the amount described in (ii) above is greater than the amount described in (i) above, SpinCo
shall cause to be transferred to RemainCo an amount in cash equal to the excess of (ii) over (i).
No more than 45 days following the Distribution Date, SpinCo shall cause to be transferred to
RemainCo an amount in cash equal to (i) the sum of all contributions to the SpinCo Reimbursement
Account Plan made with respect to calendar year 2008 by or on behalf of all Transferred RemainCo
Participants for periods before the date of each such Transferred RemainCo Participant’s transfer
to the RemainCo Group, reduced by (ii) the sum of all claims incurred in calendar year 2008 and
paid by the SpinCo Reimbursement Account Plan with respect to all such Transferred RemainCo
Participants, and the RemainCo Reimbursement Account Plan shall fully perform, pay and discharge
all claims submitted by Transferred RemainCo Participants on or after the date of the cash
transfer; provided, however, that if the amount described in (ii) above is greater than the amount
described in (i) above, RemainCo shall cause to be transferred to SpinCo an amount in cash equal to
the excess of (ii) over (i). All assets or obligations relating to all participants in the
RemainCo Reimbursement Account Plan with respect to periods ending on or before December 31, 2007
will be retained by RemainCo.



     5.3 Retiree Medical Coverage. Effective as of January 1, 2008, SpinCo adopted a
retiree medical plan to provide retiree medical benefits substantially equivalent to those provided
under the RemainCo Welfare Plan providing retiree medical benefits (the “RemainCo Retiree
Medical Plan”) to SpinCo Participants who immediately prior to January 1, 2008 (or, with
respect to a Transferred SpinCo Participant, the date of such Transferred SpinCo Participant’s
transfer to the SpinCo Group) were participants in the RemainCo Retiree Medical Plan (such retiree
medical plan, the “SpinCo Retiree Medical Plan” and such SpinCo Participants, the
“SpinCo Retiree Medical Plan Participants”). The SpinCo Retiree Medical Plan shall provide
retiree medical benefits to (i) SpinCo Participants who terminate employment on or after January 1,
2008 under conditions entitling them to benefits under such plan, and (ii) other individuals who
terminate employment on or after January 1, 2008 under conditions entitling them to benefits under
such plan who would have been SpinCo Participants on their date of termination if such date were
the Distribution Date. SpinCo (acting directly or through a member of the SpinCo Group) shall be
responsible for any and all liabilities (including liabilities for funding) with respect to the
SpinCo Retiree Medical Plan. Effective as of January 1, 2008, SpinCo has



-21-









 






caused the SpinCo Retiree Medical Plan to assume, and to fully perform, pay and discharge, all
accrued but unpaid benefits as of January 1, 2008, including incurred but unreported claims for
benefits, and any credits under the RemainCo Retiree Medical Plan relating to all SpinCo Retiree
Medical Plan Participants as of January 1, 2008 (or, with respect to a Transferred SpinCo
Participant, the date of such Transferred SpinCo Participant’s transfer to the SpinCo Group).



     5.4 Time-Off Benefits. SpinCo shall credit each SpinCo Participant with the amount of
accrued but unused vacation time, sick time and other time-off benefits as such SpinCo Participant
had with the RemainCo Group as of the Distribution Date (or, with respect to a Transferred SpinCo
Participant, the date of such Transferred SpinCo Participant’s transfer to the SpinCo Group).
Notwithstanding the above, SpinCo shall not be required to credit any SpinCo Participant with any
accrual to the extent that a benefit attributable to such accrual is provided by the RemainCo
Group. RemainCo shall credit each Transferred RemainCo Participant with the amount of accrued but
unused vacation time, sick time and other time-off benefits as such Transferred RemainCo
Participant had with the SpinCo Group as of the date of such Transferred RemainCo Participant’s
transfer to the RemainCo Group. Notwithstanding the above, RemainCo shall not be required to credit
any Transferred RemainCo Participant with any accrual to the extent that a benefit attributable to
such accrual is provided by the SpinCo Group.



ARTICLE 6.




SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN




     6.1 SpinCo Supplemental Pension Plan.



          (a) Establishment of SpinCo SERP. Effective as of the Distribution Date, SpinCo
shall, or shall cause a member of the SpinCo Group to, establish a non-qualified deferred
compensation plan to benefit SpinCo Participants who have accrued, or were eligible to accrue,
benefits under the RemainCo SERP immediately prior to the Distribution Date, the terms of which are
substantially comparable, in the aggregate, to the terms of the RemainCo SERP as in effect
immediately prior to the Distribution Date (the “SpinCo SERP”). Effective as of the
Distribution Date, SpinCo hereby agrees to cause the SpinCo SERP to assume responsibility for all
liabilities and fully perform, pay and discharge all obligations, when such obligations become due,
of the RemainCo SERP with respect to all SpinCo Participants therein. SpinCo (acting directly or
through a member of the SpinCo Group) shall be responsible for any and all liabilities (including
liability for funding) and other obligations with respect to the SpinCo SERP.




          (b) Continuation of Elections. As of the Distribution Date, SpinCo (acting directly
or through a member of the SpinCo Group) shall cause the SpinCo SERP to recognize and maintain all
elections (including deferral, distribution and investment elections) and beneficiary designations
with respect to SpinCo Participants under the RemainCo SERP to the extent such elections or
designations are available under the SpinCo SERP until a new election that by its terms supersedes
such original election is made by the SpinCo Participant in accordance with applicable law and the
terms and conditions of the SpinCo SERP.





-22-












 




     6.2 SpinCo Board of Directors’ Deferred Compensation Plan.



          (a) Establishment of SpinCo Board of Directors’ Deferred Compensation Plan. Effective
as of the Distribution Date, SpinCo shall, or shall cause a member of the SpinCo Group to,
establish a non-qualified deferred compensation plan, the terms of which are substantially
comparable, in the aggregate, to the terms of the RemainCo Board of Directors’ Deferred
Compensation Plan as in effect immediately prior to the Distribution Date (the “SpinCo Board of
Directors’ Deferred Compensation Plan”). Effective as of the Distribution Date, except as
provided in paragraphs (b) and (c) below, SpinCo hereby agrees to cause the SpinCo Board of
Directors’ Deferred Compensation Plan to assume responsibility for all liabilities and fully
perform, pay and discharge all obligations, when such obligations become due, of the RemainCo Board
of Directors’ Deferred Compensation Plan with respect to all individuals who immediately prior to
the Distribution were directors of RemainCo and who, after the Distribution Date, will serve as
directors of SpinCo but not RemainCo (“SpinCo Directors”) who have accrued, or were
eligible to accrue, benefits under the RemainCo Board of Directors’ Deferred Compensation Plan
immediately prior to the Distribution Date. SpinCo (acting directly or through a member of the
SpinCo Group) shall be responsible for any and all liabilities (including liability for funding)
and other obligations with respect to the SpinCo Board of Directors’ Deferred Compensation Plan.




          (b) RemainCo/SpinCo Directors. With respect to each individual who immediately prior
to the Distribution was a director of RemainCo and who, after the Distribution Date, will serve as
a director of both RemainCo and SpinCo, SpinCo hereby agrees to cause the SpinCo Board of
Directors’ Deferred Compensation Plan to assume responsibility for all liabilities and fully
perform, pay and discharge all obligations, when such obligations become due, of the RemainCo Board
of Directors’ Deferred Compensation Plan with respect to the benefits accrued by such director
under the RemainCo Board of Directors’ Deferred Compensation Plan immediately prior to the
Distribution Date. For periods on and after the Distribution Date, (i) each such director shall be
eligible to accrue benefits under the RemainCo Board of Directors’ Deferred Compensation Plan and
the SpinCo Board of Directors’ Deferred Compensation Plan under the terms of each such plan, (ii)
SpinCo (acting directly or through a member of the SpinCo Group) shall be responsible for any and
all liabilities (including liability for funding) and other obligations with respect to the SpinCo
Board of Directors’ Deferred Compensation Plan accrued thereunder by each such director on and
after the Distribution Date, and (iii) RemainCo (acting directly or through a member of the
RemainCo Group) shall be responsible for any and all liabilities (including liability for funding)
and other obligations with respect to the RemainCo Board of Directors’ Deferred Compensation Plan
accrued thereunder by each such director on and after the Distribution Date.




          (c) Benefits Payable in Stock. Notwithstanding anything herein to the contrary,
effective as of the Distribution Date, with respect to any benefits accrued by a RemainCo director
immediately prior to the Distribution Date under the RemainCo Board of Directors’ Deferred
Compensation Plan that represent RemainCo Deferred Shares, the shares in each such individual’s
RemainCo Deferred Share Account shall be replaced with adjusted RemainCo Deferred Shares and
substitute SpinCo Deferred Shares. Immediately following the Distribution, (i) the number of
RemainCo Deferred Shares in such individual’s RemainCo Deferred Share Account shall equal the
number of RemainCo Deferred Shares in such RemainCo Deferred Share Account immediately prior to the
Distribution, and (ii) the substitute




-23-









 




SpinCo Deferred Shares shall represent the number of shares of SpinCo common stock that such
individual would have received in the Distribution had he held the number of shares in his RemainCo
Deferred Share Account immediately prior to the Distribution, with the intention that such
adjustment and substitution preserve the intrinsic value of the original RemainCo Deferred Shares.
Effective as of the Distribution Date, SpinCo hereby agrees to cause the SpinCo Board of Directors’
Deferred Compensation Plan to assume responsibility for all liabilities and fully perform, pay and
discharge all obligations, when such obligations become due, with respect to the SpinCo Deferred
Shares, and RemainCo hereby agrees to cause the RemainCo Board of Directors’ Deferred Compensation
Plan to assume responsibility for all liabilities and fully perform, pay and discharge all
obligations, when such obligations become due, with respect to the RemainCo Deferred Shares as
adjusted in accordance with this paragraph.




          (d) Continuation of Elections. As of the Distribution Date, SpinCo (acting directly
or through a member of the SpinCo Group) shall cause the SpinCo Board of Directors’ Deferred
Compensation Plan to recognize and maintain all elections (including deferral, distribution and
investment elections) and beneficiary designations with respect to SpinCo Directors and directors
described in paragraph (b) above under the RemainCo Board of Directors’ Deferred Compensation Plan
to the extent such elections or designations are available under the SpinCo Board of Directors’
Deferred Compensation Plan until a new election that by its terms supersedes such original election
is made by such a director in accordance with applicable law and the terms and conditions of the
SpinCo Board of Directors’ Deferred Compensation Plan.




     6.3 SpinCo Executive Deferred Compensation Program.



          (a) Establishment of SpinCo Executive Deferred Compensation Program. Effective as of
the Distribution Date, SpinCo shall, or shall cause a member of the SpinCo Group to, establish a
non-qualified deferred compensation plan, the terms of which are substantially comparable, in the
aggregate, to the terms of the RemainCo Executive Deferred Compensation Program as in effect
immediately prior to the Distribution Date (the “SpinCo Executive Deferred Compensation
Program”). SpinCo (acting directly or through a member of the SpinCo Group) shall be
responsible for any and all liabilities (including liability for funding) and other obligations
with respect to the SpinCo Executive Deferred Compensation Program.




          (b) Allocation of Liabilities.





          (i) Cash Benefits. Effective as of the Distribution Date, SpinCo hereby agrees
to cause the SpinCo Executive Deferred Compensation Program to assume responsibility for all
liabilities and fully perform, pay and discharge all obligations, when such obligations
become due, of the RemainCo Executive Deferred Compensation Program with respect to benefits
accrued thereunder by SpinCo Participants immediately prior to the Distribution Date that
are payable in cash. Effective as of the Distribution Date, RemainCo hereby agrees to cause
the RemainCo Executive Deferred Compensation Program to retain responsibility for all
liabilities and fully perform, pay and discharge all obligations, when such obligations
become due, of the RemainCo Executive Deferred Compensation Program with respect to benefits
accrued thereunder



-24-









 






by RemainCo Participants immediately prior to the Distribution Date that are payable in
cash.




          (ii) Stock Benefits. Effective as of the Distribution Date, with respect to
any benefits accrued by a RemainCo Participant or a SpinCo Participant immediately prior to
the Distribution Date under the RemainCo Executive Deferred Compensation Program, the
Hillenbrand Industries Stock Award Program, the Hillenbrand Industries Senior Executive
Compensation Program, or any other similar program maintained by RemainCo that represent
RemainCo Deferred Shares, the shares in each such individual’s RemainCo Deferred Share
Account shall be replaced with adjusted RemainCo Deferred Shares and substitute SpinCo
Deferred Shares. Immediately following the Distribution, the number of RemainCo Deferred
Shares in such individual’s RemainCo Deferred Share Account shall equal the number of
RemainCo Deferred Shares in such RemainCo Deferred Share Account immediately prior to the
Distribution, and (ii) the substitute SpinCo Deferred Shares shall represent the number of
            shares of SpinCo common stock that such individual would have received in the Distribution
had he held the number of shares in his RemainCo Deferred Share Account immediately prior to
the Distribution, with the intention that such adjustment and substitution preserve the
intrinsic value of the original RemainCo Deferred Shares. Effective as of the Distribution
Date, SpinCo hereby agrees to cause the SpinCo Executive Deferred Compensation Program to
assume responsibility for all liabilities and fully perform, pay and discharge all
obligations, when such obligations become due, with respect to the SpinCo Deferred Shares,
and RemainCo hereby agrees to cause the RemainCo Executive Deferred Compensation Program to
assume responsibility for all liabilities and fully perform, pay and discharge all
obligations, when such obligations become due, with respect to the RemainCo Deferred Shares
as adjusted in accordance with this paragraph.



          (c) Continuation of Elections. As of the Distribution Date, SpinCo (acting directly
or through a member of the SpinCo Group) shall cause the SpinCo Executive Deferred Compensation
Program to recognize and maintain all elections (including deferral, distribution and investment
elections) and beneficiary designations with respect to SpinCo Participants under the RemainCo
Executive Deferred Compensation Program to the extent such elections or designations are available
under the SpinCo Executive Deferred Compensation Program until a new election that by its terms
supersedes such original election is made by the SpinCo Participant in accordance with applicable
law and the terms and conditions of the SpinCo Executive Deferred Compensation Program.




ARTICLE 7.




LONG-TERM INCENTIVE AWARDS




     7.1 Treatment of Outstanding RemainCo Options.



          (a) RemainCo Directors and Employees. RemainCo shall take any and all action as shall
be necessary or appropriate, including without limitation approval of the provisions of this
Agreement, so that each RemainCo Option held on the Distribution Date by (1) an individual who
immediately prior to the Distribution was a director of RemainCo and who,




-25-









 




after the Distribution Date, will serve as a director of RemainCo but not SpinCo, or (2) a
RemainCo Participant (other than a Former RemainCo Employee) shall remain an option to purchase
RemainCo common stock issued under the RemainCo Stock Plan or the RemainCo 1996 Stock Plan (each
such option, a “Remaining RemainCo Option”). Each Remaining RemainCo Option shall be
subject to the same terms and conditions after the Distribution as the terms and conditions
applicable to the corresponding RemainCo Option immediately prior to the Distribution, including
the terms and conditions relating to vesting and the post-termination exercise period, with the
intention that such adjustment satisfy the requirements of Section 424 of the Code and avoid
treatment as nonqualified deferred compensation subject to Section 409A of the Code. The exercise
price and number of shares subject to each Remaining RemainCo Option shall be adjusted as follows:
(i) the number of shares of RemainCo common stock subject to each such Remaining RemainCo Option
shall be equal to the product of (x) the number of shares of RemainCo common stock subject to the
corresponding RemainCo Option immediately prior to the Distribution Date and (y) the RemainCo Share
Ratio, with fractional shares rounded to the nearest whole share and (ii) the per-share exercise
price of each such Remaining RemainCo Option shall be equal to the product, rounded to the nearest
cent, of (x) the per-share exercise price of the corresponding RemainCo Option immediately prior to
the Distribution Date and (y) the RemainCo Price Ratio.




          (b) SpinCo Directors and Employees. RemainCo and SpinCo shall take any and all action
as shall be necessary or appropriate, including without limitation approval of the provisions of
this Agreement, so that each RemainCo Option held on the Distribution Date by (1) an individual who
immediately prior to the Distribution was a director of RemainCo and who, after the Distribution
Date, will serve as a director of SpinCo but not RemainCo, or (2) a SpinCo Participant (other than
a Former SpinCo Employee) shall be replaced with a substitute SpinCo Option (each such option, an
“SpinCo Option”) issued under the SpinCo Stock Plan, subject to terms and conditions after
the Distribution that are substantially similar (to the extent practicable) to the terms and
conditions applicable to the corresponding RemainCo Option immediately prior to the Distribution,
including the terms and conditions relating to vesting and the post-termination exercise period,
with the intention that such substitution satisfy the requirements of Section 424 of the Code and
avoid treatment as nonqualified deferred compensation subject to Section 409A of the Code. The
exercise price and number of shares subject to such SpinCo Option shall be determined as follows:
(i) the number of shares of SpinCo common stock subject to each such SpinCo Option shall be equal
to the product of (x) the number of shares of RemainCo common stock subject to the corresponding
RemainCo Option immediately prior to the Distribution Date and (y) the SpinCo Share Ratio, with
fractional shares rounded to the nearest whole share and (ii) the per-share exercise price of each
such SpinCo Option shall be equal to the product, rounded to the nearest cent, of (x) the per-share
exercise price of the corresponding RemainCo Option immediately prior to the Distribution Date and
(y) the SpinCo Price Ratio. Such substitute SpinCo Option will take into account all employment
with both RemainCo and SpinCo, and their respective subsidiaries and affiliates, for purposes of
determining when the SpinCo Option becomes exercisable.




          (c) RemainCo/SpinCo Directors, Former RemainCo Directors and Former Employees.
RemainCo and SpinCo shall take any and all action as shall be necessary or appropriate, including
without limitation approval of the provisions of this Agreement, so that each RemainCo Option held
on the Distribution Date by (1) an individual who immediately prior




-26-









 




to the Distribution was a director of RemainCo and who, after the Distribution Date, will
serve as a director of both RemainCo and SpinCo, (2) a Former RemainCo Director, (3) a Former
RemainCo Employee, or (4) a Former SpinCo Employee shall be replaced with an adjusted RemainCo
Option with an adjusted exercise price (a “Post-Distribution RemainCo Option”) and a
substitute SpinCo Option issued under the SpinCo Stock Plan, subject to terms and conditions after
the Distribution that are substantially similar (to the extent practicable) to the terms and
conditions applicable to the corresponding RemainCo Option immediately prior to the Distribution,
including the terms and conditions relating to vesting and the post-termination exercise period,
with the intention that such adjustment and substitution satisfy the requirements of Section 424 of
the Code and avoid treatment as nonqualified deferred compensation subject to Section 409A of the
Code. Such replacement will be implemented in a manner such that immediately following the
Distribution (i) the number of shares relating to the Post-Distribution RemainCo Option will be
equal to the number of shares of RemainCo common stock subject to the RemainCo Option immediately
prior to the Distribution, (ii) the number of shares subject to the substitute SpinCo Option will
be equal to the number of shares of SpinCo common stock that the option holder would have received
in the Distribution had the RemainCo common stock subject to the RemainCo Option represented
outstanding shares of RemainCo common stock, and (iii) the per share option exercise price of the
original RemainCo Option will be proportionally allocated between the Post-Distribution RemainCo
Option and the substitute SpinCo Option based upon the RemainCo Post-Distribution Stock Value and
the SpinCo Stock Value and rounded to the nearest cent. Each Post-Distribution RemainCo Option and
substituted SpinCo Option adjusted from or substituted for an original RemainCo Option described in
this Section 7.1(c), when combined, will preserve the intrinsic value of such original RemainCo
Option, and each will preserve the ratio from the original option of the exercise price to the fair
market value of the stock subject to the option. Such options will take into account all
employment with both RemainCo and SpinCo, and their respective subsidiaries and affiliates, for
purposes of determining when the options become exercisable.




          (d) Non-U.S. Employees. RemainCo Options held by non-U.S. RemainCo Participants and
non-U.S. SpinCo Participants shall be treated in the same manner as set forth in paragraphs (a)-(c)
above, as applicable, unless it is determined that such treatment would result in adverse tax
consequences under applicable non-U.S. tax laws, in which case such RemainCo Options shall be
adjusted in an alternative manner that will, to the extent possible, avoid such adverse tax
consequences.




          (e) Amendments and Waivers. Prior to the Distribution Date, RemainCo shall amend the
RemainCo Stock Plan and/or outstanding RemainCo Options, as necessary, to provide that neither the
Distribution nor a transfer of employment in connection with the Distribution (i) between members
of the RemainCo Group, (ii) between members of the SpinCo Group, (iii) from a member of the
RemainCo Group to a member of the SpinCo Group, or (iv) from a member of the SpinCo Group to a
member of the RemainCo Group shall constitute a termination of employment for purposes of such
RemainCo Options. Prior to the Distribution Date, RemainCo shall waive any applicable exercise or
forfeiture restrictions with respect to outstanding RemainCo Options under the RemainCo 1996 Stock
Plan held by SpinCo Participants that would otherwise apply as a result of the Distribution or a
transfer of employment from a member of the RemainCo Group to a member of the SpinCo Group in




-27-









 




connection with the Distribution so that neither the Distribution nor any such transfer shall
cause such RemainCo Options to expire.




          (f) Exercise of Options. Upon the exercise of a SpinCo Option, regardless of the
holder thereof, the exercise price shall be paid to (or otherwise satisfied to the satisfaction of)
SpinCo in accordance with the terms of the SpinCo Option, and SpinCo shall be solely responsible
for the issuance of SpinCo common stock, for ensuring the withholding of all applicable tax on
behalf of the employing entity of such holder, and for ensuring the remittance of such withholding
taxes to the employing entity of such holder. Upon the exercise of a Remaining RemainCo Option or a
Post-Distribution RemainCo Option, regardless of the holder thereof, the exercise price shall be
paid to (or otherwise satisfied to the satisfaction of) RemainCo in accordance with the terms of
the Remaining RemainCo Option or Post-Distribution RemainCo Option, and RemainCo shall be solely
responsible for the issuance of RemainCo common stock, for ensuring the withholding of all
applicable tax on behalf of the employing entity of such holder and for ensuring the remittance of
such withholding taxes to the employing entity of such holder.




          (g) Restriction on Exercisability of Options. The Parties acknowledge and agree that
blackout periods may be implemented with respect to the Remaining RemainCo Options,
Post-Distribution RemainCo Options and the SpinCo Options for administrative reasons in accordance
with the terms of the RemainCo Stock Plan or the SpinCo Stock Plan, as applicable.




     7.2 Treatment of Outstanding RemainCo Deferred Stock Awards.



          (a) RemainCo Directors and Employees. Subject to Section 7.2(d), RemainCo and SpinCo
shall take any and all action as shall be necessary or appropriate, including without limitation
approval of the provisions of this Agreement, so that, as of the Distribution Date, the number of
shares of RemainCo Deferred Stock in the RemainCo Deferred Stock Account of (1) an individual who
immediately prior to the Distribution was a director of RemainCo and who, after the Distribution
Date, will serve as a director of RemainCo but not SpinCo, and (2) a RemainCo Participant (other
than a Former RemainCo Employee) shall be adjusted such that the number of shares of RemainCo
Deferred Stock in such RemainCo Deferred Stock Account shall equal the product of (x) the number of
shares of RemainCo Deferred Stock in the RemainCo Deferred Stock Account immediately prior to the
Distribution, multiplied by (y) the RemainCo Share Ratio. Such adjustment shall be intended to
preserve the intrinsic value of the original RemainCo Deferred Stock Award and to avoid treatment
as nonqualified deferred compensation subject to Section 409A of the Code.




          (b) SpinCo Directors and Employees. Subject to Section 7.2(d), RemainCo and SpinCo
shall take any and all action as shall be necessary or appropriate, including without limitation
approval of the provisions of this Agreement, so that each RemainCo Deferred Stock Award held by
(1) an individual who immediately prior to the Distribution was a director of RemainCo and who,
after the Distribution Date, will serve as a director of SpinCo but not RemainCo, and (2) a SpinCo
Participant (other than a Former SpinCo Employee) will be replaced with a substitute SpinCo
Deferred Stock Award issued under the SpinCo Stock Plan, subject to terms and conditions after the
Distribution that are substantially similar (to the extent




-28-









 




practicable) to the terms and conditions applicable to the corresponding RemainCo Deferred
Stock Award immediately prior to the Distribution, with the intention that such substitution avoid
treatment as nonqualified deferred compensation subject to Section 409A of the Code. It is
intended that each substitute SpinCo Deferred Stock Award will preserve the intrinsic value of the
original RemainCo Deferred Stock Award for which it was substituted by representing a number of
shares of SpinCo common stock equal to the product of (x) the number of shares of RemainCo Deferred
Stock in the RemainCo Deferred Stock Account immediately prior to the Distribution, multiplied by
(y) the SpinCo Share Ratio. The Parties agree that unvested RemainCo Deferred Stock Awards (other
than performance-based RemainCo Deferred Stock Awards) granted prior to December 2007 and held by
individuals who immediately prior to the Distribution are employees of a member of the SpinCo Group
shall become fully vested as of the Distribution Date and shall be paid according to their terms as
adjusted in accordance with this paragraph.




          (c) RemainCo/SpinCo Directors and Former RemainCo Directors. RemainCo and SpinCo
shall take any and all action as shall be necessary or appropriate, including without limitation
approval of the provisions of this Agreement, so that (1) each individual who immediately prior to
the Distribution was a director of RemainCo and who, after the Distribution Date, will serve as a
director of both RemainCo and SpinCo, and (2) each Former RemainCo Director will have each of his
RemainCo Deferred Stock Awards replaced with an adjusted RemainCo Deferred Stock Award and a
substitute SpinCo Deferred Stock Award issued under the SpinCo Stock Plan, subject to terms and
conditions after the Distribution that are substantially similar (to the extent practicable) to the
terms and conditions applicable to the corresponding RemainCo Deferred Stock Award immediately
prior to the Distribution, with the intention that such adjustment and substitution avoid treatment
as nonqualified deferred compensation subject to Section 409A of the Code. Immediately following
the Distribution (i) the number of shares of RemainCo Deferred Stock in such individual’s RemainCo
Deferred Stock Account shall equal the number of shares of RemainCo Deferred Stock in such RemainCo
Deferred Stock Account immediately prior to the Distribution, and (ii) the substitute SpinCo
Deferred Stock Award shall represent the number of shares of SpinCo common stock that such
individual would have received in the Distribution had he held the number of shares in his RemainCo
Deferred Stock Account immediately prior to the Distribution, with the intention that such
adjustment and substitution avoid treatment as nonqualified deferred compensation subject to
Section 409A of the Code.




          (d) Deferred Stock Awards with Deferred Payment. Notwithstanding Sections 7.2(a) and
(b), RemainCo and SpinCo shall take any and all action as shall be necessary or appropriate,
including without limitation approval of the provisions of this Agreement, so that each RemainCo
Participant and each SpinCo Participant who has made an election to defer payment of a RemainCo
Deferred Stock Award will have the portion of their RemainCo Deferred Stock Awards to which such
election applies replaced with an adjusted RemainCo Deferred Stock Award and a substitute SpinCo
Deferred Stock Award issued under the SpinCo Stock Plan. Immediately following the Distribution,
with respect to the portion of the RemainCo Deferred Stock Awards to which the deferral election
applies, (i) the number of shares of RemainCo Deferred Stock in such individual’s RemainCo Deferred
Stock Account shall equal the number of shares of RemainCo Deferred Stock in such RemainCo Deferred
Stock Account immediately prior to the Distribution, and (ii) the substitute SpinCo Deferred Stock
Award shall




-29-









 




represent the number of shares of SpinCo common stock that such individual would have received
in the Distribution had he held the number of shares in his RemainCo Deferred Stock Account
immediately prior to the Distribution, with the intention that such adjustment and substitution
preserve the intrinsic value of the original RemainCo Deferred Stock Award and avoid treatment as
nonqualified deferred compensation subject to Section 409A of the Code.




          (e) Non-U.S. Employees. RemainCo Deferred Stock Awards held by non-U.S. RemainCo
Participants and non-U.S. SpinCo Participants shall be treated in the same manner as set forth in
paragraphs (a)-(d) above, as applicable, unless it is determined that such treatment would result
in adverse tax consequences under applicable non-U.S. tax laws, in which case such RemainCo
Deferred Stock Awards shall be adjusted in an alternative manner that will, to the extent possible,
avoid such adverse tax consequences.




          (f) Amendments. Prior to the Distribution Date, RemainCo shall amend the RemainCo
Stock Plan and/or outstanding RemainCo Deferred Stock Awards, as necessary, to provide that (i)
neither the Distribution nor a transfer of employment in connection with the Distribution (A)
between members of the RemainCo Group, (B) between members of the SpinCo Group, (C) from a member
of the RemainCo Group to a member of the SpinCo Group, or (D) from a member of the SpinCo Group to
a member of the RemainCo Group shall constitute a termination of employment for purposes of such
RemainCo Deferred Stock Awards, and (ii) awards that were granted on April 5, 2007 that are subject
to vesting based on certain performance goals shall vest based solely on the achievement of the
performance goals of each holder’s post-Distribution employer (i.e., RemainCo or SpinCo). Prior to
the Distribution Date, RemainCo shall amend the RemainCo Stock Plan and RemainCo Deferred Stock
Awards held by RemainCo directors who, after the Distribution, will serve as directors of SpinCo,
as necessary, to allow such directors to make new elections providing that the underlying common
stock will be delivered on the six month anniversary of the date the director ceases to be a
director of SpinCo, provided that any such election to defer shall be conditioned on the occurrence
of the Distribution.




          (g) Vesting and Distribution of Deferred Stock Awards. Except with respect to the
RemainCo Deferred Stock Awards that vest as described in Section 7.2(b), upon the vesting of the
RemainCo Deferred Stock Awards, RemainCo shall be solely responsible for the settlement of all
RemainCo Deferred Stock Awards, regardless of the holder thereof, and for ensuring the satisfaction
of all applicable tax withholding requirements on behalf of the employing entity of such holder and
for ensuring the remittance of such withholding taxes to the employing entity of such holder. Upon
the vesting of the RemainCo Deferred Stock Awards that vest as described in Section 7.2(b) and the
SpinCo Deferred Stock Awards, SpinCo shall be solely responsible for the settlement of all such
awards, regardless of the holder thereof, and for ensuring the satisfaction of all applicable tax
withholding requirements on behalf of the employing entity of such holder and for ensuring the
remittance of such withholding taxes to the employing entity of such holder.




     7.3 Cooperation. Each of the Parties shall establish an appropriate administration
system in order to handle, in an orderly manner, exercises of RemainCo Options and SpinCo Options
and the settlement of RemainCo Deferred Stock Awards and SpinCo Deferred Stock Awards. Each of the
Parties will work together to unify and consolidate all indicative data and



-30-









 






payroll and employment information on regular timetables and make certain that each applicable
entity’s data and records in respect of such awards are correct and updated on a timely basis. The
foregoing shall include employment status and information required for tax withholding/remittance,
compliance with trading windows and compliance with the requirements of the Securities Exchange Act
and other applicable laws.



     7.4 SEC Registration. The Parties mutually agree to use commercially reasonable
efforts to maintain effective registration statements with the SEC with respect to the long-term
incentive awards described in this Article VII, to the extent any such registration statement is
required by applicable law.



     7.5 Savings Clause. The Parties hereby acknowledge that the provisions of this
Article VII are intended to achieve certain tax, legal and accounting objectives and, in the event
such objectives are not achieved, the Parties agree to negotiate in good faith regarding such other
actions that may be necessary or appropriate to achieve such objectives.



ARTICLE 8.




ADDITIONAL COMPENSATION MATTERS; SEVERANCE




     8.1 Annual Incentive Awards.



          (a) SpinCo Assumption of Annual Incentive Liability. Effective as of the Distribution
Date, SpinCo shall assume or retain, as applicable, responsibility for all liabilities and fully
perform, pay and discharge all obligations, when such obligations become due, relating to any
annual incentive awards that any SpinCo Participant is eligible to receive with respect to fiscal
year 2008 and, effective as of the Distribution Date, RemainCo shall have no obligation with
respect to any such annual incentive award.




          (b) RemainCo Assumption of Annual Incentive Liability. Effective as of the
Distribution Date, RemainCo shall assume or retain, as applicable, responsibility for all
liabilities and fully perform, pay and discharge all obligations, when such obligations become due,
relating to any annual incentive awards that any RemainCo Participant is eligible to receive with
respect to fiscal year 2008 and, effective as of the Distribution Date, SpinCo shall have no
obligation with respect to any such annual incentive award.




          (c) Establishment of SpinCo Annual Incentive Plan. Effective as of the Distribution
Date, SpinCo shall have adopted an annual incentive plan which shall permit the issuance of annual
incentive awards on terms and conditions substantially comparable to those under the RemainCo
Short-Term Incentive Compensation Plan (provided that the payment amounts and individual
performance criteria shall be established in the discretion of the SpinCo Board of Directors or the
SpinCo Committee).




          (d) Adjustment of Outstanding Awards. Effective as of the Distribution Date, RemainCo
and SpinCo shall adjust any outstanding annual incentive awards for RemainCo Participants and
SpinCo Participants, respectively, so that such awards’ payout calculations shall be based solely
on the RemainCo Participants’ and SpinCo Participants’ post-Distribution employer’s financial
performance.





-31-












 




     8.2 Individual Arrangements.



          (a) RemainCo Individual Arrangements. RemainCo acknowledges and agrees that, except
as otherwise provided herein, it shall have full responsibility with respect to any liabilities and
the payment or performance of any obligations arising out of or relating to any employment,
consulting, non-competition, retention or other compensatory arrangement previously provided by any
member of the RemainCo Group or SpinCo Group to any RemainCo Participant, including life insurance
policies not held in any trust and covering any RemainCo Participant.




          (b) SpinCo Individual Arrangements. SpinCo acknowledges and agrees that, except as
otherwise provided herein, it shall have full responsibility with respect to any liabilities and
the payment or performance of any obligations arising out of or relating to any employment,
consulting, non-competition, retention or other compensatory arrangement previously provided by any
member of the RemainCo Group or SpinCo Group to any SpinCo Participant, including life insurance
policies not held in any trust and covering any SpinCo Participant.




     8.3 Severance Plans.



          (a) Establishment of SpinCo Severance Plans. Effective as of the Distribution Date,
SpinCo shall take all steps necessary to establish for SpinCo Employees a severance plan which
provides severance benefits comparable to those provided under the RemainCo Severance Plan (such
SpinCo severance plan referred to herein as the “SpinCo Severance Plan”).




          (b) Assumption of Severance Liabilities. Effective as of the Distribution Date,
SpinCo shall assume or retain, as applicable, responsibility for all liabilities and fully perform,
pay and discharge all obligations, when such obligations become due, relating to any severance
benefit to which a SpinCo Participant is entitled under a RemainCo Severance Plan as of the
Distribution Date. Likewise, RemainCo shall assume or retain, as applicable, responsibility for all
liabilities and fully perform, pay and discharge all obligations, when such obligations become due,
relating to any severance benefit to which a RemainCo Participant is entitled under a RemainCo
Severance Plan as of the Distribution Date.




          (c) Effect of the Separation on Severance. RemainCo and SpinCo acknowledge and agree
that the transaction contemplated by the Distribution Agreement, in and of itself, will not
constitute a termination of employment of any SpinCo Participant for purposes of any policy, plan,
program or agreement of RemainCo or SpinCo or any member of the RemainCo Group or SpinCo Group that
provides for the payment of severance, separation pay, salary continuation or similar benefits in
the event of a termination of employment.




     8.4 Workers’ Compensation Liabilities.



          (a) Pre-Distribution Date Claims. Except as set forth below, (i) all workers’
compensation liabilities relating to, arising out of, or resulting from any claim by a SpinCo
Employee or Former SpinCo Employee that results from an accident, incident or event occurring, or
from an occupational disease which becomes manifest, before the Distribution Date shall be retained
by SpinCo, and (ii) all workers’ compensation liabilities relating to, arising out of, or resulting
from any claim by a RemainCo Employee or Former RemainCo Employee that




-32-









 




results from an accident, incident or event occurring, or from an occupational disease which
becomes manifest, before the Distribution Date shall be retained by RemainCo. Notwithstanding the
foregoing, (i) RemainCo shall retain any workers’ compensation liability relating to, arising out
of, or resulting from any claim by a SpinCo Employee or Former SpinCo Employee that results from an
accident, incident or event occurring, or from an occupational disease which becomes manifest, as
of a date such that, had such date been the Distribution Date, the individual would have been a
RemainCo Participant, and (ii) SpinCo shall retain any workers’ compensation liability relating to,
arising out of, or resulting from any claim by a RemainCo Employee or Former RemainCo Employee that
results from an accident, incident or event occurring, or from an occupational disease which
becomes manifest, as of a date such that, had such date been the Distribution Date, the individual
would have been a SpinCo Participant.




          (b) Post-Distribution Date Claims. All workers’ compensation liabilities relating to,
arising out of, or resulting from any claim by a SpinCo Employee or Former SpinCo Employee that
results from an accident, incident or event occurring, or from an occupational disease which
becomes manifest, on or after the Distribution Date shall be retained by SpinCo. All workers’
compensation liabilities relating to, arising out of, or resulting from any claim by a RemainCo
Employee or Former RemainCo Employee that results from an accident, incident or event occurring, or
from an occupational disease which becomes manifest, on or after the Distribution Date shall be
retained by RemainCo.




          (c) General. For purposes of this Section 8.4, a compensable injury shall be deemed
to be sustained upon the occurrence of the event giving rise to eligibility for workers’
compensation benefits or an occupational disease becomes manifest, as the case may be. RemainCo and
SpinCo shall cooperate in good faith with respect to the notification to appropriate governmental
agencies of the Distribution and the issuance of new workers’ compensation insurance policies or
program of self-insurance and claims handling contracts.




     8.5 Sections 162(m)/409A. Notwithstanding anything in this Agreement to the contrary
(including the treatment of supplemental and deferred compensation plans, outstanding long-term
incentive awards and annual incentive awards as described herein), the Parties 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 such supplemental or deferred
compensation or long-term incentive award, annual incentive award or other compensation is not
limited by reason of Section 162(m) of the Code (to the extent that such result is intended under
the applicable RemainCo Benefit Plan), and (ii) the treatment of such supplemental or deferred
compensation or long-term incentive award, annual incentive award or other compensation does not
cause the imposition of a tax under Section 409A of the Code.



     8.6 Director Fees. RemainCo shall retain responsibility for the payment of any fees
payable in respect of service on the RemainCo Board of Directors that are payable but not yet paid
as of the Distribution Date, and SpinCo shall have no responsibility for any such payments.



-33-









 





ARTICLE 9.




INDEMNIFICATION




     9.1 General Indemnification. Any claim for indemnification under this Agreement shall
be governed by, and be subject to, the provisions of Article III of the Distribution Agreement,
which provisions are hereby incorporated by reference into this Agreement and any references to
“Agreement” in such Article III as incorporated herein shall be deemed to be references to this
Agreement.



ARTICLE 10.




GENERAL AND ADMINISTRATIVE




     10.1 Separate Plans. Each SpinCo Benefit Plan is intended to constitute a separate,
“single employer” plan so that no “multiple employer” plan (as described in Code Section 413(c)) or
“multiple employer welfare arrangement” (as defined in ERISA Section 3(40)) shall exist with
respect to RemainCo and SpinCo. Notwithstanding the foregoing, RemainCo and SpinCo may arrange
with third parties providing services with respect to RemainCo Benefit Plans immediately prior to
the Distribution (including, but not limited to, administrative services, claims processing
services, trustee services and stop-loss coverage) to continue such services on a shared basis for
a period of time after the Distribution Date. RemainCo and SpinCo agree to share the costs of any
such shared services during such period on a per-participant basis.



     10.2 Sharing Of Information. RemainCo and SpinCo (acting directly or through their
respective affiliates) shall provide to the other and their respective agents and vendors all
information as the other may reasonably request to enable the requesting Party to administer
efficiently and accurately each of its Benefit Plans and to determine the scope of, as well as
fulfill, its obligations under this Agreement. Such information shall, to the extent reasonably
practicable, be provided in the format and at the times and places requested, but in no event shall
the Party providing such information be obligated to incur any out-of-pocket expenses not
reimbursed by the Party making such request or make such information available outside of its
normal business hours and premises. Any information shared or exchanged pursuant to this Agreement
shall be subject to the confidentiality requirements set forth in the Distribution Agreement. The
Parties also hereby agree to enter into any business associate agreements that may be required for
the sharing of any information pursuant to this Agreement to comply with the requirements of HIPAA.



     10.3 Reasonable Efforts/Cooperation. Each of the Parties hereto will use its
commercially reasonable efforts to promptly take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable laws and regulations
to consummate the transactions contemplated by this Agreement, including adopting plans or plan
amendments. Each of the Parties hereto shall cooperate fully on any issue relating to the
transactions contemplated by this Agreement for which the other Party seeks a determination letter
or private letter ruling from the IRS, an advisory opinion from the DOL or any other filing,
consent or approval with respect to or by a Governmental Authority.



-34-









 





     10.4 Employer Rights. Nothing in this Agreement shall prohibit SpinCo or any SpinCo
affiliate from amending, modifying or terminating any SpinCo Benefit Plan at any time within its
sole discretion. In addition, nothing in this Agreement shall prohibit RemainCo or any RemainCo
affiliate from amending, modifying or terminating any RemainCo Benefit Plan at any time within its
sole discretion.



     10.5 Effect on Employment. Nothing in this Agreement is intended to confer upon any
employee or former employee of RemainCo, SpinCo or either of their respective affiliates any right
to continued employment, or any recall or similar rights to an individual on layoff or any type of
approved leave.



     10.6 Consent Of Third Parties. If any provision of this Agreement is dependent on the
consent of any third party and such consent is withheld, the Parties hereto shall use their
reasonable best efforts to implement the applicable provisions of this Agreement to the fullest
extent practicable. If any provision of this Agreement cannot be implemented due to the failure of
such third party to consent, the Parties hereto shall negotiate in good faith to implement the
provision in a mutually satisfactory manner.



     10.7 Access To Employees. Following the Distribution Date, RemainCo and SpinCo shall,
or shall cause each of their respective affiliates to, make available to each other those of their
employees who may reasonably be needed in order to defend or prosecute any legal or administrative
action (other than a legal action between RemainCo and SpinCo) to which any employee, director or
Benefit Plan of the RemainCo Group or SpinCo Group is a party and which relates to their respective
Benefit Plans prior to the Distribution Date. The Party to whom an employee is made available in
accordance with this Section 10.7 shall pay or reimburse the other Party for all reasonable
expenses which may be incurred by such employee in connection therewith, including all reasonable
travel, lodging, and meal expenses, but excluding any amount for such employee’s time spent in
connection herewith.



     10.8 Beneficiary Designation/Release Of Information/Right To Reimbursement. To the
extent permitted by applicable law and except as otherwise provided for in this Agreement, all
beneficiary designations, authorizations for the release of information and rights to reimbursement
made by or relating to SpinCo Participants under RemainCo Benefit Plans shall be transferred to and
be in full force and effect under the corresponding SpinCo Benefit Plans until such beneficiary
designations, authorizations or rights are replaced or revoked by, or no longer apply, to the
relevant SpinCo Participant.



     10.9 Not A Change In Control. The Parties hereto acknowledge and agree that the
transactions contemplated by the Distribution Agreement and this Agreement do not constitute a
“change in control” for purposes of any RemainCo Benefit Plan or SpinCo Benefit Plan.



ARTICLE 11.




MISCELLANEOUS




     11.1 Effect If Distribution Does Not Occur. Notwithstanding anything in this
Agreement to the contrary, if the Distribution Agreement is terminated prior to the Distribution



-35-









 




Date, then all actions and events that are, under this Agreement, to be taken or occur
effective prior to, as of or following the Distribution Date, or otherwise in connection with the
Distribution, shall not be taken or occur except to the extent specifically agreed to in writing by
RemainCo and SpinCo and neither Party shall have any liability or further obligation to the other
Party under this Agreement.




     11.2 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.



     11.3 Affiliates. Each of RemainCo and SpinCo 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 each of their affiliates, respectively.



     11.4 Notices. All notices, requests, claims, demands and other communications under
this Agreement, as between the Parties, shall be in writing and shall be given or made (and shall
be deemed to have been duly given or made upon receipt unless the day of receipt is not a Business
Day, in which case it shall be deemed to have been duly given or made on the next following
Business Day) by delivery in person, by overnight courier service, by facsimile with receipt
confirmed (followed by delivery of an original via overnight courier service) or by registered or
certified mail (postage prepaid, return receipt requested) to the respective Parties at the
following addresses (or at such other address for a Party as shall be specified in a notice given
in accordance with this Section 11.4):


To RemainCo:





Hillenbrand Industries, Inc. (to be renamed Hill-Rom Holdings, Inc.)

700 State Route 46 East

Batesville, IN 47006-8835

c/o Corporate Secretary


To SpinCo:





Batesville Holdings, Inc. (to be renamed Hillenbrand, Inc.)

One Batesville Boulevard

Batesville, IN 47006-8835

c/o Corporate Secretary



     11.5 Entire Agreement. This Agreement, the Distribution Agreement, and each other
related agreement, including any annexes, schedules and exhibits hereto and thereto, as well as any
other agreements and documents referred to herein and therein, shall constitute the entire
agreement between the Parties with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject matter. In the event
of any inconsistency between this Agreement and any Exhibit hereto, the Exhibit shall prevail.



-36-









 





     11.6 Waivers. The failure of any Party to require strict performance by any other
Party of any provision in this Agreement will not waive or diminish that Party’s right to demand
strict performance thereafter of that or any other provision hereof.



     11.7 Amendments. Subject to the terms of Section 11.8 of this Agreement, this
Agreement may not be modified or amended except by an agreement in writing signed by each of the
Parties.



     11.8 Termination, Etc. This Agreement (including Article IX hereof (Indemnification))
may be terminated and abandoned at any time prior to the Distribution Date by and in the sole
discretion of RemainCo without the approval of SpinCo or the stockholders of RemainCo and it shall
be deemed terminated if and when the Distribution Agreement is terminated. In the event of such
termination, no Party shall have any liability of any kind to any other Party or any other Person.
After the Distribution Date, this Agreement may not be terminated except by an agreement in writing
signed by each of the Parties.



     11.9 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Indiana (other than the laws regarding choice of laws and conflicts
of laws) as to all matters, including matters of validity, construction, effect, performance and
remedies.



     11.10 Dispute Resolution. Any controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance, nonperformance, validity,
termination or breach of this Agreement or otherwise arising out of, or in any way related to this
Agreement or the transactions contemplated hereby, including any claim based on contract, tort,
statute or constitution (but excluding any controversy, dispute or claim arising out of any
contract relating to the use or lease of real property if any third party is a necessary party to
such controversy, dispute or claim) (collectively, “Agreement Dispute”), shall be governed
by, and be subject to, the provisions of Article VI of the Distribution Agreement, which provisions
(and related defined terms) are hereby incorporated by reference into this Agreement and any
references to “Agreement” in such Article VI as incorporated herein shall be deemed to be
references to this Agreement; provided, however, any references to “Agreement” or
“Agreement Disputes” in such Article VI as incorporated herein shall be deemed to be references to
this Agreement and Agreement Disputes as defined in this Agreement. Notwithstanding the foregoing
provisions of this Section 11.10, (i) disputes regarding the amount of the Final Pension Plan
Transfer Amount or True-Up Amount shall be determined exclusively pursuant to the dispute
resolution procedures set out in Section 3.2 of this Agreement, (ii) no notice of dispute relating
to the characterization of an individual as a RemainCo Employee, SpinCo Employee, Former RemainCo
Employee or Former SpinCo Employee may be provided under this Section 11.10 more than one hundred
eighty (180) days after the Distribution, and (iii) no notice of dispute may be provided under this
Section 11.10 after the second anniversary of the Distribution Date.



     11.11 Titles and Headings. Titles and headings to sections herein are inserted for
the convenience of reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.



-37-









 





     11.12 Counterparts. This Agreement may be executed in more than one counterparts, all
of which shall be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the Parties and delivered to the other Parties.



     11.13 Assignment. Except as otherwise provided for in this Agreement, this Agreement
shall not be assignable, in whole or in part, directly or indirectly, by any Party without the
prior written consent of the other Party, and any attempt to assign any rights or obligations
arising under this Agreement without such consent shall be void; provided, that, a
Party may assign this Agreement in connection with a merger transaction in which such Party is not
the surviving entity or the sale by such Party of all or substantially all of its assets; and
provided, further, that the surviving entity of such merger or the transferee of
such assets shall agree in writing, reasonably satisfactory to the other Parties, to be bound by
the terms of this Agreement as if named as a “Party” hereto.



     11.14 Severability. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable provisions.



     11.15 Successors and Assigns. The provisions of this Agreement and the obligations
and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and
against) the Parties and their respective successors and permitted transferees and assigns.



     11.16 Exhibits. The Exhibits shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.



     11.17 Specific Performance. The Parties agree that irreparable damage would occur in
the event that the provisions of this Agreement were not performed in accordance with their
specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to (i) an
injunction or injunctions to enforce specifically the terms and provisions hereof in any
arbitration in accordance with Section 11.10 of this Agreement, (ii) provisional or temporary
injunctive relief in accordance therewith in any Indiana Court, and (iii) enforcement of any such
award of an arbitral tribunal or an Indiana Court in any court of the United States, or any other
any court or tribunal sitting in any state of the United States or in any foreign country that has
jurisdiction, this being in addition to any other remedy or relief to which they may be entitled.



     11.18 Waiver of Jury Trial. SUBJECT TO SECTIONS 11.10 AND 11.17 OF THIS AGREEMENT,
EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR



-38-









 




OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.18.




     11.19 Force Majeure. No Party (or any Person acting on its behalf) shall have any
liability or responsibility for failure to fulfill any obligation (other than a payment obligation)
under this Agreement so long as and to the extent to which the fulfillment of such obligation is
prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A
Party claiming the benefit of this provision shall, as soon as reasonably practicable after the
occurrence of any such event: (a) notify the other Party of the nature and extent of any such Force
Majeure condition and (b) use due diligence to remove any such causes and resume performance under
this Agreement as soon as reasonably practicable.



     11.20 Authorization. Each of the Parties hereby represents and warrants that it has
the power and authority to execute, deliver and perform this Agreement, that this Agreement has
been duly authorized by all necessary corporate action on the part of such Party, that this
Agreement constitutes a legal, valid and binding obligation of each such Party and that the
execution, delivery and performance of this Agreement by such Party does not contravene or conflict
with any provision of law or of its charter or bylaws or any material agreement, instrument or
order binding on such Party.



     11.21 No Third-Party Beneficiaries. 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 third parties any remedy, claim, liability, reimbursement, cause of action or other
right in excess of those existing without reference to this Agreement.



     11.22 Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or causing any instrument
to be drafted.



[Remainder of this page intentionally left blank.]




-39-









 




IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and
year first above written.




	 	 	 	 	 
	 	HILLENBRAND INDUSTRIES, INC. 
 	 
	 	By:  	 	 
	 	Name:  	Peter H. Soderberg 	 
	 	Title:  	President and Chief Executive Officer 	 
	 
	 	BATESVILLE HOLDINGS, INC. 
 	 
	 	By:  	 	 
	 	Name:  	Kenneth A. Camp 	 
	 	Title:  	President and Chief Executive Officer 	 
	 




-40-








 




EXHIBIT A




Assumptions And Valuation Methodology for Purposes of Section 3.2(b)




Mortality Rates — Per PBGC Regulation Section 4044.53.




Interest Rates — Per PBGC Regulation Section 4044.52 and Appendix B thereto.




Expected Retirement Age — Per Regulation Section 4044.55 and assuming beginning-of-year decrement.
Early retirement subsidies will be taken into account in the value of accrued benefits by
reflecting a grow-in of early retirement eligibility by including projected future eligibility
service.




Preretirement Withdrawal/Disability Rates — None assumed.




Expense Loading — None assumed.




 









 





EXHIBIT B




RemainCo Welfare Plans




Medical Plan




Dental Plan




Vision Plan




Basic Employee Life Insurance




Supplemental Life and Dependent Life Insurance




Basic Employee AD&D




Voluntary AD&D and Dependent AD&D




Long Term Disability




Voluntary Long Term Disability




Short Term Disability




Employee Assistance Program




Health Care Flexible Spending Account




Dependent Care Flexible Spending Account




Adoption Assistance Flexible Spending Account




Limited Scope Flexible Spending Account




Business Travel Accident




Tuition Reimbursement




Vacation and Holiday Policies




 









 





EXHIBIT C




Transferred RemainCo Participants




Back, Brigid

Betz, Mike K.

Bibee, Nicole

Breheim, Ken A.

Briggs, Steven R.

Clayton, David D.

Crawford, Barbara L.

Fletcher, Jerry

Harris, Jermaine W.

McClanahan, Shawn P.

Merkel, Laura

Newman, Heather R.

Patterson, Marci M.

Schneider, Frank T.

Seagren, Lynne M.

Shaw, Anna

Todd, Michael A.

Wolter, Adam J.




 









 





EXHIBIT D




Transferred SpinCo Participants




Barnhorst, Scott

Bischoff, Mary

Bowers, Sue

Brack, Robert

Branstetter, Gayle

Clarke, Dan

Faust, Richard

Goins, Glenn

Heinlein, Merrilee

Kinker, Michael

Kuntz, Eric

Lake, Barry

Lanning, Mark

Mehlon, Gerald

Russell, Kay

Vankirk, James