AMENDED AND RESTATED
MANAGEMENT AGREEMENT
This AMENDED AND RESTATED MANAGEMENT AGREEMENT ("Agreement") is entered
into as of this 9th day of June, 1997, by and between Figgie International Inc.
(the "Company") and Xxxxxxx X. Xxxxx (the "Executive").
WHEREAS, the Executive is presently in the employ of the Company as
President of the Snorkel Division of the Company; and
WHEREAS, the Company desires to retain the employment of the Executive
and the Executive desires to continue to serve the Company in such capacity; and
WHEREAS, the Company and the Executive desire to set forth in a written
agreement the terms and provisions of such employment and of certain severance
and other payments to be made to the Executive under certain circumstances;
NOW THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements set forth in this Agreement and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Definition. For purposes of this Agreement: the following terms shall
have the following meanings whenever used in this Agreement.
1.1 Business Unit. "Business Unit" shall mean the Snorkel Division of
the Company.
1.2 Sale of the Company. "Sale of the Company" shall mean the first to
occur of the following:
a. any person (including any individual, firm, partnership,
association, trust, trustee, personal representative, group as
defined in Rule 13d-5 under the Securities Exchange Act of
1934, as amended, body corporate, corporation, unincorporated
organization, syndicate or other entity) (other than the
Company) is or becomes the beneficial owner, directly or
indirectly, of (i) securities of the Company representing 50%
or more of the combined voting power of the Company's then
outstanding securities or (ii) assets of the Company comprising
50% or more of such assets; or
b. the consummation of any consolidation or merger of the company
with any other entity, other then a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with
the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, at
least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation.
1.3 Sale of the Business Unit. "Sale of the Business Unit" shall have
occurred when any person (other than the Company or any subsidiary of the
Company) is of becomes the beneficial owner, directly or indirectly, of assets
of the Business Unit comprising 50% or more of such assets.
1.4 Net Proceeds. "Net Proceeds" shall mean all cash consideration and
the fair market value of other consideration (at the time such consideration is
received) received by the Company in connection with the Sale of the Business
Unit, or, as applicable, the aggregate cash consideration and the fair market
value of other consideration (at the time such consideration is received)
received by the stockholders of the Company (or received by the Company if such
consideration is first received by the Company and then distributed to its
stockholders) in connection with the Sale of the Company (excluding, if
applicable, holdbacks and amounts deposited in escrow which amounts have not
been
released ("Holdbacks")), less the legal fees, investment banking fees and other
costs associated with the Sale of the Business Unit or the Sale of the Company,
as applicable. "Net Proceeds" shall also include the value of any long-term
liabilities (including any and all debt obligations) of the Company or Business
Unit, as applicable, indirectly or directly assumed by the buyer or successor
entity, as applicable, in connection with the Sale of the Business Unit or the
Sale of the Company, as applicable. Net Proceeds shall be approved by the
Management Development, Compensation and Nominating Committee of the Board of
Directors of the Company and shall be final. At such time as any Holdbacks are
released to the stockholders (or to the Company if such Holdbacks are first
released to the Company and then distributed to its stockholders) such holdbacks
shall constitute a portion of Net Proceeds.
Section 2. Term of Employment
The Company will employ the Executive in accordance with the terms and
conditions set forth herein commencing as of the date of this Agreement and
extending to December 31, 1998. The Executive will continue to serve the Company
as President of the Snorkel Division or in such other future capacity as he and
the Company might mutually agree and will devote his full business time and best
efforts to the satisfactory discharge of the responsibilities of his offices,
performing such other duties as might reasonably be requested by the Company's
Chief Executive Officer.
The initial period of employment will be automatically extended for one
(1) additional year at the end of the initial term, and then again after each
successive year thereafter. However, either party may terminate this Agreement
at the end of the initial
period, or at the end of any successive one (1) year term thereafter, by giving
the other party written notice of intent not to renew, delivered at least three
(3) months Prior to the end of such initial period or successive term.
In the event such notice of intent not to renew is properly delivered,
the term of the employment of the Executive shall then become indefinite and can
be terminated by the Company without notice. Similarly, subject to the
provisions of this Agreement relating to nondisclosure of confidential
information and non-interference with employees, customers and suppliers, the
Executive can quit, at any time thereafter, without notice to the Company.
Section 3. Benefits Plans
During his employment, the Executive shall be entitled to
participate in all employee benefit plans and perquisites which are
maintained or established by the Company from time to time and which cover
the Company's executives provided he satisfies any applicable eligibility
requirements therefor.
Section 4. Continued Service Bonus
4.1 Amount of Continued Service Bonus. As of the earlier of (i) Sale of
the Company and (ii) Sale of the Business Unit (such earlier date, the "Release
Date")
a. the Company shall pay to the Executive in a cash lump sum a
transaction bonus determined as follows:
(i) if paid upon the Sale of the Business Unit, the
transaction bonus shall equal to two tenths of one
percent (0.2%) of the Net Proceeds.
(ii) if paid upon the Sale of the Company, the transaction
bonus shall equal two-tenths of one percent (0.2%) of the
portion of the Net Proceeds of the Sale of the Company
which is allocable to the Business Unit, the amount and
method of which allocation shall be
determined by the acquirer and approved by the Management
Development, Compensation and Nominating Committee of the
Board of Directors of the Company and shall be final.
b. the Company shall pay to the Executive in a cash lump sum those
presently unpaid installments, if any, of all bonuses
previously awarded to the Executive pursuant to the
Compensation Plan for Executives (the "Bonus Plan"); and
c. the Company shall pay to the Executive in a cash lump sum a
pro-rata bonus under the Bonus Plan with respect to the year in
which the Release Date occurs, which bonus shall be based on
the Executive's performance through the date of sale under the
Snorkel business plan for such year.
4.2 Condition Precedent to Receipt of Continued Service Bonus. As a
condition precedent to receiving the Continued Service Bonus described in
Section 4.2 hereof, the Executive must relinquish all claim that he has
immediately prior to the Sale of the Company or the Sale of the Business, to any
stock options which are not exercisable in accordance with their terms. If for
some reason the Executive fails to relinquish such options and receives an
amount in exchange for such options, the amount payable under Section 4.1 hereof
shall be reduced by the amount received by the Executive for such options.
4.3 Effect on Employee Benefit Plans. No amount paid or payable to the
Executive under this Agreement shall constitute salary or compensation for the
purposes of any employee benefit plan maintained by Figgie.
Section 5. Employment Terminations
5.1 Termination Due to Retirement or Death. In the event the
Executive's employment is terminated by reason of retirement or death during the
term of this Agreement, the Executive's employment with the Company shall be
deemed terminated as
of the effective date of retirement or at the end of the month in which such
death occurs and all benefits will be determined in accordance with the
Company's retirement, survivor's benefits, insurance, Compensation Plan for
Executives and other applicable programs then in effect, except that in the case
of the death of the Executive the Company will pay a pro rata portion of any
bonus which would have been payable to the Executive under Section 5.6a. hereof.
In no event will the other benefits described in the remainder of Section 5.6 or
the severance pay described in Section 5.7 be paid in the event of death and in
no event will any of the severance benefits described in Section 5.6 or
severance pay described in Section 5.7 be paid in the event of retirement.
For purposes of this Section 5.1, the determination of whether a
termination qualifies as a retirement will be made in accordance with the then
established rules and definitions of the Company's tax qualified defined benefit
plan.
5.2 Termination Due to Disability. In the event the Executive during
the term of this Agreement becomes, in the opinion of the Company and based upon
reasonable medical opinion, so disabled as to be unable to satisfactorily
perform his duties hereunder, the Company will have the right to terminate this
Agreement (but not the Executive's employment) upon thirty (30) days written
notice to the Executive. In such event, the Executive's benefits will be
determined in accordance with the Company's disability and other applicable
plans and programs then in effect, except that in the case of the disability of
the Executive the Company will pay a pro rata portion of any bonus which would
have been payable to the Executive under Section 5.6a. hereof. In no event will
the other
benefits described in the remainder of Section 5.6 or the severance pay
described in Section 5.7 be paid in the event of the disability of the
Executive.
5.3 Voluntary Termination by the Executive. The Executive may
terminate his employment at any time by giving the Company written notice of
intent to terminate, delivered at least ninety (90) calendar days prior to the
effective date of such termination. The Company will pay the Executive his full
base salary, at the rate then in effect, through the effective date of such
termination, plus all other benefits to which the Executive has a vested right
at that time (including but not limited to unused vacation time, COBRA benefits
and stock option benefits). In such event, the Executive shall not be entitled
to the Severance Benefits set forth in Section 5.6 hereof and shall not be
entitled to the severance pay set forth in Section 5.7 hereof. The Executive
shall, however, comply with the provisions of Sections 6.1 and 6.2 hereof.
5.4 Termination by the Company Other Than For Cause. The Executive
acknowledges that he is, has been and will continue at all times to be an
at-will employee of the Company and as such his employment has been and
continues to be terminable, subject to the terms and conditions of this
Agreement, by either the Executive or the Company at any time upon notice to the
other as provided for herein and for any reason not prohibited by law. However,
if the Company terminates the Executive's employment other than for "Cause" (as
defined in Section 5.6 hereof), the Executive will be entitled to receive the
Severance Benefits set forth in Section 5.6 hereof and the Severance Pay set
forth in Section 5.7 hereof.
5.5 Termination by the Company For Cause. Nothing in this Agreement
will be construed to prevent the Company from terminating the Executive's
employment for Cause and without any further duty or obligation under this
Agreement. As used herein, "Cause" will be determined by the Company in the
exercise of good faith and reasonable judgment and will include any breach of
this Agreement by the Executive or any act by him of gross personal misconduct,
insubordination, misappropriation of Company funds, fraud, dishonesty, gross
neglect of or failure to perform the duties reasonably required of him pursuant
to this Agreement or any conduct which is in violation of any applicable law or
regulation pertaining to the business of the Company. Upon any such termination
all rights, obligations and duties of the parties hereunder shall immediately
cease, except Executive's obligations under Section 4 hereof.
5.6 Severance Benefits. In the event that the Company shall terminate
the employment of the Executive other than for "Cause" as defined in Section 5.5
hereof, the Company will, upon the effective date of such termination:
a. Pay to the Executive in a cash lump sum a pro rata bonus under
the Bonus Plan with respect to the year in which he is
terminated, which Bonus shall be calculated using the formula
contained in the Bonus Plan based on the actual results of the
Company for such year but without any discretionary adjustment
of the amounts payable to the Executive that might otherwise
be permitted under the Bonus Plan. Such bonus will be paid to
the Executive on the same day as bonuses under the Plan are
paid to the executives of the Company who are still employed
with the Company.
b. Pay for the costs of outplacement services actually used by
the Executive provided however, that the total fee paid for
such services will be limited to an amount equal to seventeen
percent (17%) of the Executive's annual base salary rate as of
the effective date of termination of employment.
c. Pay to the Executive, in the event that a Sale of the Company
or a Sale of the Business Unit occurs during the period that
would have constituted the term of this Agreement absent such
termination of employment, the bonus payments described in
Section 4 hereof.
d. Continue to be obligated to pay when due all other benefits to
which the Executive has a vested right according to the
provisions of any applicable retirement or other benefit plan
or program.
5.7 Severance Pay. If the Executive executes the Non-competition
Agreement attached hereto and delivers such executed Agreement to the Company no
later than thirty (30) days after the date of this Agreement, and if the
employment of the Executive is terminated by the Company other than for "Cause"
as defined in Section 5.5 hereof, the Executive shall be entitled to Severance
Pay as follows:
a. The Company shall continue to pay to the Executive for the
twenty-four (24) months following his termination of
employment, his monthly base salary at the rate in effect as
of the date of such termination in accordance with the
Company's normal payroll practices.
b. In addition, the Company, throughout such twenty-four month
period, will continue the Executive's life insurance and
health care benefits coverage on
the same terms and at the same cost to the Executive as would
be applicable to a similarly situated full-time employee
provided however, that in the event the Executive begins to
receive comparable life insurance and health care benefits
(determined at the sole discretion of the Company) from a
subsequent employer during such period, the Company may
immediately terminate its life insurance and health care
benefits coverage of the Executive. Coverage under the
Company's health care benefits plan will be in lieu of health
care continuation under the Consolidated Omnibus Budget
Reconciliation Act ("COBRA") for periods such coverage is in
effect under this Agreement.
Section 6. Covenants
6.1 Disclosure or Use of Information. The Executive will at all times
during and after the term of his employment by the Company keep and maintain the
confidentiality of all Confidential Information and will not at any time either
directly or indirectly use such information for his own benefit or otherwise
divulge, disclose or communicate such information to any person or entity in any
manner whatsoever other than employees or agents of the Company who have a need
to know such information and then only to the extent necessary to perform their
responsibilities on behalf of the Company. As used herein, "Confidential
Information" will mean any and all information (excluding information in the
public domain) which relates to the business of the Company including without
limitation all patents and patent applications, copyrights applied for, issued
to or owned by the Company, inventions, trade secrets, computer programs,
engineering and technical
data, drawings or designs, manufacturing techniques. information concerning
pricing and pricing policies, marketing techniques, suppliers, methods and
manner of operations, and information relating to the identity and/or location
of all past, present and prospective customers of the Company.
6.2 Co-operation. During the term of this Agreement and for a period of
twenty-four (24) months following its termination, the Executive will not
attempt to induce any employee of the Company to terminate his or her employment
with the Company nor will he take any action with respect to any of the
suppliers or customers of the Company which would have or might be likely to
have an adverse effect upon the business of the Company. Executive hereby agrees
not to make any statement or take any action, directly or indirectly, that will
disparage or discredit the Company, its Officers, Directors, employees or any of
its products, or in any way damage its reputation or ability to do business or
conduct its affairs. Executive agrees that subsequent to his termination of
employment he will, in conjunction with a Company request, reasonably co-operate
with the Company in connection with transition matters, disputes and litigation
matters upon reasonable notice, at reasonable times, and will be paid or
reimbursed for reasonable expenses incurred by the Executive relating to such
matters.
6.3 Injunctive Relief. In the event of a breach or threatened breach of
any of the provisions of this Section 4 by the Executive, the Company will be
entitled to preliminary and permanent injunctive relief, without bond or
security, sufficient to enforce the provisions thereof and the Company will be
entitled to pursue such other remedies at law or in equity as it deems
appropriate.
Section 7. Miscellaneous
7.1 Successors. This Agreement is personal to the Executive and will
not be assignable by him without the prior written consent of the Company. This
Agreement may be assigned or transferred to and will be binding upon and inure
to the benefit of any Successor of the Company. As used herein, the term
"Successor" will include any person, firm, corporation or business entity which
acquires all or substantially all of the assets or succeeds to the business of
the Company or the Division.
7.2 Entire Agreement. This Agreement supersedes any prior agreements or
understandings, oral or written, between the Executive and the Company with
respect to the subject matter hereof and constitutes the entire agreement of the
parties with respect thereto.
7.3 Modification. This Agreement will not be varied, altered, modified,
canceled, changed, or in any way amended except by mutual agreement in a written
instrument executed by the Company and the Executive or their legal
representatives.
7.4 Tax Withholding. The Company may withhold from any benefits payable
under this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
7.5 Governing Law. To the extent not preempted by federal law, the
provisions of this Agreement will be construed and enforced in accordance with
the laws of the State of Ohio.
7.6 Indemnification. The Company has obtained an opinion of Xxxxxx
Xxxxxxxx LLP that the payments and benefits under this Agreement do not exceed
the maximum amount
which can be paid to the Executive without incurring an excise tax under Section
4999 of the Internal Revenue Code. If the Internal Revenue Service asserts that
the amounts payable to the Executive under this Agreement nonetheless give rise
to an excise tax under Sections 4999 of the Internal Revenue Code and the
Executive co-operates with the Company in appealing the determination of the
Internal Revenue Service through whatever level of administrative or judicial
appeals is deemed appropriate by the Company, the Company shall indemnify the
Executive for the amount of such excise tax, for any interest and penalties
applicable thereto, and for any income or excise taxes payable on such
indemnification. The Company shall pay all costs of challenging the
determination that the excise tax applies to payments hereunder including any
administrative costs, court costs, attorney fees, and accounting fees, whether
incurred by the Company or incurred by the Executive.
7.7 Replacement of Existing Contracts. This Agreement will replace the
Management Agreement dated December 9, 1994 between Figgie and the Executive and
the Retention Agreement dated July 23, 1996 between Figgie and the Executive.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the day and year first above written.
Figgie International Inc.
By: /s/ Illegible Signature
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Attest: /s/ Illegible Signature
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/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
