RETIREMENT AGREEMENT (the "Agreement"), by and between Dynatech
Corporation, a Massachusetts corporation (the "Company"), and John F. Reno
("Executive") dated as of May 19, 1999.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Executive is currently employed as President and Chief
Executive Officer of the Company and serves as Chairman of the Board of
Directors of the Company pursuant to an Amended and Restated Employment
Agreement, dated as of November 1, 1998, by and between the Company and
Executive (the "Employment Agreement");
WHEREAS, Executive has options (collectively, the "Options") to
purchase 7,687,120 shares of common stock (the "Common Stock"), no par value, of
the Company (the "Option Shares") pursuant to the Employment Agreement and a
Management Equity Agreement, dated as of May 21, 1998, between the Company, the
Clayton, Dubilier & Rice Fund V Limited Partnership (the "Fund") and Executive
(the "Equity Agreement");
WHEREAS, Executive has decided to retire from employment with the
Company and each of its direct or indirect subsidiaries (the "Subsidiaries"),
effective as of July 30, 1999 (the "Retirement Date");
WHEREAS, the Company and Executive wish to agree upon the consequences
of Executive's retirement;
WHEREAS, pursuant to the terms of the Employment Agreement and the
Equity Agreement, effective upon any termination of Executive's employment, the
Company has the right to repurchase the Options and/or Option Shares;
WHEREAS, as of the Retirement Date, pursuant to the terms of the
Equity Agreement, Executive's rights with respect to the portion of the Option
covering 7,289,181 Option Shares (the "Vested Options") have become vested and
Executive's
rights with respect to the remaining portion of the Option, covering 397,939
Option Shares (the "Unvested Options"), remain unvested; and
WHEREAS, pursuant to the terms of the Equity Agreement, effective upon
the Retirement Date, the Unvested Options will terminate and will be canceled
and the Company will have the right to repurchase the Vested Options.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein and for other good and valuable
consideration, the Company, the Fund and Executive hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, all capitalized
-------------------
terms used herein without definition shall have the respective meanings assigned
to such terms in the Employment Agreement.
2. Retirement; Resignation from Offices. In accordance with Section 7(h)
------------------------------------
of the Employment Agreement and in connection with his retirement, effective as
of the date hereof, Executive hereby resigns from his positions as President and
Chief Executive Officer of the Company and Chairman and member of the Board of
Directors of the Company and from all other offices, positions and Board
memberships with the Company or any Subsidiary currently held by Executive.
Executive shall continue in the employment of the Company, without title, until
the Retirement Date, having such duties as shall be assigned to him from time to
time by the Chairman of the Board of the Company, which shall be commensurate
with his position and status with the Company immediately prior to the date
hereof. In furtherance of the foregoing, Executive hereby agrees to promptly
deliver such letters of resignation as may reasonably be requested by the
Company.
3. Payments and Benefits Pursuant to the Employment Agreement.
----------------------------------------------------------
(a) Termination of Employment Period. Effective on the Retirement Date,
--------------------------------
the Employment Period shall expire and all of the rights and obligations of the
Company and Executive under the Employment Agreement will terminate, except as
provided in this Section 3. With regard to the Employment Agreement, the
provisions of each of Sections
2
4(c) (relating to indemnity for ISO adjustment), 7(h) (Resignation upon
Termination), 7(i) (Limits on Payments by the Company), 8 (Unauthorized
Disclosure), 9 (Non-Competition), 10 (Non-Solicitation of Employees), 11 (Non-
Solicitation of Customers), 12 (Return of Documents), 13 (Injunctive Relief with
Respect to Covenants; Forum; Venue and Jurisdiction), 16 (Indemnification) and
17 (Miscellaneous) (A) shall survive Executive's termination of employment, the
-
expiration of the Employment Period and the termination of the Employment
Agreement, (B) are incorporated herein by reference and (C) shall continue in
- -
full force and effect. With regard to the Equity Agreement, the provisions of
each of Sections 3 (Tag-Along Rights), 4 (Take-Along Rights), 7 (Lock-Up
Agreement) and 8 (Miscellaneous) and, to the extent any of the defined terms in
the Equity Agreement are used in any of the foregoing Sections, the provisions
of Section 1 (Definitions) (A) shall survive Executive's termination of
-
employment, the expiration of the Employment Period and the termination of the
Equity Agreement, (B) are incorporated herein by reference and (C) shall
- -
continue in full force and effect. The parties agree and understand that
references to the number of Shares (as defined in such Equity Agreement) in
sections 3 and 4 of the Equity Agreement include Shares held by Executive's wife
and by any and all trusts (including charitable trusts) established by Executive
and to which Shares have been transferred by Executive and/or his wife in
accordance with the Equity Agreement.
(b) Payment of Accrued Obligations. Executive shall be entitled to
------------------------------
payment of his Base Salary (at the current annual rate thereof of $530,000)
through the Retirement Date and to any benefits payable to or in respect of
Executive under any applicable employee benefit plan, policy or practice of the
Company in accordance with the generally applicable provisions thereof, based on
Executive's employment with the Company prior to the Retirement Date, other than
any such plan, policy or practice providing for severance or termination
benefits. On the Retirement Date, Executive shall be paid the amount of
$152,000 in lieu of a pro-rated annual bonus for the period from April 1, 1999
through the Retirement Date.
(c) Continued Payments of Base Salary. Subject to Section 3(g), the
---------------------------------
Company shall continue to make periodic payments to Executive of his Average
Base Salary in accordance with the Company's regular payroll practices from the
Retirement Date until
3
May 31, 2001 (the "Salary Continuance Period"). The Average Base Salary is equal
to $520,000.
(d) Continued Payments in Respect of Bonus. Subject to Section 3(g), the
--------------------------------------
Company shall pay to Executive, in 22 monthly installments, commencing on August
31, 1999 and on the last day of the next 21 succeeding months, an amount equal
to one-twelfth of the Average Annual Bonus (the "Bonus Payment"). The Average
Annual Bonus is equal to $920,814, so that, subject to Section 3(g), each
monthly payment will be $76,734.50.
(e) Continued Welfare Benefits. During the period commencing on the
--------------------------
Retirement Date and ending on the earlier of (i) Executive's 65th birthday and
(ii) the date of Executive's death (the "Benefits Continuation Period"), subject
- ---
to Section 3(g), Executive shall be entitled to continue his current
participation in each of the Company's medical benefits plans in which Executive
is an active participant immediately prior to the Retirement Date in accordance
with the terms and conditions of each such plan (including, without limitation,
the provisions thereof regarding deductibles and co-payments) as in effect from
time to time during the Benefits Continuation Period. Medical coverage shall
also be made available to Executive=s dependents, during the Benefits
Continuation Period, to the extent available under, and subject to the terms and
conditions of, each such medical plan as in effect from time to time.
Notwithstanding the foregoing, to qualify for the medical benefits made
available hereunder, Executive must pay any premiums and make any contributions
that he would have been required to pay or make under the terms of such plan as
in effect from time to time during the Benefits Period if Executive were then
still a senior officer of the Company. If such continued participation is either
not legally permissible or otherwise allowed under the terms of the applicable
plan or any insurance policy or other arrangement under which such benefits are
provided, the Company will provide equivalent coverage from its general assets
or another available source.
(f) Other Benefits. Set forth on Schedule A are statements of the amount
--------------
credited to Executive's account on the date specified therein under the
Company's 401(k) Savings Plan and the Company's Supplemental 401(k) Savings
Plan. The Company confirms that
4
Executive is fully vested in Executive's account balance under each such savings
plan and supplemental savings plan. Nothing is this Agreement shall modify or
reduce Executive's accrued benefits under all employee pension benefit plans
from those in effect immediately prior to the date hereof.
(g) Mitigation. If Executive obtains new employment (including self-
----------
employment and services as a consultant) that is not of a type prohibited by
Section 9 of the Employment Agreement (Non-Competition), (i) during the Salary
Continuation Period, any salary continuation payments or Bonus Payments to which
Executive is entitled pursuant to Section 3(c) or 3(d) shall be reduced by the
amount of any compensation earned by Executive (whether paid currently or
deferred) from any subsequent employer or other Person for which Executive
performs services, including but not limited to consulting services, and (ii)
--
during the Benefits Continuation Period, the continued medical benefits coverage
to which Executive is entitled pursuant to Section 3(e) shall be secondary to
any other medical benefit coverage available to Executive from any subsequent
employer or other Person for which Executive performs services, including, but
not limited to, consulting services, at any time after the Retirement Date.
Notwithstanding subclause (i) in the preceding sentence, no offset shall be made
to any payment under Section 3(c) or 3(d) for any compensation paid for services
(A) as a non-employee director of a corporation (or any comparable position in
-
another business organization) under any arrangement which is generally
applicable to all non-employee directors of such corporation (or to all persons
holding comparable positions in any such other business organization) or (B) by
-
any organization which is exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").
4. Options; Exercise and Repurchase and Cancellation.
-------------------------------------------------
(a) Outstanding Options. Each of the Options that are currently
-------------------
outstanding and that constitute Vested Options is listed on Schedule B under the
heading "Vested Options." Each of the Options that are currently outstanding and
that constitute Unvested Options is listed on Schedule B under the heading
"Unvested Options."
5
(b) Exercise. At the date of the wire transfer set forth in Section
--------
4(f), Executive shall be deemed to exercise the Options listed on Schedule B
under the heading "Options to be Exercised," each of which constitutes part of
the Vested Options. Payment of the aggregate exercise price in respect of such
Vested Options ($399,971.07) shall be paid by a debit against the amount to be
transferred pursuant to such Section 4(f). The Company and, by signing the
acknowledgment of this Agreement where noted below, the Fund each waives its
rights under the Equity Agreement to purchase the Option Shares issuable in
respect of the exercise of such Options to be Exercised and the 407,680 shares
of Common Stock issued to Executive upon the exercise of Options in 1998.
Executive agrees that he shall not exercise any Vested Options not listed under
the heading "Options to be Exercised" on Schedule B. The portion of Executive's
Vested Options not listed under the heading "Options to be Exercised" on
Schedule B shall hereafter be referred to as the Remaining Vested Options.
(c) Election to Repurchase. The Company hereby notifies Executive that,
----------------------
in connection with Executive's termination of employment, the Company hereby
exercises its right pursuant to Section 5 of the Equity Agreement to purchase
the Remaining Vested Options.
(d) Purchase and Sale of the Vested Options. Effective as of the date of
---------------------------------------
the wire transfer determined under Section 4(f) below, Executive hereby agrees
to sell to the Company and the Company hereby agrees to purchase from Executive
the Remaining Vested Options, at the purchase price set forth in Section 4(e)
below, payable as set forth in Section 4(f) below.
(e) Purchase Price. The Company and Executive each agrees that the
--------------
aggregate purchase price for the Remaining Vested Options is $14,427,039.30 (the
"Purchase Price"), based on a price per share of $3.25, which is the price
determined by the Company's Board of Directors in accordance with the terms and
provisions of the Equity Agreement. The portion of the Purchase Price payable
in respect of each separate option that is part of the Remaining Vested Options
is equal to the product of (i) the excess of (A) such per share price over (B)
the exercise price per Option Share under the Option multiplied by (ii) the
--
number of Options Shares covered by the relevant Option.
6
(f) Payment of Purchase Price. The Company shall, not later than the
-------------------------
Retirement Date, wire to an account identified to the Company by Executive in
writing an amount equal to (x) the Purchase Price reduced by (y) all applicable
- -
federal, state and local income and employment taxes required to be withheld
from such payment. Schedule B hereto reflects the amount to be paid in respect
of the purchased options and the amount of any taxes to be withheld therefrom.
The amount of any such wire transfer shall be reduced by the amount payable by
Executive in respect of the exercise price of the Vested Options to be exercised
in accordance with Section 4(b).
(g) Cancellation of Unvested Options. Executive hereby acknowledges and
--------------------------------
agrees that his rights with respect to the Unvested Options which have not
become vested on or prior to the Retirement Date shall automatically be canceled
and terminated effective as of the Retirement Date.
5. Executive's Cooperation. Executive hereby agrees that, from time to
-----------------------
time upon the reasonable request of the Company, Executive shall assist the
Company in connection with any pending or future dispute, litigation,
arbitration or similar proceeding or investigation instituted or commenced by
the Company or any Subsidiary or instituted or commenced by any other person
against or involving the Company or any Subsidiary.
6. Termination of Agreements. Effective as of the Retirement Date, the
-------------------------
Employment Agreement and the Equity Agreement will each terminate in its
entirety without any further liability or obligation on the part of the Company,
any of the Subsidiaries, the Fund or Executive thereunder, except for the
provisions of the Employment Agreement and the Equity Agreement that are
incorporated herein by reference pursuant to Section 3(a).
7. Release of Claims. Executive and the Company shall, simultaneously
-----------------
with the execution hereof, execute and deliver to the other party the
Confidential General Release Agreement attached hereto as Exhibit A.
8. Entire Agreement; Related Documents. This Agreement (including Exhibit
-----------------------------------
A hereto) constitutes the entire agreement among the parties hereto with respect
to the subject matter hereof. All prior correspondence and proposals (including
summaries of
7
proposed terms) and all prior promises, representations, understandings,
arrangements and agreements relating to such subject matter (including but not
limited to those made to or with Executive by any other person or entity) are
merged herein and superseded hereby.
9. Miscellaneous.
-------------
(a) Binding Effect; Assignment. This Agreement shall be binding on and
--------------------------
inure to the benefit of the Company and their respective successors and
permitted assigns. This Agreement shall also be binding on and inure to the
benefit of Executive and his heirs, executors, administrators and legal
representatives. This Agreement shall not be assignable by any party hereto
without the prior written consent of the other parties hereto. Each of the
Company and the Fund may effect such an assignment without prior written
approval of Executive upon the transfer of all or substantially all of its
business and/or assets (whether by purchase, merger, consolidation or
otherwise).
(b) Governing Law. This agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the laws of
another jurisdiction.
(c) Taxes. The Company may withhold from any payments made under this
-----
Agreement all federal, state, city or other applicable taxes as shall be
required by law. Each of the parties (and, by its signed acknowledgment, the
Fund) hereby represents to the other party (or to the Fund, if applicable) that
the facts and circumstances leading to Executive's retirement are not related in
any way to the consummation of the transaction whereby the Fund acquired the
majority of the voting securities of the Company . Each of the parties
represents and covenants that it will file any applicable tax returns and/or
reports on the basis that none of the payments made hereunder constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code. The
parties represent to each other that, prior to May 1, 1999, there was no
discussion between the parties with respect to the cessation of Executive's
employment, and that the events that have led to Executive's election to retire
are independent of, and unrelated to, the acquisition by the Fund of a
controlling interest in the Company during 1998.
8
(d) Amendments. No provision of this Agreement may be modified, waived
----------
or discharged unless such modification, waiver or discharge is approved by the
Board of Directors of the Company and is agreed to in writing by Executive and,
in the case of any such modification, waiver or discharge affecting the rights
or obligations of the Fund, is approved by the Fund. No waiver by any party
hereto at any time of any breach by any other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No waiver of any provision of
this Agreement shall be implied from any course of dealing between or among the
parties hereto or from any failure by any party hereto to assert its rights
hereunder on any occasion or series of occasions.
(e) Severability. In the event that any one or more of the provisions of
------------
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
(f) Notices. Any notice or other communication required or permitted to
-------
be delivered under this Agreement shall be (i) in writing, (ii) delivered
--
personally, by courier service or by certified or registered mail, first-class
postage prepaid and return receipt requested, (iii) deemed to have been received
---
on the date of delivery or on the third business day after the mailing thereof,
provided that the party giving such notice or communication shall have attempted
- --------
to telephone the party or parties to which notice is being given during regular
business hours on or before the day such notice or communication is being sent,
to advise such party or parties that such notice is being sent, and (iv)
--
addressed as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):
9
(A) if to the Company, to it at:
Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803
Attention: General Counsel
(B) if to Executive, to him at:
31 Prospect Street
Winchester, Massachusetts 01890
Copies of any notices or other communications given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Attention: Mr. Brian Finn
---------
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
---------
(g) Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
10
(h) Headings. The section and other headings contained in this Agreement
--------
are for the convenience of the parties only and are not intended to be a part
hereof or to affect the meaning or interpretation hereof.
IN WITNESS WHEREOF, the Company has duly executed this Agreement by its
authorized representatives and Executive has hereunto set his hand, in each case
effective as of the date first above written.
DYNATECH CORPORATION
By: /s/ Allan M. Kline
---------------------------------------
Name: Allan M. Kline
Title: Vice President, Chief Financial
Officer and Treasurer
/s/ John F. Reno
---------------------------------------
John F. Reno
Agreed and Acknowledged:
Clayton Dubilier & Rice Fund V Limited Partnership
/s/ Brian D. Finn
- -------------------------------------------------
By: Brian D. Finn
11
EXHIBIT A
Confidential General Release Agreement
THIS CONFIDENTIAL GENERAL RELEASE AGREEMENT (hereinafter "Agreement")
is made and entered into this 19th day of May, 1999 by and between Dynatech
Corporation, a Massachusetts corporation (the "Company"), and John F. Reno
("Executive") (collectively, hereinafter the "Parties").
-W-I-T-N-E-S-S-E-T-H-
WHEREAS, the Parties have determined that it is in their mutual
interest for Executive's employment with the Company and each of its direct or
indirect subsidiaries (the Company and such subsidiaries collectively referred
to as the "Companies") to terminate, effective as of the date hereof;
WHEREAS, in connection with the termination of his employment and the
election by the Company to repurchase certain options to purchase shares of the
Company's common stock granted to Executive, Executive is entitled to certain
payments and benefits under the terms of (x) an Amended and Restated Employment
-
Agreement, dated as of November 1, 1998, by and between the Company and
Executive (the "Employment Agreement") and (y) a Management Equity Agreement,
-
dated as of May 21, 1998, among the Company, Clayton, Dubilier & Rice Fund V
Limited Partnership, a Cayman Islands limited partnership (the "Fund"), and
Executive, (the "Equity Agreement");
WHEREAS, the Company, the Fund, Executive have entered into an
Agreement, dated as of the date hereof, to which this Confidential General
Release Agreement is attached as Exhibit A (the "Retirement Agreement"),
providing for, among other things, certain additional compensation, benefits and
rights of and to
Executive identified therein in connection with the termination of his
employment (such additional compensation, benefits and rights, the "Additional
Benefits");
IN CONSIDERATION THEREOF, the Companies desire to settle, conclude and
obtain the final release of all possible matters and claims which Executive has
now or may have in the future, whether known or unknown against any of the
Companies;
NOW, THEREFORE, in consideration of the Company's promise to provide
the Additional Benefits to Executive pursuant to the Retirement Agreement, the
premises and promises herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, IT
IS AGREED AS FOLLOWS:
1. The Company shall provide the Additional Benefits to Executive.
2. In return for the receipt of such Additional Benefits, Executive,
on his own behalf and on behalf of each of his agents, representatives, assigns,
heirs, executors and administrators (the "Releasors"), does hereby fully and
generally release, settle, cancel, discharge and acknowledge to be fully
satisfied, and covenant not to sue any Releasee (as defined below) in respect
of, any and all claims, contractual or otherwise, demands, costs, rights, causes
of action, charges, complaints, losses, damages and all liability of whatever
kind and nature, whether known or unknown, which he may have at the time of
signing this Agreement, or had at any time prior thereto, against any of the
Company, any subsidiary or affiliate of the Company, any successor or assign of
any such entity or any of their respective current or former employees,
directors, officers, attorneys, agents or other representatives (collectively,
the "Releasees") which may in any way be connected with or related to (i)
Executive's employment with the Company or any of their respective subsidiaries
or the severing or permanent discontinuance of that employment or any of the
events or circumstances leading thereto, (ii) Executive's purchase or holding of
--
shares (the "Shares") of common stock of the Company (the
2
"Common Stock"), (iii) the grant to Executive of options (the "Options") to
---
purchase additional shares of Common Stock (the "Option Shares") pursuant to the
Equity Agreement and the Employment Agreement, the vesting, exercisability or
other right or obligation of any Releasor in connection with the Options, the
Option Shares or the Equity Agreement, the Employment Agreement or the Company's
purchase of the Remaining Vested Options pursuant to the Retirement Agreement
and the cancellation of the Unvested Options pursuant to the Equity Agreement
and the Retirement Agreement, (iv) the Employment Agreement, (v) the Equity
-- -
Agreement (collectively, the "Claims"), other than the Excluded Claims (as
defined below). This release specifically includes Claims in respect of all
personal injuries and consequences thereof, including death and pain and
suffering, and any injuries which may now exist but which, at this time, are
unknown, unknowable, or unanticipated, or which may or may not develop further
at some time in the future, and all potential Claims concerning any
unforeseeable or unanticipated further development or consequences of known
injuries, other than the Excluded Claims.
Without limiting the generality of the foregoing, it is expressly
agreed and understood that this release includes, but is not limited to, any
Claim before any court, government agency or in any other forum, including but
not limited to, Claims under Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. (S) 2000 et seq. (Race and sex discrimination); the Age
-- ----
Discrimination in Employment Act 29 U.S.C. (S) 621 et seq. (age discrimination),
-- ----
the National Labor Relations Act, as amended, 29 U.S.C. (S) 141 et seq. (union
-- ----
and collective activity), the Equal Pay Act of 1963, 29 U.S.C. (S) 201 et seq.
-- ----
(equal pay), the Americans with Disabilities Act, 42 U.S.C. (S) 12101
(disability discrimination), the Rehabilitation Act of 1973, 29 U.S.C. (S) 701
(disability discrimination), the Civil Rights Acts of 1866 and 1871, as amended,
29 U.S.C. (S) 1981 et seq. (civil rights), the Consolidated Omnibus Budget
-- ----
Reconciliation Act of 1985, as amended, (COBRA-group health insurance), the
Employee Retirement and Income Security Act, as amended, 29 U.S.C. (S) 1001
et seq. (employee benefits), the Fair Labor Standards Act, as amended, 29 U.S.C.
(S) 201 et seq. (minimum wage, overtime pay and working hours), the Family
Medical Leave Act of 1993, as amended, 42 U.S.C. (S) 2601 et seq. (leaves of
-- ----
absence), the Massachusetts Human Rights Act, as amended, actions for race,
color, religion, age,
3
sex, national origin and handicap discrimination or for work-related injuries or
payment of wages arising under state law, for wrongful discharge based upon an
implied contract or public policy, and any other federal, state or local
statute, public policy, order, regulation, tort or contract claim, in each case,
other than the Excluded Claims.
For purposes of this Agreement, the term "Excluded Claims" means (i)
Claims under the terms of the Retirement Agreement (including, without
limitation, those sections of the Employment Agreement or the Equity Agreement
that are incorporated by reference into the Retirement Agreement) or this
Agreement and (ii) any Claims for indemnification or contribution with respect
--
to any liability incurred by Executive as a director, officer or employee of the
Company.
3. Executive understands, agrees and acknowledges that this Agreement
is intended to include in its effect, without limitation, claims and causes of
action which he does not know of or suspect to exist in his favor at the time of
executing this Agreement, and that this Agreement contemplates extinguishment of
all such claims and causes of action.
4. Executive understands, agrees and acknowledges that by signing
this Agreement he is not relying on any representation, promise or statement,
either oral or written, not contained in this Agreement or the Retirement
Agreement.
5. Executive understands, agrees and acknowledges that:
A. he has been encouraged by representatives of the Company to have
this Agreement reviewed by legal counsel of his own choosing and
that he has been given ample time to do so prior to signing it;
B. he has had the opportunity to negotiate concerning the terms of
this Agreement;
4
C. he has been provided the opportunity to take up to twenty-one
(21) days to consider this Agreement, but has elected to waive
such full 21 day period by executing this Agreement;
D. he shall have the right to revoke this Agreement within seven
(7) days following the date he executes this Agreement. Any
revocation of this Agreement must be in writing and received by
the Company by the close of business on the seventh day following
the execution of this Agreement and shall be delivered to Mark
V.B. Tremallo, Esq., General Counsel, c/o Dynatech Corporation, 3
New England executive Park, Burlington, Massachusetts 01803. Upon
any revocation in accordance herewith, Executive's right to the
Additional Benefits shall terminate, the Retirement Agreement
will be rendered void and without effect and the Employment
Agreement and Equity Agreement will continue in full force and
effect unamended by the Retirement Agreement and this Agreement;
and
E. by signing this Agreement, he represents that he fully
understands the terms and conditions stated in it and intends to
be legally bound by them.
6. Executive represents and warrants to the Company that he has not
engaged in any acts of dishonesty or in willful and serious misconduct, which
misconduct has caused or is reasonably expected to result in direct or indirect
material injury to the Company or any of its Affiliates (as defined in the
Employment Agreement). For and in consideration of the representations and
promises made by Executive herein and other good and valuable consideration,
except as otherwise expressly provided herein, the Company hereby waives,
releases and forever discharges Executive and Executive's heirs, successors and
assigns of and from all actions, causes of actions, suits, debts sums of money,
accounts, bonds, bills, covenants, contracts, controversies, agreements,
promises, damages, judgments, claims and demands whatsoever, in law in equity,
whether known or
5
unknown, of every kind and nature whatsoever, including any claims that may be
brought on the Company's behalf by any third party, relating to Executive's
employment with or services (including as a director) for the Company and any of
its Subsidiaries, or under the Employment Agreement or the Equity Agreement
("Company Claims"), provided, however, that the foregoing release shall not
-------- -------
apply to any Company Claim arising out of or under the Retirement Agreement
(including, without limitation, the portions of the Employment Agreement or the
Equity Agreement incorporated therein by reference) or this Agreement.
7. Executive and the Company each represents to the other that he or
it has not heretofore assigned or transferred or purported to assign or
transfer, to any person or entity, any of the Claims or Company Claims, any
portion thereof, or any interest therein.
8. Executive agrees that he will not make any untruthful and
disparaging statements about the Company or any of its Affiliates or any
clients, competitors, suppliers, employees or former employees of the Company or
of any of its Affiliates to any such person or any other persons (including but
not limited to the press or other media). The Company agrees that it will not
make any untruthful and disparaging statements about Executive to any person
(including but not limited to the press or other media). The Company and
Executive have agreed on the wording of a joint press release, a copy of which
is attached.
9. Any breach by Executive or the Company of a condition of this
Agreement with an attendant failure to remedy the breach within ten (10) days of
receiving notice of it from the other Party shall subject the breaching Party to
any and all equitable and/or monetary relief required to prevent further damage
to the other Party and to compensate same for any damages suffered as a
consequence of the breach of this Agreement.
10. Executive and the Company are of the mutual understanding and
agreement that the provisions of the Retirement Agreement provide Executive with
rights and benefits in addition to those otherwise committed to him under any
other agreement
6
with the Company or any Affiliate (including, without limitation, the Employment
Agreement and the Equity Agreement).
11. Nothing in the Retirement Agreement or this Agreement shall be
construed as an admission of any improper action or conduct by Executive or by
the Company, the Fund or any of their respective Affiliates, subsidiaries, joint
venturers, or directors, officers, employees, agents, representatives or assigns
of any violation or noncompliance with any obligation, legal or otherwise.
12. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, without giving effect to its
principles or rules of conflict of laws to the extent such principles or rules
would require or permit the application of the laws of another jurisdiction..
13. The Parties intend that the invalidity or unenforceability of any
provision of this Agreement shall not affect or render invalid or unenforceable
any other provision.
7
14. This Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective heirs, administrators, representatives,
executors, successors and assigns.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the day and year first above written.
IN THE PRESENCE OF: DYNATECH CORPORATION
/s/ Mark V.B. Tremallo By: /s/ Allan M. Kline
- ------------------------------------ ------------------------------------
Date: May 19, 1999 Name: Allan M. Kline
------------------------------- ---------------------------------
Title: VP, CFO and Treasurer
---------------------------------
IN THE PRESENCE OF: /s/ John F. Reno
---------------------------------------
John F. Reno
/s/ Richard J. Schnall
- ------------------------------------
Date: May 19, 1999
-------------------------------
Agreed and Acknowledged:
Clayton Dubilier & Rice Fund V Limited Partnership
/s/ Brian D. Finn
- -----------------------------------------------
By: Brian D. Finn
8
Attachment
Dynatech Corporation
News
Contact: Chris Tofalli
Broadgate Consultants, Inc.
212-232-2222
For Immediate Release
- ---------------------
Dynatech Corporation's Ceo, John Reno, Announces Retirement
BURLINGTON, Mass., May 19, 1999 . . . John F. Reno today announced his
retirement as chairman, president and chief executive officer of Dynatech
Corporation.
"Some time ago I promised myself that when I turned 60, I would assess my
personal situation and make decisions about spending time on other endeavors.
After 25 years with Dynatech, that time has come. After consulting with our
directors about succession to my leadership, Mr. Ned Lautenbach, from Clayton,
Dubilier and Rice, has been named to replace me as chief executive officer,"
said Mr. Reno.
"I have many outside interests which I enjoy and on which I want to focus.
I feel I owe it to myself and my family to take this step which we all must at
one time or another. Proudly, I am leaving Dynatech at record performance
levels," he continued. "Our management team is extremely competent and together
with the support of our equity partner, Clayton, Dubilier & Rice, I am certain
they will continue to bring the company to even greater financial heights. I
look forward to, and will applaud, their continued success."
Mr. Reno joined Dynatech in 1974. In 1991, he was named president, and in
1993, he was appointed chief executive officer. In 1996, Mr. Reno assumed the
role of chairman of the board while still actively serving as president and CEO.
Mr. Reno initiated Dynatech's management-led recapitalization in 1998,
inviting Clayton, Dubilier & Rice to become the company's equity partner. During
his period as chief executive the company has grown 18.4% per year and its
enterprise value has risen from $250 million to over $950 million.
"We are pleased with the many changes Jack has implemented during CD&R's
first year of equity ownership, particularly the installment of a strong
management team. Dynatech is now better positioned to achieve long-term
financial success and we thank him for his accomplishments," said Joseph L.
Rice, III, chairman of Clayton, Dubilier & Rice. "We are confident that Ned's
background with a technology-oriented company will enable him to lead Dynatech
effectively."
Prior to joining Clayton, Dubilier & Rice, Mr. Lautenbach served as senior
vice president and group executive of worldwide sales and services at IBM
Corporation. During his extensive tenure with IBM, he held a variety of senior
executive positions, including President of the National Distribution division
of the U.S.; President, Asia Pacific; as well as Chairman, IBM World Trade
Corporation. Mr. Lautenbach received his MBA from Harvard University after
having completed his undergraduate studies in economics at the University of
Cincinnati.
Dynatech Corporation (OTC-BB: DYNA) is a global communications equipment
company focused on network technology solutions. Its products address
communications test, industrial computing and communications, and visual
communications applications. Headquartered in Burlington, Massachusetts,
Dynatech sells its products worldwide through subsidiaries located throughout
the Americas, Europe and Asia. (Internet URL: www.dynatech.com)
This press release may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which reflect the Company's current
judgement on certain issues. Because such statements apply to future events,
they are subject to risks and uncertainties that could cause the actual results
to differ materially. Important factors which could cause actual results to
differ materially are described in the Company's reports on Form 10-K and 10-Q
on file with the Securities and Exchange Commission.
1
Schedule A
Account balance in Dynatech Corporation 401(k) Savings Plan
as of May 13, 1999: $1,507,262
Account balance in Dynatech Corporation Supplemental Savings Plan
as of May 13, 1999: $1,246,631
Schedule B
Vested Options
--------------
Exercise Options
Type Grant Date Price Granted
- ---- ---------- -------- -------
NQ 12/21/92 $0.5676 1,630,720
ISO 7/26/94 $0.5357 517,440
NQ 1/26/95 $0.8929 1,813,980
NQ 7/27/95 $1.0332 1,215,200
NQ 7/30/96 $1.6964 1,021,023
NQ 7/30/97 $1.8335 1,056,793
ISO 1/26/95 $0.8929 25,519
ISO 1/26/95 $0.8929 8,506
------- ---------
7,289,181
Unvested Options
----------------
Exercise Options
Type Grant Date Price Granted
- ---- ---------- -------- -------
ISO 7/26/94 $0.5357 172,480*
ISO 1/26/95 $0.8929 111,995
ISO 7/30/96 $1.6964 58,937
ISO 7/30/97 $1.8335 54,527
------- -------
397,939
- ---------------------
* These options will vest prior to the Retirement Date in the ordinary course
based on Executive's continued employment with the Company. From and after
the date on which they become vested (July 25, 1999), they shall for all
purposes of the Agreement be treated as Vested Options.
Options to Be Exercised
-----------------------
Exercise Options Cost to
Type Grant Date Price Granted Exercise
---- ---------- -------- ------- --------
ISO 7/26/94 $0.5357 517,440 $277,192.60
ISO 1/26/95 $0.8929 25,519 22,785.92
ISO 1/26/95 $0.8929 8,506 7,595.01
ISO 7/26/94 $0.5357 172,480 92,397.54
------- -----------
723,945 $399,971.07
Payment in Cancellation of Vested Options
-----------------------------------------
Spread at Aggregate Option
Exercise Options $3.25 Cancellation
Grant Date Price Granted Per Share Payment
---------- -------- ------- --------- ----------------
12/21/92 $0.5676 1,630,720 $2.6824 $4,374,243.30
1/26/95 $0.8929 1,813,980 2.3571 4,275,732.20
7/27/95 $1.0332 1,215,200 2.2168 2,693,855.30
7/30/96 $1.6964 1,021,023 1.5536 1,586,261.30
7/30/97 $1.8335 1,056,793 1.4165 1,496,947.20
-------------
$14,427,039.30
Withholding Rates
-----------------
Federal income tax: 28.00%
FICA 1.45%
Massachusettes 5.95%
2