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EXHIBIT 10.60
FIRST ALERT
MANAGEMENT INCENTIVE PLAN
1. PURPOSE
The First Alert Management Incentive Plan (the "Plan") is established
to provide key employees of the Company (as hereinafter defined) the
opportunity to increase their compensation based on the performance of
the Company and, in some cases, the achievement of Participants' (as
hereinafter defined) individual goals and objectives. This Plan is
intended to directly link key employee compensation to the performance
of the Company and creation of value for the Company's stockholders.
2. DEFINITIONS
2.1 "Company" means First Alert, Inc., BRK Brands, Inc., both
Delaware corporations, and their respective subsidiaries.
2.2 "Incentive" means the total incentive payment a Participant may
earn under the Plan each year based upon both corporate
objectives and individual objectives, if applicable, established
pursuant to the Plan.
2.3 "Participant" means an employee of the Company selected to
participate in the Plan.
2.4 "Level of Participation" means the overall range of the
potential Incentive a Participant may earn under the Plan,
based upon the management group of which the Participant is a
member, which range includes (i) a "target" level (that may be
earned if the Company achieves its operating plan for the year
and the individual objectives of the Participant are fully
achieved, if applicable) and (ii) a "maximum" level (that may
not be exceeded).
2.5 "EBIDAT" means earnings before interest, depreciation,
amortization, and taxes (which is a widely accepted financial
indicator of a business' ability to service and/or incur debt)
for a Plan year as determined by the Compensation Committee, or
alternatively the full Board of Directors, of First Alert, Inc.
and on which a percentage of the Plan's corporate objectives is
based.
2.6 "Cash Flow" means the reduction in borrowing under the
Company's credit facilities net of overnight cash investment
and cash balances as determined by the Compensation Committee,
or alternatively the full Board of Directors, of First Alert,
Inc. and on which a percentage of the Plan's corporate
objectives is based.
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2.7 "Percentage Weight" means the percentage of total Incentive
dependent upon each of (i) corporate objectives for the
determination of the corporate performance and (ii) personal
objectives for the determination of the individual performance,
if applicable. The sum of the Percentage Weight for the two
types of objectives shall equal 100%.
2.8 "Hire Date" means the date on which a Participant commences
employment with the Company.
2.9 "Termination Date" means the date on which a Participant
terminates employment with the Company.
3. ELIGIBILITY AND PARTICIPATION
3.1 A separate incentive program has been established by the
Company for the Chairman of the Board and the President and
Chief Executive Officer, therefore they are not Participants in
this Plan.
3.2 Employees eligible for Incentives under the Plan will be
limited to those key employees of the Company who, in the sole
judgment and discretion of the Company, are deemed to be in a
position that has a significant impact on the overall
performance of the Company. Notwithstanding an employee's
salary grade, position or title, participation in the Plan and
any Participant's Level of Participation under the Plan shall
be determined in the sole judgment and discretion of the
Company.
3.3 A Participant's Level of Participation shall not exceed the
following percentage of the Participant's base salary unless
otherwise determined by the Compensation Committee, or
alternatively the full Board of Directors, of First Alert, Inc.
or the Board of Directors of the Participant's employer:
Levels of Participation
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Key Employee Target Level Maximum Level
Group of Participation of Participation
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Vice President and 30% 60%
other specific key
executives selected to
participate at this level
Director, Senior
or General Manager,
Managing Director 20% 40%
First-Level Manager 10% 20%
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A Participant's maximum Level of Participation times his/her
base salary as of December 31, i.e. the end, of each Plan year
times the other factors set forth in Section 5 of the Plan
represents the maximum Incentive a Participant may receive in
that year.
3.4 Employees hired by January 1 of each Plan year are eligible to
be a Participant (if designated as such in accordance with the
Plan) for full-year participation.
3.5 Employees hired after January 1 but prior to October 1 of each
Plan year are eligible to be a Participant (if designated as
such in accordance with the Plan) on the first day of the
calendar quarter following their Hire Date. Any earned
Incentive for such Participant will be calculated on a pro rata
basis for the portion of the year the employee was a
Participant.
3.6 Employees newly employed or promoted between October 1 and
December 31 of each Plan year and having, as a result of such
employment or promotion, a position which might be expected to
result in that employee being designated a Participant shall
not be eligible to participate in the Plan until the following
year and until so designated.
4. ADMINISTRATION OF THE PLAN
4.1 The Compensation Committee, or alternatively the full Board of
Directors, of First Alert, Inc. will have full and final
authority to prescribe, amend and rescind rules and regulations
relating to the administration of the Plan; to interpret the
Plan and the rules and regulations applicable thereto; and to
make all other determinations deemed necessary or advisable for
the administration of the Plan. Such administrative action
will be conclusive and binding on all parties in interest.
4.2 For each fiscal year for which this Plan is in effect, the
Company shall determine, and shall notify Participants of (i)
EBIDAT, cash flow, earnings per share or other financial
performance criteria which are established as corporate
objectives for that year under the Plan, (ii) assigned
Percentage Weights for corporate and individual objectives to
the extent pertinent and (iii) their Level of Participation.
5. AWARD DETERMINATION
5.1 The Percentage Weights assigned to the corporate and individual
objectives for various key employee groups under the Plan shall
be as follows:
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Percentage Weights
------------------
Key Employee Corporate Individual
Group Objectives Objectives
----- ---------- ----------
Vice President 100% 0%
Managing Director, 33.3% 66.7%
General Manager
Senior Manager,
Director,
First-Level Manager 50% 50%
5.2 Subject to the provisions of Section 7 below, the portion of
Incentive which may be earned, based upon corporate objectives,
shall be the sum of the products of the following calculation
for each such objective: the product of the target Level of
Participation, times base salary on the last day of the Plan
year, times the Percentage Weight of the portion of Incentive
based upon corporate objectives, times the weighted average of
the rating factor attainment of each corporate objective, times
any relative weighting factor assigned to each corporate
objective.
5.3 Subject to the provisions of Section 7 below, the portion of
Incentive which may be earned, based upon individual objectives,
(operating unit objectives for Participants in BRK Brands, Inc.
subsidiaries) which have been approved in advance by the
Participant's direct supervisor, shall be the product of the
target Level of Participation, times base salary on the last day
of the Plan year, times the Percentage Weight of the portion of
Incentive based upon individual objectives, times the weighted
average of the rating factor attainment of the individual
objectives.
5.4 Subject to the provisions of Section 7 below, the total
Incentive which may be earned is the sum of the amounts
determined under paragraphs 5.2 and 5.3 above.
6. ATTAINMENT RATINGS
Attainment ratings for corporate objectives shall be determined in
accordance with the following schedule and shall be based on the audited
financial statements of First Alert, Inc. and the ratings, rating
factors, and corporate financial objectives which are either set forth
herein or attached to this Plan as an exhibit and designated as
applicable to the 1997 Plan year. For future Plan years, such
attainment ratings for corporate objectives shall be determined in
accordance with ratings, rating factors, and
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corporate financial objectives set forth on an exhibit designated as
applicable to a particular Plan year and attached hereto, after such
exhibit has been approved by the Compensation Committee, or
alternatively the full Board of Directors, of First Alert, Inc.
Attainment ratings for individual objectives shall be determined in
accordance with the following schedule and shall be based upon the
evaluation of the Participant's direct supervisor of the extent to
which such objectives were attained. The following attainment rating
schedule shall be reviewed and re-established or revised year to year
by the Compensation Committee, or alternatively the full Board of
Directors, of First Alert, Inc.:
Attainment Ratings
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5 = Maximum
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3 = Target
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1 = Minimum
If any of the attainment ratings for any Plan year, whether for
corporate or individual objectives, fall between the minimum and target
or the target and maximum figures, the attainment rating shall be
computed on a straight-line basis between the minimum and target or the
target and maximum, as appropriate.
7. MINIMUM BONUS
Total weighted average attainment ratings of the corporate objectives
and individual objectives of any Participant for any Plan year must be
equal to two (2) as a condition precedent to any Incentive being earned
by any Participant, whether based upon corporate or individual
objectives.
8. DISTRIBUTION OF INCENTIVE
Incentives shall be distributed to each Participant in a lump sum as
soon as practicable after the audit of the First Alert, Inc. financial
statements for the Plan year is completed.
9. TERMINATION OF EMPLOYMENT
A Participant who voluntarily or involuntarily leaves the employ of
the Company during or after a Plan year, but before the distribution of
the Incentive for that year, shall forfeit any right to any portion of
the Incentive for that year, unless (i) such Participant dies after the
end of a Plan year for which an Incentive has been determined to be due
under the Plan but before receipt of the Incentive award, in which case
Section 15 applies, (ii) there has been a "change in control" of the
Company, in which case Section 16 applies or (iii) the Compensation
Committee, or alternatively the full Board of Directors, of First
Alert, Inc. in their absolute discretion, shall decide otherwise (such
as in the case of death or retirement in the course of a
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Plan year). Any partial or pro rata Incentive awarded pursuant to this
Section shall be paid when all other Incentives are paid for the Plan
year.
10. FORFEITURE OF AWARDS
10.1 Unpaid awards to a Participant may be forfeited, in whole or
in part, by action of the Compensation Committee, or
alternatively by the full Board of Directors, of First Alert,
Inc., upon a finding that a Participant has at any time
misappropriated assets of the Company or any other person or
entity on whose behalf the Company acts in a fiduciary
capacity. A forfeiture under this paragraph may occur on
account of a misappropriation which occurred prior to the
Participant's termination of service with the Company
regardless of whether the termination of service resulted from
such misappropriation, or after such termination of service.
10.2 An employee selected to be a Participant in any year may be
removed as a Participant during that year if he/she is demoted
to a position that, in the opinion of the Compensation
Committee, or alternatively the full Board of Directors, of
First Alert, Inc. or the Board of Directors of the
Participant's employer, does not qualify for participation in
the Plan and shall then forfeit any portion of the Incentive
for that year.
11. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN
The Compensation Committee, or alternatively the full Board of
Directors, of First Alert, Inc. may, at any time, amend, suspend, or
terminate the Plan.
12. CHANGES TO ATTAINMENT RATINGS
The Compensation Committee, or alternatively the full Board of
Directors, of First Alert, Inc., may at any time prior to the final
determination of Incentives change the attainment ratings for corporate
objective achievement if, in its judgment, such change is desirable in
the interests of equitable treatment of the Participants and the
Company as a result of extraordinary or non-recurring events, changes
in applicable accounting rules or principles, changes in the Company's
method of accounting, changes in applicable law, changes due to
consolidation, acquisitions, reorganization, stock split or stock
dividends, combination of shares or other changes in the corporate
structure or shares, or any other change of a similar nature to any of
the foregoing.
13. FUNDING OF PLAN
Any Incentive to be granted under the Plan constitutes a general claim
against the Participant's employer. Such Incentive shall not be funded
through a trust or special segregated assets of the Company.
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14. WITHHOLDING TAX
The Company shall have the right to withhold with respect to any
payments made to Participants under the Plan any taxes required by law
to be withheld because of such payments.
15. DEATH BEFORE DISBURSEMENT
If a Participant dies before receipt of an Incentive award which has
been determined to be due under the Plan, the amount due will be paid
in a lump sum to the Participant's designated beneficiaries on file
with the Company or, in the absence of such designation, to his/her
estate.
16. CHANGE IN CONTROL
If, prior to determination or payment of Incentive awards for a
particular Plan year, a Participant is terminated by the Company after
a "change in control" of the Company (as that term is used in the proxy
rules of the Securities and Exchange Commission adopted pursuant to the
Securities Exchange Act of 1934, as amended), such Participant shall be
entitled to a full or partial Incentive award for such Plan year, if
otherwise due in accordance with Section 5, based upon the
Participant's base salary on the last day of his/her employment and the
portion of the Plan year for which the Participant was so employed.
17. NON-ASSIGNABILITY
A Participant's Incentive under the Plan shall not (otherwise than by
will or the laws of descent and distribution) be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to so anticipate, alienate,
sell, transfer, assign, pledge, encumber, or charge the same shall be
null and void; nor shall any such Incentive be liable for, or subject
to, the debts, contracts, liabilities or torts of the Participant (or
his/her beneficiary) entitled to such Incentive.
18. GOVERNING LAW
This Plan and all actions taken hereunder shall be governed by the laws
of the State of Delaware.
19. RIGHTS TO CONTINUED EMPLOYMENT
The Plan shall not in any way grant any rights to any Participant to
continued employment by the Company and the Company shall maintain any
rights it might otherwise have to terminate the employment of any
Participant.
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20. EFFECTIVE DATE
This Plan shall be effective for the Company's 1997 fiscal year and for
each fiscal year of the Company thereafter, beginning January 1 and
ending December 31, which shall also be the Plan year, unless either
the fiscal or Plan year is determined to be otherwise by the
Compensation Committee, or alternatively the full Board of Directors,
of First Alert, Inc.
21. EFFECT ON BENEFIT PLANS
The payment of an Incentive to a Participant actively employed by the
Company at the time of payment under the terms of the Plan will be
considered compensation for the purpose of determining benefits
available under any Company Pension Program, Retirement Savings
Program, or any other employee benefit program where the benefit or any
other aspect of the program is based upon employee compensation.
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1997 Exhibit
FIRST ALERT, INC.
MANAGEMENT INCENTIVE PLAN
Corporate Objectives, Ratings and Rating Factors
(in millions)
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EBIDAT CASH FLOW RATING RATING FACTOR
- ------ --------- ------ -------------
$15.7 $18.0 5 2.0
13.7 15.0 4 1.5
11.7 12.0 3 1.0
9.7 9.0 2 .5
7.7 6.0 1 0
EBIDAT shall be weighted at 75% of the corporate objective portion of the
Incentive.
Cash Flow shall be weighted at 25% of the corporate objective portion of the
Incentive.
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